Choosing Jurisdiction In A Fractious World
Despite international tensions, London continues to be a popular hub for cross-border disputes.
Between April 2020 and March 2021, 50 percent of litigants in London’s Commercial Court1 were from outside the UK.2
Commercial parties wishing to resolve their differences in London can do so by inserting a clause in their contractual documentation nominating the Courts of England and Wales3 to hear any dispute arising out of the contractual relationship. It is also open to them to agree to submit their dispute for determination to the English Courts after it has arisen or to submit to the Courts’ jurisdiction after being served with an English Court’s claim form. Many litigants are content for their disputes to be tried in London, so most international cases proceed without a jurisdiction challenge.
Nevertheless the English Courts’ jurisdiction continues to be one of the most hotly litigated areas of civil procedure.
This is not surprising given that the successful outcome of a case for one of the parties can hinge on the venue where the case is to be heard. Without consensus between the prospective litigants, the choice of a venue is almost never open-ended after the dispute has arisen.
The Courts’ ability to deal with a dispute involving a foreign dimension will be circumscribed – for the English Courts to assume jurisdiction some connection between the dispute and England must exist. To answer what connection is sufficient invariably requires an intricate factual and legal analysis in each case. Prospective litigants, both claimants and defendants, should give a thorough consideration to the question of the English Courts’ jurisdiction before taking steps in any proceedings that involve facts with a cross-border dimension.
So what are the relevant principles of English civil procedure and case law for disputes litigated after 31 December 2020?
Service in England and Wales
English Courts will have jurisdiction over any defendant who is present in their geographical territory when the defendant is served with the English Courts’ claim form. This holds even where the presence is temporary, for example to visit the races or a football match. Additionally, individuals who are directors and have given a registered address in England may be served at that address, even when they are not physically present in England and regardless of whether the claim concerns the relevant company.
English companies and overseas companies with an establishment in the UK registered with the UK Registrar of Companies in accordance with Companies Act 2006 can be served at their registered address. Such overseas companies can be so served regardless of whether the claim concerns the overseas establishment or the company’s business activity in England. The civil procedure rules expand on the Companies Act and allow a claimant to effect valid service on an overseas company at any place of its business in England, even at a trade exhibition stand. Again, there is no requirement that the claim be related to the overseas company’s business in England.
Ordinarily a claimant will have four months to serve the claim on the defendant within England, which must be by one of the methods prescribed under the civil procedure rules.
However the English Courts can stay the proceedings, and normally will, if the defendant can show that there is another more appropriate forum to hear the dispute). Remember though: a defendant served with an English claim form can submit to the English Courts’ jurisdiction regardless of whether the English Courts would otherwise have jurisdiction over the defendant. Whether submission has occurred is evaluated objectively in all the circumstances of the case and it is not possible to challenge the jurisdiction subsequently. So a defendant mindful to challenge the English Courts’ jurisdiction, having been served with an English claim, must take great care not to take steps that could be construed as a submission to the jurisdiction.
Service outside of England and Wales
English Courts can and do exercise “long-arm” jurisdiction over defendants who are not present, and hence cannot be served, in England.
The general position, with few exceptions, is that a claimant will have to obtain permission from the Court before being able to serve the English claim outside of England. How the service is to be effected will depend on the country where the claim is to be served.
Great care must be taken by claimants to ensure that the service follows the correct process. Not following the required steps may invalidate the service and, in certain countries, can amount to a criminal offence.
There are some 21 jurisdictional “gateways”, which list the circumstances where the English Courts may grant permission to serve the claim overseas. These include claims against individuals domiciled in England, claims concerning English (and English law) trusts or property in England, claims to enforce foreign judgments and arbitral awards.
It is worth setting out three commonly relied on “gateways in more detail.
The first concerns contracts. The English Courts may exercise jurisdiction, and therefore grant permission to serve outside England and Wales, where the contract was substantially made in England, contains an English Courts jurisdiction clause, or is governed by English law. Contracts made through the defendant’s (although not the claimant’s) agent in England, and claims for a negative declaration that no contract exists, also fall within the English Courts’ jurisdictional remit. The English Courts’ may also exercise jurisdiction in claims where a contract was breached in England.
In disputes arising out of non-contractual obligations, the English Courts may exercise jurisdiction where the damage has been or will be sustained in England or where the damage results, or liability arises, from acts committed – or likely to be committed) – in England.
In cases involving multiple defendants the English Courts may grant permission to serve a defendant abroad, even if the case against the defendant does not fall into any of the categories set out above but where the defendant is a necessary and proper party to the claim against one or more of the other defendants in the litigation. In other words, the existence of just one “anchor defendant” amenable to the English Courts’ jurisdiction potentially extends a claimant’s reach over a wider pool of potential defendants. Given the potential for abuse of the necessary and proper party gateway, a claimant will have to satisfy the Court to a relatively high standard that the claim against the anchor defendant is not just a pretext to bring other defendants before the Court.
‘Forum (non) conveniens’
As alluded to above, in cases where a defendant is served in England, it will be open for the English Courts to stay the proceedings if the defendant can demonstrate that there is another more appropriate forum ( for example a court of another country) to hear the dispute. The English Courts will refuse the stay if the claimant can demonstrate that justice will not be done if the foreign court was to try the dispute.
Similarly, to obtain the Court’s permission to serve the claim outside the jurisdiction, a claimant must satisfy the Court that England is the appropriate forum. This means showing that in all the circumstances of the cases (having regard, among other factors, to the nature of dispute, availability of witnesses, their evidence, language and expense) England is the most closely connected forum to the dispute.
The claimant may still be able to obtain the Court’s permission, even if England is not the most closely connected forum to the dispute, if it can be shown that there is a real risk that justice will not be obtained in the foreign court by reason of incompetence or lack of independence or corruption.
Depending on one’s vantage point it is easy to criticise English Courts for having too much or too little jurisdictional reach. There is a basic principle, however, behind the complexity of the relevant rules and authorities. If the parties cannot agree where to try their dispute, the choice of forum cannot rest solely in the hands of the claimants.
1 This note focuses on rules about civil and commercial jurisdiction of the High Court of England and Wales. It does not deal with arbitration generally or the London Court of International Arbitration specifically.
2 Portland, Commercial Courts Report 2021.
3 For shorthand the note will refer to the Courts of England and Wales, and to the jurisdiction of England and Wales, as the English Courts and England.
Keith is Peters & Peters’ Head of International and one of the firm's key partners. He has frontline experience at the cutting edge of international fraud litigation, asset recovery and disputes with a focus on achieving the very best result for every client whatever the challenge. Keith specialises in international disputes and the location, freezing and recovery of misappropriated assets involving emergency relief procedures and the management of legal teams from many jurisdictions. His work often involves multi-jurisdictional actions in the USA, continental Europe and worldwide. He is widely recognised as one of the UK’s leading lawyers in civil fraud with a reputation for addressing and resolving the most intractable of disputes and crises faced by individuals and companies.
Vlad is a commercial litigator specialising in the field of complex corporate and financial fraud. He acts in the High Court and arbitral proceedings that also tend to engage criminal process and involve emergency without notice applications to seize property and assets. Vlad’s experience covers both obtaining and challenging freezing injunctions.
Much of Vlad’s work is international. In addition to UK and European clients, he has acted for individuals and entities from India, Kazakhstan, Nigeria, Russia, Ukraine and the United States.