Royal Petrol Trading v Total India: Court decides whether party was validly served with claim form in accordance with contractual provision

The parties entered into a settlement agreement which provided that "For the purposes of any…dispute arising from…the Settlement Agreement, the Parties confirm that they have instructed their respective legal representatives to accept service on their behalf of…any proceedings". Each party then named a firm of solicitors. After a dispute under the settlement agreement arose, a separate firm of solicitors (Firm A) wrote to the claimant's solicitors (Firm B), advising that they had taken over from the firm of solicitors named in the settlement agreement to accept service on behalf of the defendant (Firm C), and that they were instructed to accept service.

When the claimant subsequently terminated the settlement agreement for breach of contract, Firm A advised that it was no longer instructed to accept service (and argued that any agreement under the settlement agreement to accept service fell away as a result of the termination by the claimant).

Firm B then served the claim form on Firm A, and the defendant argued that there had been no valid service because service had not taken place in accordance with the prescribed contractual method (see CPR r6.11).

Cockerill J held that Firm A had replaced Firm C following notice to Firm B (and there was no requirement under the agreement for the defendant itself to notify Firm B). She then held that Firm A's authority had been irrevocable. It is possible for a contractual appointment to be revocable, if it plainly says so (although there is no "magic in the use of the word "irrevocable"", and the court will look at the clause in its context). However, she said that "the suggestion that the objective intention was not for the appointment to be irrevocable is in my judgment, somewhat startling – in the context of a legal representatives clause, contained within a settlement agreement which is drafted in really quite broad terms".

Furthermore, just as jurisdiction or arbitration clauses survive the termination of an agreement, because they are collateral or ancillary to the agreement, it was held that the same position applies to a legal representation clause: "A legal representation clause is in my judgment effectively ancillary….It is part of the mechanism which is in place for dealing with disputes….this is a clause which is in essence collateral or ancillary to a clause which is itself collateral or ancillary to the main subject matter of the contract – and one might therefore say that you cannot get much more collateral and ancillary than that".