Factual and Procedural Background
This appeal concerned a Commercial Court claim by Company A against Company B for sums said to be due under a contract containing an English jurisdiction clause. Company A issued the claim in August 2019, served it in India through Hague Convention procedures in December 2019, and Company B did not acknowledge service or file a defence; an automatic stay then arose in July 2020, and Company A later sought to lift that stay in July 2024 while Company B sought strike-out for abuse of process. [Para 26][Para 27][Para 28]
The underlying contract, dated 1 February 2017, concerned software and related services for handset production and launch, with minimum royalties rising from $4m to just under $6m over the five-year term. Company A said that, apart from one $1m payment, Company B did not pay the invoices rendered from July 2018 onward, and the product was not the commercial success Company B had hoped for. [Para 31][Para 33]
After initial pre-action correspondence in 2019, service was treated as valid in December 2019/March 2020, but no steps were taken to progress the case for roughly four years. Company A revived the matter in July 2024, Company B later instructed English solicitors, and the dispute over strike-out, relief from sanctions, interest, costs, and amendment was then heard before the High Court judge and on this appeal. [Para 34][Para 37][Para 40][Para 42][Para 48][Para 54][Para 65][Para 69][Para 71][Para 72][Para 73]
Legal Issues Presented
- Whether Company A’s decision to leave the claim dormant for about four years amounted to a Grovit abuse of process under CPR 3.4(2)(b). [Para 28][Para 148]
- Whether, if abuse was established, the court was required to strike out the claim unless Company A showed “compelling reasons” not to do so, or instead had to apply the CPR overriding objective and proportionality. [Para 96][Para 98][Para 150][Para 151]
- Whether the automatic stay under CPR 15.11 should be lifted, and what consequences should follow as to interest and costs. [Para 110][Para 112][Para 145][Para 148]
Arguments of the Parties
Appellant's Arguments
- The judge applied the wrong legal test because, once Grovit abuse is found, the claim should normally be struck out unless compelling reasons exist to the contrary. [Para 148][Para 150][Para 151]
- The judge understated the seriousness of the abuse and failed properly to weigh the length of the delay, the absence of good reasons, and the impact on the overriding objective. [Para 152][Para 155][Para 156]
- The judge was wrong about prejudice, especially the loss of witness evidence, accounting consequences, and the interest position, and wrongly treated some matters as irrelevant or gave weight to Company B’s silence. [Para 157][Para 159]
- The judge was therefore wrong to refuse strike-out and wrong to lift the automatic stay. [Para 148][Para 149][Para 159]
Respondent's Arguments
- The correct approach was the two-stage abuse/proportionality analysis, not a free-standing “compelling reasons” test. [Para 150][Para 161][Para 165]
- The judge was entitled to assess all circumstances, including the seriousness of the abuse, the availability of lesser sanctions, and the impact on both parties and the court. [Para 161][Para 167]
- Company B’s criticisms were largely challenges to the judge’s evaluative and discretionary assessment rather than errors of law. [Para 165][Para 167]
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Grovit v Doctor |
Deliberately commencing or maintaining litigation with no intention of bringing it to a conclusion can be an abuse of process. |
The Court treated Grovit as the core authority on this species of abuse, but held that strike-out is not automatic and depends on the overall justice of the case. [Para 76][Para 204][Para 205][Para 206] |
| Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd |
Wholesale disregard of the rules is an abuse of process, separate from Birkett v James. |
The Court relied on it as part of the background to abuse-of-process strike-out, but rejected the suggestion that it created a rigid strike-out rule. [Para 76][Para 213][Para 214] |
| Board of Governors of the National Heart and Chest Hospital v Chettle |
Was argued to support a “compelling reasons” requirement after abuse is shown. |
The Court held that the “compelling reasons” language in Chettle was not a free-standing rule of law. [Para 76][Para 96][Para 210][Para 212] |
| Asiansky Television plc v Bayer Rosin |
The CPR provide flexible remedies; striking out is not the only response, and the court must consider the broader administration of justice. |
The Court used it to support a proportionality-based approach rather than a siloed rule for Grovit abuse. [Para 76][Para 230][Para 231][Para 237][Para 238] |
| Société Generale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS |
Part of the judge’s surveyed body of abuse-of-process authorities. |
No separate proposition from this case was identified in the final reasoning; it was included in the judge’s review of the authorities. [Para 76] |
| Alibrahim v Asturion Fondation |
Abuse-of-process analysis proceeds in two stages: abuse first, then the discretionary response. |
The Court adopted that structure, but held that the second stage is governed by the CPR overriding objective and proportionality. [Para 76][Para 239][Para 240][Para 246][Para 257] |
| Alfozan v Quastel Midgen LLP |
Part of the judge’s reviewed caselaw on abuse and strike-out. |
No separate principle was extracted from it in the Court of Appeal’s reasoning. [Para 76] |
| Morgan Sindall Construction and Infrastructure Ltd v Capita Property and Infrastructure (Structures) Ltd |
Part of the judge’s reviewed caselaw on abuse and strike-out. |
No separate principle was extracted from it in the Court of Appeal’s reasoning. [Para 76] |
| Watford Control Instruments Ltd v Brown |
Took the view that Chettle required compelling reasons to avoid strike-out after abuse. |
The Court respectfully disagreed and declined to follow that approach. [Para 76][Para 244][Para 245] |
| Lloyd v Hayward |
Rejected Watford and endorsed a broad CPR-based discretion. |
The Court agreed with Lloyd and treated its reasoning as persuasive. [Para 76][Para 96][Para 246][Para 247][Para 251] |
| Denton v TH White Ltd |
Criteria governing relief from sanctions / lifting a stay. |
The Court noted the judge’s use of Denton for CPR 15.11 and did not disturb it. [Para 110][Para 112] |
| Biguzzi v Rank Leisure Plc |
Under the CPR, courts should consider the full range of case-management powers and the intrinsic justice of the case. |
The Court relied on it as support for a flexible, proportional response rather than automatic strike-out. [Para 223][Para 224][Para 225][Para 226][Para 227][Para 229][Para 230] |
| UCB Corporate Services Ltd v Halifax (SW) Ltd |
Referred to in Purdy as consistent with the CPR’s flexible approach. |
The Court treated it as part of the line of authority confirming a broad discretionary response. [Para 226][Para 227] |
| Re Vitara Foods |
Read Chettle as suggesting a “compelling reasons” burden. |
The Court declined to treat that reading as authoritative. [Para 217] |
| Purdy v Cambran |
The CPR require a broad, justice-based judgment; earlier rigid structures are no longer appropriate. |
The Court relied on Purdy to confirm that strike-out decisions should be made under the overriding objective, not by old-rules formalism. [Para 219][Para 221][Para 222][Para 225][Para 226][Para 227][Para 228] |
| Quaradeghini v Mishcon de Reya |
Example of serious abuse where strike-out is not necessarily automatic. |
The Court used it to show that even grave abuse does not justify a categorical strike-out rule. [Para 250][Para 251] |
| SNV & Ors v Al Khayyat & Ors |
Modern CPR case-management is inconsistent with endorsing abuse of process. |
The Court said the passage did not alter the legal test. [Para 252] |
| Pliego v Astor Asset Management 3 Ltd |
For serious abuse, the response depends on all circumstances and must be proportionate. |
The Court relied on it by analogy to reject a default “very good reason” or “compelling reasons” rule for Grovit abuse. [Para 262][Para 263][Para 264][Para 265][Para 266][Para 267][Para 268][Para 269][Para 270][Para 271] |
| Birkett v James |
Concerned dismissal for want of prosecution and the limitation period. |
The Court noted that Grovit abuse is a separate ground and is not constrained by Birkett v James in the same way. [Para 199][Para 204][Para 205][Para 213][Para 214] |
Court's Reasoning and Analysis
The Court held that the governing question was not whether Company A could show “compelling reasons” against strike-out, but whether, under the CPR and the overriding objective, the deliberate decision to pause the claim for the relevant period amounted to abuse and, if so, whether strike-out was a proportionate response. It endorsed the judge’s two-stage analysis: first, whether there was abusive conduct; second, how the court should respond to it. [Para 98][Para 107][Para 108][Para 257]
On the law, the Court read Grovit, Chettle, and the later CPR authorities as showing that abuse is serious but that the remedy is discretionary and must be approached in the round. It rejected the idea that Chettle created a mandatory “compelling reasons” threshold, and preferred the flexible, proportional approach reflected in Purdy, Asiansky, Asturion, Lloyd, and Pliego. [Para 205][Para 211][Para 212][Para 222][Para 226][Para 227][Para 230][Para 238][Para 239][Para 245][Para 246][Para 257][Para 268][Para 271]
Applying that approach, the Court accepted that there was an objectively strong reason for the initial pause from March to August 2020 because Hague Convention service was not then possible, but held that the justification fell away thereafter. The judge was entitled to find that the later four-year stasis was based on only general and impressionistic concerns about enforcement, not on a sufficiently strong objective reason for leaving the claim dormant. [Para 116][Para 117][Para 118]
The Court also accepted the judge’s proportionality assessment. It held that the delay caused no specific identifiable prejudice apart from interest, that a fair trial remained possible, and that alternative measures—especially interest and costs conditions—were available. By contrast, strike-out would have deprived Company A of arguable claims worth more than $6 million. [Para 123][Para 126][Para 127][Para 128][Para 139][Para 141][Para 145]
On the detailed grounds of prejudice, the Court upheld the judge’s findings about witnesses, accounting provisions, termination notices, and interest. It also held that Company B’s own non-engagement was a relevant circumstance at the sanction stage, even though prejudice is not itself an essential element of the abuse inquiry. [Para 284][Para 285][Para 289][Para 291][Para 293][Para 297][Para 299]
Holding and Implications
APPEAL DISMISSED. The Court of Appeal upheld the refusal to strike out, upheld the lifting of the automatic stay, and left in place the judge’s interest and costs conditions. [Para 306][Para 307][Para 308][Para 310][Para 312][Para 145][Para 146]
The direct effect is that Company A’s claim may proceed, subject to the conditions already imposed; the broader implication is that Grovit abuse remains serious, but strike-out is not automatic and must be tested against the CPR overriding objective and proportionality. [Para 141][Para 146][Para 257][Para 271][Para 303]