Argo Capital Investors Fund Spc v Essar Steel Ltd

For contractual service provisions to support deemed service under Civil Procedure Rules 1998, r 6.15, the claimant must show a sufficient contractual connection with the agreement, such as being a party, assignee or transferee. A claimant need not establish its substantive entitlement finally at the jurisdiction stage, but must ordinarily show a good arguable case.

Construction of an assignment agreement depends on the agreement read as a whole. References to the assigned asset, the parties’ stated intention, warranties and the commercial structure may establish an assignment of the underlying debt rather than merely its proceeds.

The claimant sought to recover US$2 million said to represent a bank’s interest in a loan facility made to the defendant. The bank assigned its interest to Dresdner, and Dresdner subsequently assigned it to the claimant.

The claimant served the claim form on the defendant’s contractual agent under clause 32.5 of the facility agreement. The defendant challenged jurisdiction, arguing that the assignment agreements transferred only proceeds received by the original bank and did not assign the underlying debt or contractual rights.

The issues were whether the claimant had a sufficient interest to invoke CPR 6.15 and whether the assignment agreements assigned the debt itself or only its proceeds.

1. Jurisdiction and service. The contractual service agreement in clause 32.5 was made between the borrower and the other contractual parties. It could not be construed as permitting service by a person who was neither a party, assignee nor transferee. The claimant therefore had to establish that it had such a status before relying on CPR 6.15.
2. Applicable threshold. The claimant was required to show a good arguable case that it was an assignee of the debt and rights under the facility agreement. That approach was consistent with Crescent Oil and Shipping Services Ltd v Importang U.E.E. [1998] 1 W.L.R. 919.931.
3. Construction of the first assignment. Read as a whole, the first assignment agreement assigned KDLC’s interest in the loan to Dresdner. The reference to the assigned amount of US$2 million identified the separate and independent debt owed to KDLC under clause 3.3 of the facility agreement. The recitals, the definitions, the warranties and the provision that Dresdner would retain no residual beneficial interest were inconsistent with an assignment confined to proceeds.
4. Construction of the second assignment. The second assignment agreement transferred Dresdner’s interest in the loan to Argo. Provisions dealing with payments received by KDLC did not alter that conclusion; they accommodated payments made through the facility agent or made without notice of the assignment.
5. Disposition. Argo had, at least, a good arguable case that it was an assignee entitled to invoke the contractual service clause and CPR 6.15. Service was not set aside and the action was not dismissed.

This was a first-instance Commercial Court decision. The judgment referred to an earlier interlocutory decision in The Argo Fund v Essar Steel Ltd [2004] EWHC 128 and to the subsequent trial decision reported at [2005] 2 Lloyd’s Rep 203, concerning whether the claimant was a permitted transferee.