The Supreme Court in its decision in Abela & Ors v Baadarani considered the requirements for service of English proceedings abroad, and in particular on prospective defendants based in a state which is not a member of one of the international conventions governing service of proceedings. In its judgment, the Supreme Court set down a clear marker that the procedural rules governing service of English proceedings in those circumstances are to be given a purposive interpretation.
Mr Abela and the other appellants (Mr Abela’s companies) were, they believe, defrauded in the course of a purchase of shares in an Italian company. The share purchase agreement was subject to English law, and the parties had agreed to the English courts having non-exclusive jurisdiction. The appellants had instructed an English lawyer (Mr Haan) to act for them in relation to the contract. The appellants allege that Mr Haan was secretly and corruptly acting for Mr Baadarani. Before seeking to issue proceedings against Mr Baadarani, the appellants had already sued Mr Haan and his firm, and settled those claims in the course of trial. It is evident those proceedings were settled for less than the appellants say they lost in the deal, as the appellants then sought to start proceedings against Mr Baadarani (and an associated Cypriot company) in England, seeking to recover the balance of their losses.
Mr Baadarani is resident in Lebanon, which is not a signatory to the Hague Service Convention or to any bilateral treaty with the UK. The appellants issued the claim form on 30 April 2009. The validity of the claim form, and its service on Mr Baadarani before it expired, was critical because the appellants’ case was that they found out about the fraud, at the latest, in June 2009. The appellants would not be able to issue a fresh claim form if the one issued on 30 April 2009 was not served before its validity expired.
The appellants applied for permission to serve the claim form abroad in September 2009. They were granted permission by the court to serve proceedings on Mr Baadarani at a residential address which the appellants’ Lebanese lawyer had identified as being his residential address (the Farid Trad Street address). The Judge extended the validity of the claim form to 31 December 2009, and granted permission to serve the proceedings in English, without the usual translation.
The appellants had difficulty serving Mr Baadarani at the Farid Trad Street address. On 22 October 2009, an untranslated copy of the claim form and other documents were delivered to the offices of Mr Baadarani’s Lebanese lawyer, Mr Azoury. In February 2010, Mr Azoury returned the claim form to the appellants’ solicitors, stating that he did not have instructions to receive service of English proceedings. Mr Baadarani then instructed English solicitors, who also stated that they were not instructed to accept service. In the meantime, the appellants had sought a further extension of the validity of the claim form, which had been extended to April 2010.
Shortly before the expiry of that extended deadline, the appellants issued an application which eventually (in part) worked its way through to the Supreme Court. The appellants sought an order declaring that (i) the delivery of the documents on Mr Azoury in October 2009 be retrospectively recognised as a good alternative form of service (despite the fact that, at the time, the appellants did not have any permission to serve proceedings on Mr Baadarani anywhere other than at the Farid Trad Street address) and/or (ii) permitting them to serve the proceedings by an alternative means in the form of service on Mr Azoury or on Mr Baadarani’s English solicitors (notwithstanding the fact that neither were instructed to accept service) and (iii) seeking a yet further extension of time to allow them to achieve the latter. The court granted these orders, which the defendants to the action then sought to set aside.
The primary issue was whether and in what circumstances the English courts have a power to approve retrospectively “alternative means” of serving a claim form on a defendant based abroad.
The court’s discretion to approve departures from the default service requirements (ie to approve “service by alternative means”) has long been recognised for cases within the jurisdiction. Prior to 2008, claimants were always required to seek advance permission from the court to use an alternative means of service. Since Part 6 of the Civil Procedure Rules (CPR) was overhauled in 2008, the courts have had a power to retrospectively approve alternative means of service; in other words, to find that some other steps already taken by the claimant to bring the claim to the attention of the defendant were sufficient to constitute good service of proceedings. There has been debate about whether that power only extends to service within the jurisdiction, or whether it also extends to an ability to approve retrospectively alternative steps taken to serve a defendant abroad. Indeed, prior to that, there had also been a question as to whether the court can approve alternative means of service on a foreign defendant at all, even in advance of service.
The Supreme Court’s judgment sweeps away any doubt on these issues. Foreign defendants can be served by alternative means, and the courts have the power to decide that steps taken in the past constituted good service. English courts do have the power to approve retrospectively service by alternative means.
Furthermore, the judgment firmly dismissed the Court of Appeal’s attempts to curb the licence given to courts to depart from the formal default service provisions, by requiring that retrospective approval of alternative service abroad should only be given in exceptional circumstances. The Supreme Court had no issues with this, pointing out that the relevant test in the CPR simply requires the court to be satisfied that there is “good reason” to find that service has been adequately made – the bar is no higher than that.
The Supreme Court also cleared away another related area of uncertainty: This was the question as to whether the steps taken to serve a defendant abroad by alternative means had to be recognised as good service in the relevant local foreign law, or whether it was enough that those steps are not unlawful or illegal in the relevant local foreign law and were recognised as good service by the English court. Again, the Supreme Court’s judgment leaves no room for doubt. It is sufficient that the steps taken to effect service are not unlawful or illegal in the relevant foreign local law. There is no requirement that they constitute good service in the local foreign law.
It is important to note that the Supreme Court’s judgment does not affect service of English proceedings on a foreign defendant based in a state which is a signatory to a service convention such as the Hague Convention or a bilateral treaty. The validity of service by alternative means in cases where that does apply is an issue for another day.
Where that does not apply, and the prospective defendants are based outside a service convention state, the Supreme Court’s decision is very helpful in clarifying the law on service. Obviously prospective claimants will find it helpful, in that it sets down a clear marker that the English courts will take a very pragmatic and purposive approach to service of proceedings, rather than following a literal set of rules. The Supreme Court was very clear that the rules of service are intended to ensure that defendants are made aware of the proceedings and the nature of the claims made in them. Those rules should not enable prospective defendants to play “technical games” in order to seek to avoid the jurisdiction of the English courts.