Department of Civil Aviation of the Kyrgyz Republic v Finrep GmbH

In an arbitration seated in England, the tribunal controls the conduct of proceedings while a jurisdiction challenge under section 67 of the Arbitration Act 1996 is pending. A party is not generally required to nominate solicitors within the jurisdiction to accept service of that challenge. The court may permit alternative service under CPR 6.8 where there is good reason. In this context, service on solicitors or other representatives who act or acted for an overseas party in the arbitration will often be appropriate, particularly where their authority has not been terminated. The approach in Knaut UK GmbH v British Gypsum Ltd is confined to its different jurisdictional and service context. Service on a barrister in private practice will ordinarily be inappropriate. Permission to serve out of the jurisdiction must nevertheless be obtained, ordinarily together with the application for alternative service.

The claimant applied under section 67 of the Arbitration Act 1996 to challenge a preliminary arbitration award on jurisdiction. The arbitration concerned a commercial joint venture and was seated in England. The defendant was an Austrian company represented in the arbitration by New York attorneys, English counsel and, later, London solicitors.

The claimant obtained an order permitting service of the Arbitration Claim Form on English counsel. The order did not grant permission to serve out of the jurisdiction, did not specify the method or deemed date of service, and was not accompanied by all supporting evidence. The defendant applied to set the order aside. The central issues were whether the defendant had been obliged to nominate solicitors to accept service, whether CPR 6.8 permitted alternative service in this context, and whether the procedural defects invalidated the order.

The order permitting service on English counsel was set aside. Time for service was extended, permission was granted to serve the defendant out of the jurisdiction, and service through the defendant’s London solicitors was authorised and deemed effective on the date of judgment.

1. Conduct of the arbitration. Section 40 of the Arbitration Act 1996 requires parties to do what is necessary for the proper and expeditious conduct of the arbitration. Section 67(2) expressly permits the tribunal to continue the arbitration and make a further award while a jurisdiction application is pending. Whether the arbitration should continue is therefore a matter for the tribunal’s discretion. It was not necessary for the defendant to nominate solicitors within the jurisdiction to accept service of the section 67 challenge.
2. Alternative service. CPR 6.8 requires good reason for service by an alternative method. The court’s practice is generally compatible with that requirement. In an English-seated arbitration, there will often be good reason to serve an overseas party’s solicitor or representative within the jurisdiction, where that person acts or acted in the arbitration and authority has not apparently been terminated. Such service promotes reliable, economical and expeditious notification and contributes to finality.
3. Scope of Knaut UK GmbH v British Gypsum Ltd. The Court of Appeal’s warnings against using alternative service merely to obtain speed or to subvert international service and jurisdiction arrangements concerned ordinary proceedings involving a foreign defendant. They did not prevent alternative service in an English-seated arbitration, which falls outside the relevant convention regime and involves submission to the supervisory jurisdiction of the English court.
4. Choice of representative. Service on an English barrister in private practice will ordinarily be inappropriate because the barrister’s retainer is usually task-specific, direct contact with the client may be absent, and the barrister may lack the infrastructure needed to ensure reliable communication. Service on overseas arbitration lawyers may be appropriate in a proper case.
5. Procedural safeguards. Permission to serve out of the jurisdiction must be applied for and obtained, although it may ordinarily be sought together with alternative-service relief. Applications should normally be supported by a witness statement addressing relevant circumstances, including the realistic implications of overseas service and, where appropriate, the merits. The defects in the original order were important but were cured by the consequential orders.