Rimpacific Navigation Inc v Daehan Shipbuilding Co Ltd (Rev 1)

For service out of the jurisdiction under CPR 6BPD 3.1, a claimant must establish a good arguable case that the relevant contract exists. It is insufficient to show that, if a contract exists, it would contain an English law and jurisdiction clause. The relevant contract is the guarantee as a whole, not merely its jurisdiction clause.

Questions of ostensible authority are governed by the putative proper law of the contract. Internal limitations on a company officer’s actual authority do not necessarily defeat ostensible authority. An anti-suit injunction may be granted where there is a strongly arguable case that proceedings breach an exclusive jurisdiction clause and the foreign proceedings are vexatious or oppressive.

The claimants, disponent owners of two vessels, sued the defendant guarantor under guarantees securing charterparty obligations. The guarantees contained English governing-law and exclusive-jurisdiction clauses.

The defendant applied under CPR 11.1 for an order that the English court lacked jurisdiction, arguing that the guarantees were not binding because the signatory lacked authority under Korean law. The claimants applied for anti-suit injunctions restraining proceedings brought by the defendant in South Korea for declarations of non-liability.

The central issues were whether the claimants had a good arguable case that the guarantees existed, which law governed ostensible authority, whether the guarantees were binding under Korean law in any event, and whether anti-suit relief should be granted.

1. Jurisdiction. The defendant’s jurisdiction challenge was rejected. Under CPR 6BPD 3.1, the claimants had to show a good arguable case that the contract relied upon existed. The relevant contract was each guarantee as a whole. It was not sufficient to establish only that a jurisdiction clause would apply if a contract existed.
2. A good arguable case required the claimants to have much the better of the argument on the material available. The claimants satisfied that test on the existence of the guarantees.
3. The doctrine of separability applicable to arbitration agreements and jurisdiction clauses did not alter the gateway test for service out. Fiona Trust & Holding Corporation v Privalov and Deutsche Bank AG v Asia Pacific Broadband Wireless Communication Inc concerned separability in different statutory and jurisdictional contexts and did not justify treating the jurisdiction clause as the relevant contract for CPR 6BPD 3.1.
4. Questions of ostensible authority were governed by English law as the putative proper law of the guarantees. Sections 36 of the Companies Act 1985 and regulations 3 and 4 of the Foreign Companies (Execution of Documents) Regulations 1994 did not disapply that conflicts rule. The defendant’s challenge based on Korean law therefore did not give it the better argument.
5. On the facts, the designation of the signatory as CEO/President, the company stamp and earlier guarantees provided a formidable case of ostensible authority. The matters relied upon by the defendant did not make the claimants’ failure to investigate grossly unreasonable.
6. Alternatively, the claimants had much the better argument under Korean law. Third parties acting in good faith were protected against internal limits requiring board approval. The defendant had not shown knowledge or gross negligence. The guarantees were therefore sufficiently arguable as binding for present purposes.
7. The anti-suit applications were granted in principle. The claimants had a high probability of succeeding on the existence of the exclusive English jurisdiction clause. The Korean proceedings risked determination of the authority issue without applying English law and possible issue estoppel. Although the application had been delayed, the delay caused no material prejudice. Relief was to be granted subject to submissions on its precise form.