A director of a company will typically be closely involved in litigation that the company is engaged in. However, in two recent cases English proceedings have come perhaps a little too close for comfort for directors who might have thought they were protected by the fact that they were based outside England and Wales.

Key Homes Bradford v Patel concerned the service of proceedings on an individual who contended that he was no longer resident in the UK. The claimants had delivered the proceedings to two English addresses, and the key argument they relied on to support their contention that this amounted to valid service raised an apparently novel point under section 1140 Companies Act 2006. That section provides that “a document may be served on a [director or secretary of a company] by leaving it at, or sending it by post to, the person’s registered address … whatever the purposes of the document in question”. The section is linked to the information required to be recorded in the register of directors pursuant to the Companies Act, and in particular the requirement that the register contain a “service address” for each director, together with details of the country or state in which the director is usually resident. The claimants contended that because the proceedings had been delivered to addresses specified as “service addresses” by the defendant in the register, service had been properly effected on him. The court agreed, holding that section 1140 was drafted in clear and unambiguous language, and was not restricted to service for purposes arising out of or in connection with the directorship or in connection with the company to which the register related.

This decision will mean that it will be considerably easier for claimants to serve proceedings on individuals that are resident abroad where they have given an address for service in England in the register of directors. However, the court added that nothing in the Act will prevent a director who is resident abroad from providing an address outside the jurisdiction, provided that the conditions in the Companies Act 2006 (Annual Return and Service Addresses) Regulations 2008 are complied with. In such circumstances, it will be necessary for a claimant to obtain permission to serve out of the jurisdiction before service can be effected. Directors that are located outside the jurisdiction would therefore be well advised to check the register to ensure that it provides an appropriate address for service.

Meanwhile, in Dar Al Arkan Real Estate Development Company v Bader, the claimant companies had given undertakings which were recorded in court orders that they would preserve and deliver up certain documents. However, the defendants contended that the claimants had breached the undertaking and so were in contempt of court, and sought an order that the managing director of the first claimant be held liable for that contempt and imprisoned under powers set out in the Civil Procedure Rules. The director, who was domiciled and resident in Saudi Arabia, disputed the court’s jurisdiction over him, arguing that the English court’s presumption against giving statutes extra‑territorial effect meant that he could not be subjected to committal proceedings in England and that therefore permission should not be given for the committal proceedings to be served on him. However, the High Court rejected this argument, holding that given the public interest in seeing that orders are upheld, the relevant provisions enabling directors to be committed for a companies’ civil contempt could have extra‑territorial effect. The court went on to hold that permission should be given for the contempt proceedings to be served on the director out of the jurisdiction. This decision has recently been upheld by the Court of Appeal.

Although the case continues and the English courts have not finally concluded that the director should be held liable for the claimants’ alleged contempt, in finding that the English court would have jurisdiction to reach such a decision, the decision in Dar Al Arkan is of particular significance and should be carefully noted by company directors.

Key Homes Bradford Ltd & Ors v Patel [2014] EWHC B1 (Ch)

Dar Al Arkan Real Estate Development Company (c) & Anr v AlSayed Bader Hashim AlRefai & Ors [2013] EWHC 4112 (QB) and [2014] EWCA Civ 715