Global 5000 Ltd v Wadhawan

A personal assurance given by a company director will not amount to a guarantee unless, construed objectively in its context, it conveys an undertaking to answer for the company’s contractual performance. An assurance of an intention to proceed with a transaction and sign an agreement is not such an undertaking.

For service out, a claim made under a contract must satisfy the contractual jurisdictional gateway by reference to that contract. A claimant cannot rely instead on a collateral contract governed by English law merely because it is connected with the claim.

Global 5000 Ltd alleged that Mr Wadhawan had personally guaranteed Privilege Airways Pvt Ltd’s obligation to pay for an aircraft under a purchase and sale agreement. The agreement was governed by English law, but Mr Wadhawan, who lived in India, was not a party to it.

Global obtained permission to serve him out of the jurisdiction. Beatson J upheld his CPR Part 11 challenge. Global appealed, contending that Mr Wadhawan’s letter of 9 August 2008 offered a guarantee which Global accepted by entering the purchase agreement. It also relied on the purchase agreement as the English-law contract for the purposes of the jurisdictional gateway.

1. Appeal dismissed unanimously. The court held that Global had no serious issue to be tried that Mr Wadhawan gave a personal guarantee of Privilege’s obligations. The letter contained no express or objective indication that he undertook to answer for Privilege’s payment. Its personal assurance was confined to his wish to proceed with the transaction and readiness to sign an agreement.

2. The statement that payment would be made by the end of August referred to the obligation set out in the purchase agreement. Read in context, Mr Wadhawan wrote as Privilege’s managing director. The fluctuating use of the first person singular and plural did not convert Privilege’s obligation into his personal obligation. The surrounding negotiations showed that Global wanted reassurance that Privilege was a genuine buyer, not a guarantee of the price or deposit.

3. The claim therefore failed the merits standard of a serious issue to be tried, which the parties accepted was equivalent to the CPR Part 24 summary-judgment standard. It followed a fortiori that there was no good arguable case for the alleged guarantee, and the jurisdiction challenge succeeded.

4. Although unnecessary to the disposal, the court also expressed the view that, under paragraph 3.1(6) of Practice Direction 6B to the Civil Procedure Rules, the relevant contract is the contract under or pursuant to which the claim is made. A claimant cannot establish the gateway by selecting a merely collateral contract governed by English law. The existence of the contract founding the claim and its qualifying jurisdictional connection must be shown to the applicable good-arguable-case standard.

• Court of Appeal (Civil Division) — dismissed Global’s appeal and upheld the jurisdiction challenge: [2012] EWCA Civ 13.
• Commercial Court — Beatson J upheld Mr Wadhawan’s CPR Part 11 challenge to the English court’s jurisdiction.