Service out of the jurisdiction where permission of the court is required (Bill Kenwright Ltd v Flash Entertainment)

19411771 - the royal courts of justice in london.

Owen Williams, partner at Clarke Wilmott, considers the decision in Bill Kenwright Ltd v Flash Entertainment FZ LLC, which dealt with the circumstances under which an Abu Dhabi company can be served and brought into the jurisdiction of the English court.

What was the background to this case?

The underlying dispute is about the staging of the musical Jekyll and Hyde in Abu Dhabi in 2011 by Bill Kenwright, the theatre impresario.

An agreement had allegedly been reached between Bill Kenwright Ltd (BKL) and Flash Entertainment (F), whereby BKL would present the musical in Abu Dhabi. It was due to be shown in February 2011 and F was to pay BKL £780,000 for this.

BKL alleged that a subsequent agreement was reached seven months later in January 2011, in which the production would be postponed from February 2011 to September 2011. F was to pay £260,000 to BKL in compensation for the postponement.

BKL alleged that a third agreement (the ‘settlement agreement’) was entered into on 4 November 2011 during a telephone conversation between Mr Kenwright in London and Mr Lickrish (chief executor of F) in Abu Dhabi. Mr Kenwright claimed that Mr L agreed to pay £500,000 in settlement of F’s breaches of the previous two agreements. It is the settlement agreement which is the subject of the claim issued by BKL.

What were the legal issues Haddon-Cave J had to decide?

The chief issue was, essentially, whether F, an Abu Dhabi company, could be served and bought into the jurisdiction of the English court, and whether having been served, England and Wales was the correct jurisdiction in which to determine the dispute.

What were the legal arguments and what did Haddon-Cave J decide, and why?

There was a substantial investigation as to whether BKL could be allowed to serve its claim out of the jurisdiction—I discuss this in my answer to the next question, below.

A large majority of the judgment deals with whether BKL could evidence the existence of the settlement agreement. F denied that any binding settlement agreement had been reached. Haddon-Cave J held that, based upon the evidence before him, he was satisfied that BKL had ‘the much better argument’ as to the existence of the settlement agreement. This is not a final determination, of course, but a precursor to permission to serve out of jurisdiction.

There are a large number of potential gateways set out in CPR PD 6B by which the English courts can have jurisdiction. BKL argued in this case that there were three possible gateways:

  • CPR PD 6B, para 3.1(6)(a)—the contract was made within the jurisdiction
  • CPR PD 6B, para 3.1 (6)(c)—the contract is governed by English law, or
  • CPD PD 6B, para 3.1(7)—the breach of contract was committed within the jurisdiction

A contract is only formed when the offeror receives acceptance and in cases of instantaneous communication (such as a telephone call) the acceptance is received at the location of the offeror. Haddon-Cave J was satisfied that Mr Lickrish (if he had accepted anything) had accepted during that call Mr Kenwright’s earlier offer to accept £500,000 made at an earlier the meeting in London. As such, Mr Kenwright was able to satisfy the first gateway that is that the contract was made within the jurisdiction. In respect of CPR PD 6B, para 3.1(6)(c), the question of which law applies to the contract, BKL argued that article 4 of the Rome I Regulation (EC) 593/2008 applied. This provides that in the absence of an express agreement, the jurisdiction will fall within the country most closely connected with the contract. This is presumed to be the country where the party required to effect the ‘characteristic performance’ of the contract has residence. Haddon-Cave J held that the characteristic performance of the contract was the compensation payment to BKL, invoices for which provided for payment in England, and so English law applied.So Haddon-Cave J had no difficulty in getting through each of the jurisdictional gateways, and therefore the court had jurisdiction. However, this does not necessarily mean it will accept jurisdiction though—there’s a fine line between forum conveniens and forum non conveniens. Essentially, the test here was whether Abu Dhabi was a clearly more appropriate forum than England.

To what extent is the judgment helpful in clarifying the law in this area?

The only point of clarity I can think of is on alternative service.

In this hearing, F was also challenging an earlier order of the court by permitting service by an alternative method, namely service by registered mail to F’s registered address in Abu Dhabi. This is because under the treaty between the UK and the UAE, service in the UAE via diplomatic channels would take up to eight months—a significant delay.

F sought to rely on Deutsche Bank v Sebastian Holdings [2014] EWHC 112 (Comm), [2014] 1 All ER (Comm) 733, in which a party sought to serve outside of the treaty provisions by alternative means.

In Deutsche Bank, the reason the defendant wanted to avoid going through diplomatic means is because in intra-European litigation, the first court that is seised of the litigation—which for these purposes in terms of the English proceedings would mean once the other side is served—then has to decide whether it has jurisdiction or not. Getting the first shot in can be quite important tactically as to which court is going to hear the case, and there was evidence in Deutsche Bank that the claimant was deliberately trying to accelerate the process to make sure that England was first seised of the case.

In Kenwright, the judge recognised that service via diplomatic means in the UAE would result in a significant delay, and that unlike in Deutsche Bank, there was no evidence that BKL was trying to achieve a tactical advantage, merely trying to speed the process up.

If anything, what this judgment tells us is that Deutsche Bank is a much more limited decision than perhaps once thought. In an appropriate case, if you are not doing it for tactical advantage, then it is perfectly possible to get an order for alternative service even where there is a service treaty between England and Wales and the other country.

Interviewed by Duncan Wood. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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