There have been many cases reported recently concerning the service of Court proceedings. One case that perhaps did not receive a great deal of attention, and yet which has significant risk management implications for all businesses, is the case of Bernuth Limited v High Seas Shipping Limited [2006] 1 All ER 359.

The Court decided, in that case, that Bernuth could not set an arbitrator’s final award aside. This was despite the fact that the legal and management teams at Bernuth were not aware that arbitration proceedings had been commenced and so had not been able to prepare any kind of defence.

High Seas Shipping’s solicitors had sent an email to Bernuth inviting it to settle a claim. The email address used for that correspondence was a generic one which had not appeared on any previous communication from Bernuth. However, it did appear in the Lloyd's Maritime Directory 2005, and on Bernuth's website. Several emails were sent to that email address by High Seas Shipping’s solicitors, by the arbitrator and by the London Maritime Arbitrators’ Association. Eventually, the arbitrator issued his final award and sent it to the generic email address. It was also sent by post to Bernuth’s offices and it was that letter which triggered the application being made by Bernuth.

The emails had been received by staff in Bernuth's cargo booking department and had been ignored as “spam” because the staff were under the impression that any genuine and serious legal correspondence would have gone through more appropriate channels. Indeed, all correspondence up and until that point had been through established communication channels and it was only at the point of service of the notice that the generic address was used.

The Court decided that there was nothing on the website to limit the use of the generic email address and there was nothing, therefore, which would affect the validity of service under the Arbitration Act 1996. The arbitrator’s final award would stand.

This seems to be a harsh decision. Hundreds of spam emails were sent to the generic email address each day and Bernuth did not understand why such an important email was sent to a different email address by-passing established channels of communication.

There are various lessons that businesses can learn from this case, to improve risk- management procedures. One of Bernuth’s problems was that it had not agreed any particular method for service of proceedings. The Arbitration Act states that service can be by any “effective means” and this should be defined at the earliest possible opportunity in a dispute, preferably by the parties agreeing a particular method of service.

Staff training may be an issue as well. Many businesses have generic email addresses such as information@whoever.com. According to Messagelabs, spam accounts for about 70% of all emails sent. Staff should be alerted to the possibility that important emails may be sent to a generic address and they should be instructed to forward any such emails to more senior staff. In the Bernuth case, the emails were all seen and read by clerical staff but were simply ignored. High Seas Shipping knew that the emails had been received and opened as read receipts were generated. It may also be worth making it clear, for example on any website, that the generic address is not to be used for the service of legal proceedings. Such an exclusion would have helped Bernuth.

This case may be limited to its own facts and it is unlikely that such a problem could arise under the Civil Procedure Rules because in County Court and High Court proceedings, service can only be by email if the receiving party so consents. Arbitration is, however, widely used so it would be worth checking contracts for an arbitration clause. If there is such a clause, consideration should be given to the issue of service so that if there is a dispute there will be no repeat of the issues that arose in the Bernuth case. Steps should be taken at the outset of a dispute to make it clear, for example, that service cannot take place by sending documents to a generic email address.