Court considers evidentiary standard for service out of the jurisdiction where permission not required

In Pantheon International Advisors Ltd v Co-Diagnostics, Inc [2023] EWHC 1984 (KB), the High Court considered the evidentiary standard a party must satisfy when seeking to rely on CPR 6.33(2B)(b) as the basis for serving a claim form out of the jurisdiction. This gateway for service, introduced in the CPR post-Brexit, permits service of a claim form out of the jurisdiction without the court’s permission where the claim falls within a valid jurisdiction agreement in favour of the English courts. A claimant must demonstrate there is a good arguable case that the contract containing the jurisdiction clause exists, that the clause is valid and binding and the dispute falls within the scope of the jurisdiction clause.

Background

In 2016, the Claimant, an English company, entered into an agreement with the Defendant, a Utah company, for the Claimant to assist the Defendant with raising capital on the UK equity markets (the 2016 Agreement). There was a subsequent agreement in 2018 between the parties which was signed only by the Claimant (the 2018 Agreement). Both agreements were governed by English law and provided for the exclusive jurisdiction of the English courts.

In June 2021, the Claimant issued English proceedings for breach of contract relating to unpaid fees under the 2018 Agreement and a quantum meruit claim (for a reasonable sum in respect of services supplied to the Defendant). In September 2021, the Claimant purported to serve the claim form on the Defendant in the USA without seeking the courts’ permission, relying on CPR 6.33(2B)(b).

The Defendant had issued separate proceedings in Utah in May 2021 and entered a default judgment against the Claimant in November 2021. In March 2022, the Defendant made an application to the English court seeking a declaration that the English court had no jurisdiction and to set aside the Claim Form and Amended Particulars of Claim, in addition to setting aside their service. The Claimant made a cross-application to re-amend its Amended Particulars of Claim to additionally plead reliance upon the 2016 Contract. In the alternative, the Claimant sought an order for retrospective permission to serve out of the jurisdiction, or an order dispensing with service. One of the issues for the judge to determine was therefore whether CPR 6.33(2B)(b) was satisfied on the facts.

Parties’ Arguments

The Claimant argued that the English court had jurisdiction pursuant to the 2018 Agreement (which it claimed superseded the 2016 Agreement), and services provided to the Defendant under the 2018 Contract had not been paid for.

The Defendant argued that the 2018 Agreement had not been entered into and so there was no enforceable English jurisdiction clause (it accepted the 2016 Agreement was binding but argued it was not relevant to the claim). 

Decision

The Court confirmed that the burden of proof was on the Claimant to establish jurisdiction under CPR 6.33(2B)(b). The relevant question is whether there is a good arguable case that the contract containing the jurisdiction clause exists, that the clause is valid and binding and the dispute falls within the scope of the jurisdiction clause. This requires the court to consider the principles of the three-limbs of the good arguable case test (as recently restated by the Supreme Court in Brownlie v Fourt Seasons Holdings Inc [2017] UKSC 80, with further commentary from the Court of Appeal in Kaefer Aislamientod v AMS Drilling Mexico [2019] EWCA Civ 10):

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 the application of the 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; and
3. if a reliable assessment of the evidence cannot be made at this stage of the proceedings, there will be a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.

Applying these to the facts, the Court held that the Claimant had a good arguable case that the 2018 Contract was a binding contract containing a valid English jurisdiction agreement covering the subject matter of the dispute. As a result, the Claimant had correctly served the claim out of the jurisdiction without the Court’s permission.

Although the Claimant did not pursue its quantum meruit claim, the judge commented obiter that a quantum meruit claim in restitution (i.e. a non-contractual claim) was outside the scope of the terms of the 2018 Agreement and therefore could not fall under CPR 6.33(2B)(b). The judge suggested that such a claim may fall under CPR 6.33(2B)(c) instead (claims ‘in respect of a contract’ containing a jurisdiction clause) which was introduced into the CPR after service of the claim in this case but before the application hearing. Therefore, at the time of service, the Claimant’s quantum meruit claim required the Court’s permission to be validly served. However, this did not affect the service of the claim in contract which was validly served out of the jurisdiction.

The judge also noted that there was a judicial question mark over whether CPR 6.33(2B)(b) also requires a merits threshold test, as would be the case where court permission to serve out was being sought.

Key takeaways

This decision provides helpful guidance on the evidentiary standard when a party is seeking to rely on an English jurisdiction clause as the grounds for serving a claim out of the jurisdiction. It illustrates how the courts will seek to uphold a choice of jurisdiction clause.

The decision also highlights the importance of identifying and relying on the appropriate gateway for service out of the jurisdiction in claims with multiple causes of action (in this case contract and restitution). Claimants should carefully consider if a claim falls under CPR 6.33(2B)(b), CPR 6.33(2B)(c), or alternatively requires the court’s permission to serve out of the jurisdiction.

With thanks to Swaathi Balajawahar for her assistance in preparing this post.