Cecil & Ors v Bayat & Ors

Permission to serve proceedings out of the jurisdiction requires a sufficiently arguable case on the merits, a good arguable case on the relevant jurisdictional gateway, and proof that England and Wales is the proper place for the claim. The jurisdictional test is not ordinarily a mini-trial, although the court applied the Canada Trust gloss and assessed which side had the much better argument. A contractual gateway requires a relevant legal connection with the contract, not merely a factual connection. England may remain the proper forum where the natural foreign forum is unavailable or where there is a real risk that proceedings there would be summarily dismissed. Funding difficulties may justify an extension of time for service in unusual circumstances, and alternative service may be ordered where it is the most effective means of bringing proceedings to the defendants’ attention.

The claimants alleged that they had been promised interests in a telecommunications project in Afghanistan in return for services, finance and assistance with its development. They claimed breach of contract, constructive trust remedies, quantum meruit, fraudulent misrepresentation and conspiracy against defendants based in several jurisdictions.

The defendants applied to set aside service out of the jurisdiction, challenging the merits, the jurisdictional gateways, forum conveniens, extensions of time, alternative service and alleged non-disclosure. Related proceedings in the United States had previously been dismissed and sealed. The central issues were whether the claims reached the jurisdictional gateways, whether England was the proper forum, and whether service and the procedural orders were valid.

1. Service out and standards. The claimants had to show a serious issue to be tried on the merits, a good arguable case on the jurisdictional gateway, and that England and Wales was the proper place under CPR 6.37. The court applied the Canada Trust gloss, using the “much the better of the argument” formulation, while recognising that the issue must not become a mini-trial.
2. Contractual gateways. A claim “in respect of” a contract requires a relevant legal connection, not merely a factual relationship between contracts. The Cecil and Bentham contract was sufficiently connected with England and was governed by English law. The Grinling contract was made in England, but the Grinling and Lehmkuhl claims were not legally connected with the Cecil and Bentham contract. The Lehmkuhl contract was governed by the law of the place with which its characteristic performance was most closely connected.
3. Merits and other claims. The claimants had a good arguable case concerning the principal contracts and a serious issue to be tried on the quantum meruit and conspiracy claims, subject to the individual claimant and defendant distinctions identified in the judgment. The fraudulent misrepresentation claims did not disclose a serious issue to be tried. Serious issues were established on constructive trust and dishonest assistance for Cecil and Bentham, but not for Grinling or Lehmkuhl.
4. Forum. England was the natural forum on the evidence concerning the parties, contracts, witnesses and work performed. Although the United States had a strong connection through earlier proceedings, the court found a real risk that further United States proceedings would be dismissed. The United States was therefore unavailable and England was clearly the most appropriate forum.
5. Procedure. The extensions of time for service were justified by the unusual funding circumstances and the claimants’ sensible and responsible conduct. There was no material non-disclosure warranting discharge of the orders. Alternative electronic service was justified because it was likely to bring the proceedings to the defendants’ attention most effectively and expeditiously. The defendants’ application based on an alleged earlier service deadline was refused because the order expressly extended time to 30 April 2009.
6. Disposition. Except for Lehmkuhl’s claims, Grinling’s constructive trust claim, all fraudulent misrepresentation claims, and claims against AWCC, a proper case for service out was established. The defendants’ applications were otherwise dismissed.