Factual and Procedural Background
This opinion concerns an application for permission to serve a claim form on the Defendant outside the jurisdiction. The original claim form was issued in November 2006 and purportedly served on the Defendant at his residence. A judgment in May 2007 found that service was improper and that the Court lacked jurisdiction because the Defendant was not domiciled in England and Wales. The Court refused to dispense with service, extend time for service, or grant permission to appeal.
Subsequent procedural developments included a scheduled hearing for June 2007 that was vacated when no application to serve out of jurisdiction was made. The Claimant later changed solicitors and sought retrospective extensions for service. Permission to serve the amended claim form out of jurisdiction was sought and granted with extensions on an ex parte basis. The claim concerns a business dispute involving alleged partnership interests in a major aluminium company and related entities.
Legal Issues Presented
- Whether the Claimant has a reasonable prospect of success on the claim.
- Whether the Claimant has established a good arguable case that the claim falls within one or more categories permitting service out of the jurisdiction under CPR 6.20.
- Whether the alleged agreement was made, and if so, whether it was made in England, governed by English law, and subject to English jurisdiction.
- The appropriate approach where there is conflicting evidence on jurisdictional facts and the application of the "good arguable case" test and the Canada Trust gloss.
- Whether England is the proper forum for trial in light of the doctrine of forum conveniens, considering the risks to the Claimant of trial in Russia.
Arguments of the Parties
Appellant's Arguments
- The Claimant asserts he was a partner of the Defendant in an aluminium business and had a beneficial interest in shares held on trust by the Defendant.
- The Claimant contends the agreement was made in England, governed by English law, and disputes would be resolved in English courts.
- The Claimant relies on documentary and testimonial evidence to establish a good arguable case for jurisdiction and merits.
- The Claimant argues that, given the conflicting evidence, the court should not require him to show that his case is markedly better than the Defendant’s, but only that he has a good arguable case.
- The Claimant submits that trial in Russia is not a viable option due to risks of assassination, trumped-up criminal charges, and lack of fair trial.
Defendant's Arguments
- The Defendant denies any partnership with the Claimant and contends the payment made was to buy off extortion demands.
- The Defendant disputes the existence of the alleged trust and the oral agreement on English law and jurisdiction.
- The Defendant submits that the Claimant’s case does not satisfy the Canada Trust gloss requiring the Claimant to have the much better of the argument on jurisdictional facts.
- The Defendant denies that the Claimant faces greater risk in Russia than elsewhere and suggests any criminal charges would be well-founded.
- The Defendant relies on the Russian legal system’s adequacy and denies improper interference or unfairness in the arbitrazh courts.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Seaconsar Ltd v Bank Markasi (1994) 1 A.C. 438 |
Test for reasonable prospect of success and good arguable case on jurisdiction. |
Used to confirm the threshold for permission to serve out of jurisdiction is low but requires more than arguability. |
| Bas Capital Funding Corp & Ors v Mediaco Ltd [2004] 1 Lloyd's LR 253 |
Interpretation of good arguable case and realistic prospect of success. |
Supported the approach to the threshold for permission to serve out. |
| De Molestina v Ponton [2002] 1 Lloyd's Rep 271 |
Definition of realistic prospect of success. |
Referenced to clarify the standard for permission to serve out. |
| ABCI v Banque Franco-Tunisienne [2003] 2 Lloyd's Rep 146 |
Meaning of "good" in "good arguable case". |
Clarified that "good" adds weight beyond the lowest threshold of arguability. |
| Canada Trust v Stolzenberg (No 2) [1998] 1 WLR 547 |
Application of good arguable case test and "Canada Trust gloss". |
Explained that the court must be as satisfied as possible without a full trial and that one side must have a much better argument. |
| Bols Distilleries BV v Superior Yacht Services Ltd [2007] 1 WLR 12 |
Application of good arguable case in jurisdiction agreements under Judgments Regulation. |
Confirmed the necessity of showing a much better argument to establish jurisdiction based on an agreement. |
| WPP Holdings Italy Srl v Benatti [2007] 1 WLR 2316 |
Jurisdiction based on exclusive jurisdiction clause and good arguable case. |
Confirmed flexibility in applying good arguable case and left open the approach when the court cannot decide which side has the better argument. |
| Konkola Copper Mines v Coromin [2006] 1 Lloyd's Rep 410 |
Approach to jurisdiction issues intertwined with merits and application of Canada Trust gloss. |
Discussed the difficulty of jurisdiction decisions where the issue is also on the merits and endorsed a discretionary approach. |
| Stack v Dowden [2007] UKHL 17 |
Principles on trusts founded on common intention. |
Cited to support the legal basis for the trust claim arising from the agreement. |
| The Spiliada [1987] AC 460 |
Doctrine of forum conveniens. |
Applied to determine the proper forum for trial balancing interests of parties and ends of justice. |
| Connelly v RTZ Corp [1998] AC 854 |
Forum conveniens: substantial justice may not be done in natural forum. |
Confirmed that inability to obtain substantial justice in the natural forum may justify trial elsewhere. |
| Purcell v Khayat (1987) |
Legitimate personal or juridical advantage in forum choice. |
Accepted that avoidance of unfair trial or conviction in foreign jurisdiction may be relevant in forum decision. |
| Gusinsky v Russia (ECHR) |
Misuse of criminal proceedings to intimidate as part of commercial strategy. |
Referenced as an example of abuse of criminal process in Russia. |
| Films by Jove, Inc v Berov [2003, 2004] |
Judicial interference and state influence in Russian courts. |
Used to illustrate concerns about improper state influence on Russian judicial decisions. |
Court's Reasoning and Analysis
The Court first considered whether the Claimant had a reasonable prospect of success on the merits and concluded affirmatively, finding the claim detailed, plausible, and supported by documentary evidence. The Court acknowledged the existence of serious factual disputes, including whether the Defendant was a partner or whether the payment was extortion money, but found the Claimant had the better side of the argument on the material before it.
Regarding permission to serve out of jurisdiction, the Court analysed the "good arguable case" test and the Canada Trust gloss, concluding that where there is conflicting credible evidence, the Court should usually be satisfied that the Claimant's case is better or much better than the Defendant's before granting permission. This is because the Court exercises an exorbitant jurisdiction when permitting service out and must avoid compelling parties to litigate where jurisdiction is doubtful.
The Court then examined whether the Claimant had a good arguable case that the agreement was made in England, governed by English law, and subject to English jurisdiction. It found that the Claimant had a good arguable case on the making of the agreement but not on the oral agreement as to English law and jurisdiction, where the Defendant had the better side of the argument.
In considering forum conveniens, the Court acknowledged that the natural forum was Russia given the subject matter and location of the business interests. However, the Court accepted the Claimant's evidence of well-founded fears of assassination, arrest on trumped-up charges, and lack of a fair trial in Russia. It reviewed extensive expert evidence on the Russian legal system, highlighting concerns about corruption, political interference, and state influence in the arbitrazh courts.
Balancing these factors, the Court concluded that substantial justice might not be done in Russia and that England was the proper forum for trial in the interests of both parties and the ends of justice. The Court also noted the parties’ connections to England and that the parties met and made the agreement in London.
Holding and Implications
The Court granted permission for the Claimant to serve the claim form on the Defendant outside the jurisdiction.
Holding: Permission to serve out of jurisdiction is granted.
Implications: This decision allows the Claimant to proceed with the claim in England despite the natural forum being Russia, due to the Claimant’s well-founded fears of unfair treatment and personal risk in the Russian courts. The ruling does not set new precedent but applies established principles on jurisdiction, service out of jurisdiction, and forum conveniens to a complex factual matrix involving allegations of serious misconduct and risks to the Claimant’s safety and fair trial rights.