Service out of the jurisdiction: Expansion of the gateways

A claimant wishing to bring proceedings in the English Courts against a defendant who is outside of the jurisdiction may need to satisfy the Court the claim falls within one of the ‘jurisdictional gateways’ in CPR Practice Direction 6B. With effect from 1 October 2022, many of the existing jurisdictional gateways have been widened and new gateways have been added, such that it is challenging to think of a claim that would not fall within them.

This article explains some of the new gateways and considers how this expansion is consistent with the wide view the Courts have taken when interpreting and applying the gateways. As the scope of the Courts’ territorial jurisdiction is now primarily controlled by the question of whether England is the proper place to bring the claim, parties to cross-border disputes seeking to resist the jurisdiction of the English Courts should focus their arguments on this issue as the main battleground.

Test for permission to serve out of the jurisdiction

At common law, the jurisdiction of the English Courts is based on valid service on the defendant. Where the defendant is outside the jurisdiction the claimant may need the Court’s permission to serve proceedings on the defendant (including on defendants in EU and Lugano states, post-Brexit). There are a number of situations where permission is not required, for example, where the parties have agreed a jurisdiction clause in favour of the English Courts. Where these do not apply and permission is required, the claimant must make an application to Court (usually a “paper” without notice application) and satisfy the Court pursuant to CPR 6.37 that:

1. the claim has reasonable prospects of success;
2. the claim satisfies a jurisdictional gateway in PD 6B; and
3. England and Wales is the proper place to bring the claim (often referred to as the forum conveniens). The Court will take into account matters relevant to convenience and expense, such as the availability of evidence and witnesses, the law governing the dispute and the place where the parties reside or carry on business among other factors.

The jurisdictional gateways are essentially a list of factors or circumstances which establish a connection between the dispute and England which make it potentially appropriate for the case to be heard by the English Courts. Following a review of the existing gateways by the Civil Procedure Rule Committee Service Sub-committee (the “Sub-committee”), significant changes were made to the gateways with effect from 1 October 2022. The report produced by the Sub-committee contains a helpful explanation of the reasons for their recommended changes, all of which have been incorporated in PD 6B. A brief explanation of some of the new and expanded gateways is set out below.

Expansion of the jurisdictional gateways – examples of the changes

1. The cause of action gateways have been amended to capture future acts which will give rise to a cause of action. For example, the contract gateway has been amended to apply to a breach of contract committed or likely to be committed in the jurisdiction. This is a helpful change as it will confer jurisdiction over claims for an injunction to prevent anticipated wrongful acts, an essential element of which occurs or will occur within the jurisdiction. For example, it could potentially be used to prevent threatened breaches of a confidentiality agreement.
2. There is a new gateway for negative declarations that a claimant is not liable. This applies where, if a corresponding claim were brought against the claimant, it would fall within certain of the other gateways. This mirrors the approach under the European jurisdiction regime where claims for negative declarations are commonplace.
3. There is a new gateway for service out of a contempt of court application. This will address the situation where, for example, a party wishes to serve out a contempt application on a director of a company which is subject to the jurisdiction of the English courts.
4. The changes have introduced new gateways for breach of trust or breach of fiduciary duty where the breach is committed, or likely to be committed, within the jurisdiction. This is to bring these types of claim in line with other gateways that are premised on events relevant to the cause of action, or the claim, occurring in the jurisdiction.
5. The tort, constructive trust, breach of confidence and breach of fiduciary duty gateways have been expanded to include where such claims are governed by English law. This approach already applied to certain gateways, such as breach of contract claims where the contract is governed by English law, and the Sub-committee considered that a similar rationale applied to all claims governed by English law. The Sub-committee rejected the concern that expanding the role of applicable law beyond contract and trusts, where there is likely to be an express choice of law clause, to claims where there is likely to be more dispute as to the applicable law, risks a proliferation of disputes at the jurisdiction stage.
6. The gateway for contracts made within the jurisdiction has been expanded to include contracts concluded by the acceptance of an offer, which offer was received within the jurisdiction. This is to address the criticism that the existing gateway is rather arbitrary. As noted by the Sub-committee, where interactions leading to the conclusion of a contract take place between parties in different jurisdictions, it can be a matter of chance whether the final, as opposed to an essential, step in the formation of the contract occurs within the jurisdiction.
7. There is a new gateway for service out of Norwich Pharmacal and Bankers’ Trust orders. This permits service out of applications against non-parties for the provision of information regarding the true identity of a defendant or potential defendant and/or what has become of the claimant’s property, where the information is required for the purpose of proceedings which have been or are to be brought in England. Prior to the introduction of this gateway, the position regarding service of such information orders on banks, for example, outside of the jurisdiction was uncertain and the process could be difficult. This new gateway will assist in countering the growing problem of international digital and crypto fraud. It will be a useful tool for claimants seeking to trace the proceeds of fraud and obtain information from a bank or exchange which is outside of the jurisdiction, to enable the claimant to bring a claim.
8. There are new gateways for claims against third parties for unlawfully causing or assisting in breaches of contract, trust, fiduciary duty or confidence where there is sufficient connection to the jurisdiction.

Courts’ approach to the gateways

This expansion of the gateways is consistent with the wide view the English Courts have taken when interpreting the gateways and the Courts’ reliance on forum conveniens arguments as a ‘safety valve’ when determining which cases should be heard in England. The Courts’ approach is illustrated by two cases which considered the tort gateway of damages sustained within the jurisdiction (6BPD 3.1(9)(a)).

In Cairo v Brownlie [2021] UKSC 45, covered in our previous post, the majority of the Supreme Court held that damage from a car accident that had occurred in Egypt was sustained in England. This was on the basis that “actionable harm, direct or indirect, caused by the wrongful act alleged” had taken place in England in the form of pain and suffering, loss of amenity and the financial consequences of the death of the claimant’s husband. The context of this decision was a personal injury claim, and the majority judgment indicated that the courts may apply more scrutiny to pure economic loss cases so that remote effects do not become sufficient to establish jurisdiction.

However, in the recent case of Abu Dhabi Commercial Bank v Shetty & Ors [2022] EWHC 529 (Comm), covered in our previous post, the High Court took a similarly wide approach in an economic loss case. The claimant bank had never transferred funds to or from England or become liable to do so, but the court found indirect actionable harm in England on the basis that certain syndicated loan agreements had become effective only when solicitors had received all the executed counterparts at their London office and then dated them. The bank had suffered harm in London because it was at that point it became bound by the funding obligations in the agreements.

Key takeaways

The widening of the jurisdictional gateways, together with the Courts’ broad approach to them, means that it is easier for claimants to identify an applicable gateway. However, although this part of the test for permission to serve out will be satisfied more easily, this does not necessarily mean there will be a sudden increase in international claims being heard by the English Courts. Claimants will still need to demonstrate the merits of the claim and that England is the forum conveniens and the latter point in particular will often be hard fought by defendants. For that reason, the changes to the gateways may have comparatively little impact on the process, time or cost of applying for permission to serve out; claimants will still need to serve substantial evidence to satisfy the merits and forum conveniens requirements.

However, the focus is likely to change. Forum conveniens arguments will likely be a main battleground for jurisdiction challenges and so play a key role in delineating the territorial jurisdiction of the English Courts. This is particularly the case post-Brexit given that forum conveniens arguments are now also applicable to defendants served as of right in the jurisdiction (for example, as an anchor defendant under certain of the gateways). The English courts are not required to accept jurisdiction over a defendant domiciled here (which previously may have encouraged them to accept jurisdiction over co-defendants), but can decide which court is the most appropriate to hear the claims against all of the defendants.

As noted by the Sub-committee in its report, there have been proposals for even wider reform of the gateways: for example, for the gateways to be abolished and territorial jurisdiction determined solely by forum coveniens arguments; or, even more radically, that the requirement for permission to serve out should be abolished entirely. It remains to be seen how the service out regime will be developed in future.