The case of Iranian Offshore Engineering And Construction Company v. Dean Investment Holdings SA & Ors ([2018] EWHC 2759 (Comm)) presents a significant examination of the application of English conflict of laws, specifically Rule 25(2) as outlined in Dicey, Morris & Collins's "The Conflict of Laws". This commentary delves into the High Court's judgment delivered by Mr. Justice Andrew Baker, focusing on the pivotal decision to uphold the default application of English law in the absence of proven foreign law, despite the claims being rooted in Iranian jurisdiction.

The High Court was tasked with determining whether the defendants could contest the application of English law by default under Rule 25(2) of the conflict of laws. The plaintiff, Iranian Offshore Engineering, claimed that its actions were subject to Iranian law due to the nature of the alleged fraud and fiduciary breaches occurring within Iran and the UAE. However, the plaintiff did not provide expert evidence or plead the principles of Iranian law governing its claims. The defendants sought to argue that Rule 25(2) should not apply, necessitating the plaintiff to prove Iranian law to sustain its claims. Justice Baker ruled in favor of the plaintiff, affirming that in the absence of a proved foreign law, English law remains the default, and the defendants could not challenge this at trial based on the pleadings presented.

Precedents Cited

The judgment extensively references Rule 25(2) from Dicey, Morris & Collins's authoritative text on conflict of laws. Key cases include:

• Bumper Development Corp. v Commissioner of Police of the Metropolis [1991]: Affirmed the application of Rule 25(2).
• OPO v MLA [2014] and Brownlie v Four Seasons Holdings Inc [2015]: These cases discussed the necessity of pleading foreign law when applicable, though their reversals by the Supreme Court limit their binding authority.
• Belhaj et al. v Straw et al. [2013]: Highlighted the importance of pleading foreign law, but was deemed a highly unusual case with limited applicability.
• Global Multimedia International Ltd v Ara Media Services et al. [2006]: Criticized for not pleading foreign law, though its relevance was contested.

Justice Baker critically analyzed these precedents, distinguishing the present case from the unusual circumstances of Belhaj and rejecting the generalization that claimants must always plead foreign law.

Legal Reasoning

Justice Baker's reasoning centered on the interpretation of Rule 25(2), emphasizing that it operates as a default mechanism whereby English law applies unless foreign law is both pleaded and proved. He clarified that claimants are not inherently required to plead foreign law unless their pleadings implicitly necessitate it. In this case, since the plaintiff's claims were viable under English law without referencing Iranian law, and the defendants did not plead the inappropriateness of Rule 25(2) substantively, English law remained applicable.

The judge underscored that for a defendant to successfully argue against the default application of English law, they must provide specific reasons related to the case that render the application of English law inappropriate. Mere assertions without substantive backing do not suffice. Furthermore, procedural avenues for amending pleadings or introducing foreign law arguments were acknowledged but deemed unlikely to alter the judgment at this stage.

Impact

This judgment reinforces the certainty and predictability of applying English law as the default in commercial disputes unless there is clear and compelling evidence to the contrary. It delineates the boundaries within which parties must operate when invoking foreign law, emphasizing the importance of timely and substantive pleadings. Future cases involving foreign jurisdictions can rely on this precedent to understand the limitations and requirements for challenging the default application of English law.

Additionally, the judgment clarifies confusion arising from previous cases like Belhaj and Global Multimedia, establishing that those cases do not broadly dictate that foreign law must always be pleaded. This clarification aids practitioners in better navigating conflict of laws issues, ensuring that pleadings are appropriately structured to assert or challenge relevant legal frameworks.

• Rule 25(2) of the Conflict of Laws: A procedural rule stating that if foreign law is relevant to a case, it must be clearly stated and proven with evidence. If not, English law applies by default.
• Presumption or Evidential Assumption: The idea that English law is assumed to govern the case unless there is sufficient evidence to apply a foreign law.
• Governing Law: The legal system that is applied to resolve the disputes in a case.
• Plead and Prove: The obligation of a party to formally declare and provide evidence for the facts and laws they rely upon in their legal arguments.
• Case Management: The court's process of organizing and controlling the progression of a case to ensure an efficient and just resolution.

The High Court's decision in Iranian Offshore Engineering And Construction Company v. Dean Investment Holdings SA & Ors underscores the fundamental principle that English law serves as the default governing law in the absence of a proven foreign legal framework. By affirming Rule 25(2), Justice Baker has provided clarity on the responsibilities of parties to plead foreign law when it is relevant to their claims or defenses. This judgment not only reinforces procedural diligence but also ensures that the application of laws remains consistent and predictable. Legal practitioners should heed this ruling by meticulously assessing the necessity of invoking foreign law in their cases and ensuring that any such references are substantiated with appropriate evidence and pleadings. Ultimately, this decision contributes to the broader legal landscape by delineating the scope and application of conflict of laws rules within English courts.