30
May
22
Articles, Travel & Cross Border Claims
The Weekly Roundup: The Procedural Edition

As we look forward to a four day weekend, with the concomitant three day working week it brings, the team at 1CL have been getting stuck in to some procedural questions; the burden of proof in cases involving allegations of invalid service, the enforcement of foreign arbitral awards, and how long litigants are having to wait until their cases are tried. Meanwhile, on 24th May the Lord Chancellor announced that the Court Funds Office special and basic account rates have increased, from 29th April 2022, to a dizzying 0.645% and 0.323% respectively.

 

Burden of Proof in Service Cases: Camberley Group & Ors v Foster & Ors [2022] EWHC 1309 (QB)

Service on individuals out of the jurisdiction is not without its issues. Particularly, if an individual does not predominantly live in England & Wales, greater care as to how to effect service properly is required. Recently, in Camberley Group & Ors v Foster & Ors [2022] EWHC 1309 (QB), the High Court was tasked with the question of whether service had been validly effected on a party who predominantly resided in France.

The facts

The Claimants were a group of companies involved in manufacturing plastic and rubber products. At all material times, the First Defendant was employed as the Managing Director of the Second and Third Claimants, the Second Defendant was the General Manager of the Third Claimant, and the Third Defendant (who was married to the Second Defendant) was employed by the Third Claimant. The Claimants pleaded a number of causes of action against the Defendants, which, for the purposes of this article, are not of relevance.

The Claimants made an application for specific disclosure, pursuant to CPR 31.12, against all three Defendants, and further applications for non-party disclosure pursuant to CPR 31.17 against Mr Foster and CJ Carter Limited. Following the conclusion of a full day of argument, the Claimants and Defendants were able to reach an agreement with regards to specific disclosure (apart from the question of costs). Notwithstanding that, the Claimants’ applications for non-party disclosure against Mr Foster and CJ Carter Limited remained live.

In terms of the application against Mr Foster, he was the father of the First Defendant. The Claimants alleged that he assisted in facilitating the plans of the First and Second Defendant to start their new business. Prior to making the index application, the Claimants made a request of Mr Foster to provide certain documents to them. They later warned Mr Foster that they would make the index application compelling him to hand the documents over if they were not provided. When Mr Foster did not respond, the index application was made, and was sent to Mr Foster at an address in Kettering and by email. Mr Foster again did not respond, nor did he acknowledge receipt of the application.

When the matter came before Richard Hermer QC in the High Court, he noted that a fundamental problem with the application in respect of Mr Foster was whether Mr Foster was properly served with it in the first place, as his usual residence was not in England & Wales, however was in France. It is notable that on 2nd March 2022, prior to the application, the First Defendant’s solicitors had informed the Claimants’ solicitors that Mr Foster lived predominantly in France. The Judge found that this correspondence should have placed the Claimants’ solicitors on notice that Mr Foster was potentially usually a resident outside of England & Wales and/or that the address they had for Mr Foster was not his last known address. Despite Mr Foster’s postal address in Kettering being used on some documentation before the Court, and despite his email address being shared with his son, that did not demonstrate that he was usually resident in England when seen in the light of the information that the Claimants possessed since early March, namely that he lived in France most of the time. It was noted that the Claimants had taken no steps to ascertain the position. The Judge rejected the argument that the burden of proving service did not rest on the party serving the documents. Consequently, the Judge did not consider the Claimants had shown good service on Mr Foster and the application against him was dismissed without the need to consider the substantive merits.

Conclusion

This case emphasizes again that the burden of proof in respect of service does rest on the party serving the documents. It is timely reminder that information revealing that a party may not live in the jurisdiction should not be ignored, as to do so is a costly exercise.

About the author

Ranked by the Legal 500 2021 and 2022 as a Rising Star, Dominique Smith was called in 2016 and has a busy practice in travel law. She undertakes work for both Claimants and Defendants in package travel claims, contractual disputes, and other related claims. Dominique has a particular interest in cross-border clinical negligence claims and regularly appears in the Coroners’ Courts.

 

Privy Council rules on enforcement of foreign arbitral awards: Gol Linhas v Global Opportunities Partners [2022] UKPC 21

The Privy Council recently gave judgment in Gol Linhas Aereas SA v MatlinPatterson Global Opportunities Partners [2022] UKPC 21, an appeal on whether the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (it usually goes by the snappier title of “the New York Convention”) required enforcement in the Cayman Islands of a Brazilian arbitral award. The judgment matters for parties in England & Wales because the UK is a party to the New York Convention, and because it was common ground that the law of the Cayman Islands on the issues was the same as English law.

Facts

The parties to the dispute were a Cayman Islands private equity partnership, and a Brazilian airline group. The dispute originally submitted to arbitration arose under a share purchase agreement from 2007. That agreement was governed by Brazilian law. It was alleged by the airline that it had been fraudulently misled as to the working capital available, and that a price adjustment under the contract was thus warranted.

Procedural History

The arbitral tribunal ruled in favour of the airline, which the partnership then sought to set aside in a São Paolo court, and then by appeal to various superior Brazilian courts. The airline then applied to enforce its award against the partnership in the Cayman Islands under Cayman legislation which implemented the New York Convention. At first instance in the Cayman Islands the application was granted.

The Appeal

The partnership appealed, and the appeal ultimately came before the Privy Council. The issues were:

  1. Whether the partnership was precluded by issue estoppel from resisting enforcement on the ground that they had not agreed to arbitration;
  2. Whether the partnership was denied a proper opportunity to present its case, in circumstances where the tribunal had not heard submissions from the parties on a point of law which it decided;
  3. Whether the subject matter of the arbitral award was beyond the scope of the submission to the arbitration.

Issue 1

On the first issue, the Privy Council observed that the doctrine of issue estoppel supports the important public policy of finality in litigation and ensures that the same parties should not have to litigate the same issue twice. A foreign judgment which satisfied the requirements for recognition at common law cannot be impeached for any error either of fact or law. As such, it is irrelevant whether a domestic court would regard the reasoning of the foreign judgment as open to criticism or even as manifestly wrong. In relation to the first issue, the parties to the actions in Brazil were the same as in the present litigation, the Brazilian courts had made an independent or de novo determination, and accordingly the partnership was restrained by issue estoppel from raising the same arguments again before the Cayman courts.

Issue 2

The Privy Council found the second issue a difficult one to decide. It noted the guidance given in the ICC Secretariat’s Guide to ICC Arbitration, which states that “An arbitral tribunal should be very cautious about applying any provision of law on which the parties have not had an opportunity to comment or make submissions. Unlike judges in some civil law jurisdictions, arbitral tribunals that decide a case on the basis of legal concepts not raised by any of the parties will risk breaching due process requirements, rendering the award vulnerable to being set aside or difficult to enforce”.

This was, unfortunately, something that the tribunal had failed to do in the present case. Ultimately, however, the Privy Council concluded that it was not “so serious a denial of procedural fairness as to justify refusal to enforce the award”. The Privy Council reached this conclusion because all the factual allegations had been addressed by the parties. The only matter on which the partnership had not had the opportunity to address the tribunal was on a discrete legal provision which imposed liability for third party malice, which the tribunal applied to the facts proved.

Further, whilst it is not the case in English law, other legal systems do allow tribunals to decide cases on the basis of legal rules not raised or addressed by the parties. It was also significant that the central factual allegation proved was one of fraud, and as so, the tribunal’s consequent finding against the partnership on the issue of adjustment of the price under the contract should not have been surprising to the parties.

Lastly, the court considered that the appellant had failed to prove that the procedural approach adopted amounted to fundamental unfairness which goes to the essence of the right to be heard. It would be “a very strong thing for and English or Cayman court to find it contrary to the public policy of the forum to enforce an award which has been upheld by the courts with primary responsibility for ensuring the integrity of the arbitral process”, and there was no sufficient basis on which to reach such a conclusion in the present case.

Issue 3

On the third issue, which admittedly overlapped substantially with the first two, the Privy Council rejected the partnership’s arguments on the basis that they had already been rejected by the Brazilian courts, and were thus caught by issue estoppel.

Commentary

This was a complex case on the enforcement of an arbitral award some 15 years after initial submission to arbitration. It is significant because it shows how difficult it will be for parties to impugn arbitral awards, even where there has been significant procedural unfairness. Given the circumstances of this lengthy and convoluted litigation, the Privy Council was understandably at pains to highlight the importance of the doctrine of issue estoppel as a guard against the duplication of disputes.

About the Author

Called in 2011, prior to pupillage Conor Kennedy spent two years working with a leading insurance law firm, gaining experience across regulatory, employment, leisure, travel and public sector teams. He has a varied civil practice and is accredited for Direct Access instruction, but has a particular interest and expertise in claims involving fundamental dishonesty.

 

…And Finally…

Our friends at Express Solicitors and the Association of Consumer Support Organisations have conduced an analysis of 8,500 fast and multi-track claims, and can now reveal that in six out of ten court regions cases are taking over nine months to proceed from service of the claim form to the CCMC hearing. The east of England comfortably exceeded this average, with an average waiting time of 350 days – just two weeks shy of a year’s delay between issue and first hearing. The longest delays at individual courts occurred at Thanet (456 days), Chelmsford (426 days), Reading (424), Bournemouth (394) and Durham (377). It will come as no surprise to our Yorkshire readers that the region with the shortest delay was Yorkshire and the Humber, which boasted an average waiting time of only 210 days, a mere six months or so. The ACSO understandably focuses its concerns on the effect of delays of this magnitude on the parties to litigation – but will nobody think of the barristers? Let us assume that the overworked and overlooked barrister enters into a conditional fee agreement a year before proceedings are issued; (s)he settles Particulars of Claim, undertakes the CCMC, and then (of course) wins the resulting trial. Why, when you factor in the time taken to assess costs and then crowbar payment out of the Defendant and then from the Claimant’s solicitors, it might take five years or more to be paid! Is it any wonder we’re known as the Deserving Poor?

Written by or involving: Conor Kennedy, Dominique Smith

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