In a recent judgment the Court of Appeal in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV & Ors  EWCA Civ 10 clarified the three-stage test which must be applied by the Court when determining an application to challenge the Court’s jurisdiction.
The case reflects an ongoing move by the English courts away from service out being an exercise of an “exorbitant jurisdiction” warranting a rigorous test, to an “incident of modern global business” which requires the court take a pragmatic approach “predicated upon the efficiency of the conduct of litigation.”
Jurisdiction applications are often hotly contested, with defendants all too ready to expend considerable resources in the hope that a claim will be disposed of before they have to file a defence, provide disclosure and incur significant legal costs. These applications are likely to become more important for defendants in light of the new disclosure rules which impose onerous obligations on defendants (and claimants) to provide initial disclosure and known adverse documents as early as when they file their defence.
A claimant will usually have to establish that the English court has jurisdiction to hear a claim when defendants are not domiciled in the UK or EU and have not agreed to the jurisdiction of the English courts. Depending on the terms on which the UK exits the EU, it is possible that claimants will also have to establish that the English courts have jurisdiction when defendants are domiciled in the EU.
In order to establish jurisdiction a claimant must show that all of the following are satisfied:
- The claim falls within one of a number of jurisdictional gateways (listed in Practice Direction (PD) 6B.3.1).
- The claim has a reasonable prospect of success (CPR 6.37(1)(b)).
- England is the proper place to bring the claim (CPR 6.37(3)).
The Court of Appeal explained the test to be applied by a court in determining whether a claim falls within one of the jurisdictional gateways.
The Gateway Test
The test is a three-step test which is as follows:
- The claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway;
- If there is an issue of fact about the application of a relevant jurisdictional gateway, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but
- The nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.
The Court of Appeal provided the following guidance on the practical application of the above three-step test.
“The claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway.”
The burden of proof is on the claimant and it must show that it had the better argument on the material before the court that relevant gateway applies. The test is context-specific and flexible.
In Canada Trust Co. and Others v Stolzenberg & Ors at page 555H, Waller J stated:
“It is natural, for example, in a case concerned with a contract where the jurisdiction depends on whether the breach took place within the jurisdiction, but where the issue to be tried will be whether there was a contract at all, not to wish to give even the appearance of pre-trying the central issue, even though the concept of being satisfied must apply both to the existence of the contract and the place of the breach. It is equally natural for the court in the process of being satisfied to scrutinise most jealously that factor which actually provides jurisdiction. It is equally natural that where the foundation of jurisdiction is domicile, i.e. an issue that will not arise at the trial, that particular scrutiny of the material available takes place in the context of the limitations applied to an interlocutory process.”
“If there is an issue of fact about the application of a relevant jurisdictional gateway, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so.”
Step 2 is an instruction to the court to seek to overcome evidential difficulties and arrive at a conclusion if it reliably can, taking into consideration that jurisdictional disputes are usually held very early in the proceedings, are interim and there will invariably be gaps in the evidence.
The Court of Appeal also took a dim view of claimants seeking extensive disclosure from defendants in advance of any jurisdictional challenge, and then relying on non-disclosure as of itself supporting the claim of a plausible case.
“The nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.”
Step 3 has been formulated to deal with the situation where the court is unable to form a decided conclusion on the evidence before it and is therefore unable to say who has the better argument. In such situations, the court could assume jurisdiction if there were factors that exist which would allow the court to take jurisdiction.
Interaction of Article 25 of the Recast Brussels Regulation with the Three-Step Test
Where claimants rely on Article 25 of the Recast Brussels Regulation as their gateway to establish jurisdiction (i.e. there is a contractual jurisdictional clause in favour of the English courts), the Court of Appeal stated that the courts in applying steps 1 and 2 will be looking for “clear and precise” evidence.