The issue of service outside the jurisdiction is always a core consideration for any party looking to bring transnational litigation. CPR 6.33(2B)(b) introduced in April 2021 sought to provide a pathway for parties to serve proceedings without first obtaining permission from the Court where “a contract contains a term to the effect that the court shall have jurisdiction to determine that claim”. In October 2022, CPR 6.33(2B)(c) was introduced to try and fill a lacuna which had been created following Brexit. Unfortunately, as with many rules which aim to reduce the pressure on the Courts and streamline litigation, satellite litigation and further costs are too often the result.
Background
In Pantheon International Advisors Limited v Co-Diagnostics, Inc [2023] EWHC 1984 (KB) the Court was faced with the task of diagnosing whether the service of proceedings by the Claimant without permission of the Court taking place after the introduction of CPR 6.33(2B)(b) and before CPR 6.33(2B)(c), relying on CPR 6.33 (2B)(b) was defective and if so how to cure such ill.
The Claimant Pantheon International Advisors is an English company experienced in providing business services, including assisting companies with listings and growing internationally. The Defendant (Co-Diagnostics Inc) is a company based in Utah USA which specialises in supplying a range of products and services to diagnostic laboratories and others relying on a particular form of technology, polymerase chain reaction technology, (commonly known as “PCR”).
In 2016, the parties entered into a written agreement (the “2016 contract”) whereby Pantheon would assist Co-Diagnostics in raising capital in the UK markets through pursuing a listing on the London Stock Exchange or the AIM. It is the Claimant’s case that a subsequent agreement needed to be entered into due to regulatory issues for the Defendant that would be caused by relying upon the 2016 contract which had not been disclosed to their shareholders and others in breach of US security laws. The Defendant denies that there was any such breach.
In October 2018, after a series of meetings and emails Pantheon signed a new agreement (the “2018 contract”) to provide consultancy services to Co-Diagnostics. The Defendant disputed that this agreement was finalized. Pantheon claims the Defendant breached the 2018 contract by not making any payments. Co-Diagnostics denies any payments are due.
Pantheon maintained the 2018 contract is binding and replaced the 2016 contract. The Claimant’s claim was initially in reliance upon the 2018 contract but an application to amend the claim to rely on the 2016 contract and / or quantum meruit in the alternative was made which was to be heard after this judgment. There was factual dispute about whether the 2018 contract was finalized and binding, and whether any payments were due under the 2016 and/or 2018 contracts. Both contracts included express choice of jurisdiction clauses in favour of the English Courts.
The Procedural Litmus Test
Pantheon issued the claim in June 2021 and via the Foreign Process Section of the Court served the claim form out of the jurisdiction without permission (pursuant to CPR 6.33 (2B)(b)), relying on the choice of jurisdiction clause contained in the 2018 contract. Co-Diagnostics challenged the jurisdiction of the English courts.
The Defendant issued an application seeking a declaration that the English Court had no jurisdiction to try the claims and to strike out the Claim Form and Amended Particulars of Claim with a particular emphasis on whether permission was required to serve outside of the jurisdiction.
The Claimant opposed the application on the basis that it was proper to rely on the choice of jurisdiction clause in the 2018 Contract and that the service was indeed good service under CPR 6.33(2B)(b) and in the alternative sought retrospective permission from the Court / to dispense with service if necessary. The claimant withdrew their quantum meruit claim at the hearing.
“CPR 6.33(2B)(b) Provides that
“2B) The claimant may serve the claim form on a defendant outside the United Kingdom where, for each claim made against the defendant to be served and included in the claim form—
(b) a contract contains a term to the effect that the court shall have jurisdiction to determine that claim”[; or
(c) the claim is in respect of a contract falling within sub-paragraph (b).] (subsequently added)
The Judge confirmed that CPR 6.33(2B)(b) had not been the subject of much case law since it’s inclusion and confirmed that case law developed under the old PD 6B 3.1(6)(d) remained relevant and therefore Pantheon had to show a good arguable case that:
1. there was a binding contract that was legally binding between the parties at the time;
2. the contract contained a valid and effective jurisdictional agreement clause in favour of the English Courts;
3. The dispute fell within the scope of that jurisdiction agreement applying Brownlie and Kaefar.
The Judge applied the three-stage good arguable case test outlined by Lord Sumption in Brownlie and further guidance provided in the Kaefer case:
1. The claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway.
2. If there is an issue of fact about it, 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.
3. 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 of there is a plausible (albeit contested) evidential basis for it.
Evidential Examination
After carrying out a thorough evidential examination the Judge noted that conflicting testimony between the parties warranted a detailed review of the documentary evidence including the communications and correspondence between the parties. The judge highlighted evidence indicating the terms were agreed, both parties intended to be bound, the 2018 contract was signed by Pantheon, and Co-Diagnostics gave reasons for non-payment rather than disputing the contract. The Judge notes that the communications after October 2018 did not reference any outstanding contractual issues and indicated intention to make payment. Further the Judge was satisfied that there was evidence of Pantheon performing services contemplated under the 2018 contract after October 2018. The judge found no evidence that contract negotiations continued into Spring 2019 or were terminated then. Therefore, the factual finding was that there was a good arguable case at this preliminary stage that the 2018 contract was binding and there was no dispute that it contained a choice of jurisdiction clause.
After carrying out a careful and detailed examination of the factual claim under the 2018 contract, the Judge found that it was appropriate for the Pantheon to have served the claim for breach of the alleged 2018 contract out of the jurisdiction without permission under CPR 6.33(2B)(b), as there was a good arguable case that there was a binding 2018 contract with a valid jurisdiction clause. The Judge’s conclusion was supported by plausible evidence that the 2018 contract was legally binding.
The Court went on to find that the originally pleaded quantum meruit claim for restitution sits outside of the scope of the contractual terms of the contract and therefore does not fit within the wording of CPR 6.33(2B)(b) and therefore should not have been served without the Court’s permission. That aspect of the Claim had been conceded by the claimant during the hearing. The Judge did comment that the new CPR 6.33(2B)(c) had since been introduced but this reinforced her view that such claims were not covered by CPR 6.33(2B)(b).
Additional Considerations
The Judge made some useful findings for practitioners in that the fact both the 2018 contract claim which was appropriate to serve without permission and the quantum meruit claim which was not appropriate without permission were served together, this did not invalidate the service of the contractual claim.
The court also concluded that even if permission had been required, the tests for retrospective service to be ordered for the main 2018 contract claim had been met as there was a good reason and it would be the antithesis of justice in the circumstances to strike out the claim in its infancy. The Judge applied CPR 3.10 that the Court could remedy a failure to comply with a rule or practice direction citing that there was case law to support this power could be used to retrospectively grant permission for service out.
As the quantum meruit claim had been withdrawn, there was no need to consider retrospective service in relation to that claim.
The Court in making this finding examined the authorities concerning retrospective consent including Nesheim v Kosa [2006] WL 2794124, The Ikarian Reefer (National Justice Compania Naviera v Prudential Assurance Company Limited No.2 [2000] 1WLR 603) and Hannigan v Hannigan [2002] 2 FCR 650 and exercised her discretion.
The court ordered a stay of proceedings to allow the ADR process in the alleged 2018 contract to be followed, as agreed between the parties.
Conclusion – The Diagnostics of Discretion
This Judgment provides practitioners with an excellent guide on the issues to consider whether they would be able to rely on CPR 6.33(2B) to serve out of the jurisdiction without permission of the Court. It is clear that if a claimant can provide a good arguable case that a contract with a choice of jurisdiction clause is binding, that they would be able to rely on CPR 6.33(2B) if the dispute falls within the scope of that jurisdiction agreement.
However, despite this judgment and the introduction of the new rule 6.33(2B)(c), it is not clear whether claims such as quantum meruit would require permission to serve outside the jurisdiction. This judgment provides CPR 6.33(2B)(b) cannot be relied upon and the reasoning of the Judge that such claims are brought outside of the contract would lead practitioners to be cautious in not seeking permission relying on rule 6.33(2B)(c) for such claims as whether such a claim is “in respect of a contract falling within sub-paragraph (b)” would be questionable.
Serving one claim that does not require permission with alongside a claim that does require permission would not invalidate the service of the validly served claim.
The Court may in appropriate circumstances grant retrospective service where a claim required permission of the Court to be served out of the jurisdiction.
This appears to be one of the first test cases of the new CPR 6.33(2B) rules and will offer welcomed guidance to practitioners in the wake of Brexit.
Ronald Fletcher Baker LLP and Wendy Parker of Gatehouse Chambers were instructed by Pantheon. Freshfields Bruckhaus Deringer LLP and Sophie Weber of One Essex Court were instructed by Co-Diagnostics.
By Ben Frost (Partner) & Rudi Ramdarshan (Senior Litigation Partner)
Additional Info
- News Author:Ben Frost | Rudi Ramdarshan
Rudi Ramdarshan
Senior Litigation Partner
Ben Frost
Litigation Partner