A summary of recent developments in insurance, reinsurance and litigation law.
Higgins v ERC Accountants: Judge considers service of claim form issues where solicitors did not confirm authority to accept service
The claimants issued a claim form against two defendants in May 2016. They sent a copy of the claim form to the defendants' solicitors two months later, in July 2016 and then negotiated a series of extensions of time for service of the claim form. Although they then sought confirmation from the defendants' solicitors that they were authorised to accept service, no such confirmation was received. After they served the claim form on the defendants' solicitors, the defendants asserted that the claim form had not been validly served. The claimants therefore applied to the court for an order that the claim form had been validly served or for an order that service by an alternative method or at an alternative place was retrospectively permitted (under CPR r6.15). The judge held as follows:
(1) When the claim form was sent for information purposes only in July 2016, that was not service of the claim form. The claimant had failed to ask the defendants of their solicitors at that point whether the solicitors were authorised to accept service of the claim form. That was not merely a "technical point": a solicitor without authority who accepts service could be exposed to regulatory action or a claim. (However, had the only point been that a photocopy of the claim form, and no response pack, had been sent, the judge would have circumvented that defect by court order).
(2) As the defendants' solicitors had not been asked at the time to confirm if they would accept service, they were not obliged to object to what happened in July 2016. Although litigants should generally take reasonable steps to clear up genuine misunderstandings which have arisen between the parties that did not "extend to requiring a solicitor acting for one party to inform his or her opponent of an apparent error made by that opponent in the absence of instructions from his or her client to do so, when to do so might be contrary to the substantive interests of that solicitor's client".
(3) Although an order pursuant to CPR r6.15 can only generally be made if the claim form has come to the attention of the defendant, that factor alone is not enough to justify an order. A good reason for the order must also be demonstrated. The claimant solicitors' error here had been to leave service until very late in the period of extended validity of the claim form: they ought to have kept a record of what had been served and when and/or checked their files: "Aside from that, it is entirely unclear why [the claimants]' solicitor then attempted to serve what she considered had to be served on the defendants' solicitors when she had asked for but had not received confirmation that service could be on the defendants' solicitors".
(4) The claimants could have averted these issues by simply serving on the defendants, rather than their solicitors.
Accordingly, there had been no valid service of the claim form and an order under CPR r6.15 was refused.
Autoridad del Canal de Panama v Sacyr: Court refuses stay where defendant is appealing against earlier decision to refuse a stay of proceedings in favour of arbitration
Weekly Update 31/17 reported the earlier decision in this case. The claimant and the defendants entered into guarantees which were subject to English law and exclusive jurisdiction. Subsequently, the parties entered into a further guarantee and agreed that any disputes under that guarantee would be determined by ICC arbitration in Florida. Broadly, the same dispute arose in respect of both sets of guarantees but the judge refused a stay under section 9(1) of the Arbitration Act 1996 on the basis that the English proceedings were "in respect of a matter" which it had been agreed would be referred to arbitration. He also refused a stay on case management grounds.
The defendant is now seeking permission to appeal that decision from the Court of Appeal. Section 9(3) of the Act provides that "An application [for a stay] may not be made by a person …. after he has taken any step in those proceedings to answer the substantive claim". The defendant argued that being required to serve a defence in the English proceedings would amount to a "step" in those proceedings, rendering its appeal futile, because the English court would no longer have a discretion to stay its proceedings.
That argument was rejected by Blair J. Reference was made to the case of Bilta v Nazir (see Weekly Update 19/10), in which it was held that a reservation of the right to apply for a stay under section 9 was all that was required to exclude the operation of section 9(3). That case concerned an application to extend time to put in a defence, but the same principle applied to the filing of a defence where an appeal is being brought.
Maximov v OJSC: Enforcing an award where the supervising court has set it aside
The claimant in this case had obtained an award from a Russian arbitral body. That award was then set aside by the Moscow Arbitrazh Court, a decision which was then upheld by the Federal Arbitrazh Court of Moscow (and permission to appeal was refused by the Supreme Arbitrazh Court).
Nevertheless, the claimant sought to enforce the award in England, pursuant to the New York Convention and at common law. It submitted that the English court should not recognised the Russian court judgments setting aside the award.
One of the arguments run by the defendant was that, pursuant to the doctrine of ex nihilo nihil fit, if the award has been set aside, there is nothing to enforce. That argument had some academic support but almost no English judicial support.
The judge concluded that the award could not be enforced because there was no evidence of bias against the claimant by the Russian courts. He held that there was therefore no need to resolve the "interesting topic of ex nihilo nihil fit" but said that "My own view would be that an English court should not simply accept that a foreign court had set aside an arbitration award, particularly one within its own jurisdiction, if there were at the least an arguable case that the award had been set aside in breach of natural justice."