Arros Invest Ltd v Nishanov

Where a claim form is served abroad under Civil Procedure Rules 1998, rule 6.24(1)(a), the claimant must show that the method used was permitted by the law of the destination country. Where a foreign legal system has separate general and specialist procedural codes, the claimant must establish by expert evidence that the specialist code applied to the proceedings. Argument alone is insufficient. If that is not shown, the general code governs. A claimant relying on foreign law must also prove that the particular method and timing of service complied with the applicable local rules, especially where the defendant received no actual notice before expiry.

Arros Invest Ltd appealed against Master Moncaster’s order setting aside service of the claim form on Rafik Nishanov and refusing an extension of its validity. The claim concerned alleged diversion of approximately US$4.9 million by former directors of the claimant.

Permission to serve out of the jurisdiction had been granted. The claim form was delivered to a property owned by Mr Nishanov, but not then occupied by him, and was signed for by a babysitter. Mr Nishanov received it two days after the claim form expired.

The central issues were whether service could be effected under the Russian Arbitrazh Procedural Code rather than the Code of Civil Procedure, and whether the method and timing of service were valid under Russian law.

1. Appeal dismissed. The claimant had not shown that service on Mr Nishanov was valid before expiry of the claim form.
2. Under rule 6.24(1)(a) of the Civil Procedure Rules 1998, the court should apply a reasonable degree of flexibility when assessing foreign legal systems. However, where the claimant relies on a specialist foreign procedural code instead of the basic code, it bears the burden of proving by expert evidence that the specialist code would have applied had the proceedings been brought in that country.
3. The claimant’s evidence relied on the insolvency jurisdiction of the Arbitrazh Procedural Code. It became common ground that this jurisdiction did not apply. There was no admissible or reasoned evidence establishing that the claim fell within the provisions concerning liquidation disputes or shareholder disputes. Article 247 concerned the application of the code to international cases and did not enlarge its substantive jurisdiction.
4. Accordingly, the Code of Civil Procedure applied. It was common ground that its personal-service requirements had not been complied with. Service was therefore not established.
5. In any event, the claimant had not shown that service at a registered address, known not to be the defendant’s actual residence, was sufficient under Russian law. Nor had it shown that service occurred on delivery to the courier or the property, rather than when the defendant actually received the documents. The claimant, having waited until the last possible moment and sought no extension, failed to prove valid service.

High Court (Chancery Division): appeal from Master Moncaster’s order dated 28 October 2003. The order setting aside service was upheld and the appeal dismissed.