JSC BTA Bank v Ablyazov & Ors

Under CPR 7.6(2), an extension of time for service requires a good reason, ordinarily a difficulty in effecting service, and the claimant must have taken reasonable steps within the validity period. A possible limitation defence is important, but a good reason may overcome it where delay is inherent in service abroad and is not attributable to the claimant. Under CPR 6.15, alternative service requires a good reason. Mere desire for speed is insufficient, but defendant-specific grounds suggesting evasion and a risk that lengthy foreign service would prejudice the proceedings may cumulatively justify alternative service.

The claimant bank brought the Paveletskaya proceedings against its former chairman and others, alleging fraudulent loans and related-party transactions. The second defendant, already defending other proceedings brought by the bank, had not instructed his solicitors to accept service in this action. The claim form was issued on 17 December 2010 and its six-month validity expired on 17 June 2011.

Christopher Clarke J extended its validity until June 2013 and permitted alternative service on the second defendant’s solicitors. The second defendant applied to set that order aside, arguing that the claimant had not acted promptly to serve under the Hague Convention, that extension might prejudice limitation defences, and that there was no sufficient basis for alternative service.

1. Extension of time. Applying Cecil v Bayat [2011] EWCA Civ 135, the court required a good reason for extending time under CPR 7.6(2). The claimant had good reason not to serve before 1 March 2011 because it reasonably expected the solicitors acting in related proceedings to accept service. After that date, it should have begun preparing notarised translations sooner, and continuing without-prejudice discussions did not justify delaying preparatory work. Nevertheless, the claimant had begun the costly process within the validity period, and service in Russia would take about nine months to two years.
2. A possible limitation defence was of considerable importance. The issue could not be resolved at this interlocutory stage, but the lengthy period required for service in Russia was sufficient to surmount it. Otherwise time could never be extended for service in Russia where limitation issues existed. The extension until June 2013 was not excessive.
3. Alternative service. The jurisdiction under CPR 6.15 permits alternative service out of the jurisdiction where there is good reason. The observations in Cecil v Bayat [2011] EWCA Civ 135 were obiter but highly persuasive. Mere desire for speed was insufficient. Here, the voluntary nature of the Russian process and the defendant’s stated wish to avoid the expense of defending this action gave grounds for believing that he might avoid personal service. The lengthy delay also risked impeding the proper disposal of proceedings involving several defendants. Those considerations, together with his prior knowledge of the claim and acceptance of service in related proceedings, justified alternative service.

The application to set aside the order of Christopher Clarke J dated 21 June 2011 was dismissed.