Standard Bank Plc v EFAD Real Estate Company WLL & Ors

For service out of the jurisdiction, the claimant must establish three matters: a serious issue to be tried on the merits, a good arguable case within a jurisdictional gateway, and that England is clearly or distinctly the appropriate forum.

At the merits stage, the court should avoid a full evidential trial and ask whether the defendant has identified a decisive point showing that the claim is unsustainable. A person may be a necessary or proper party where the claims against several defendants involve one investigation. The fact that the anchor defendant may not actively defend the claim does not defeat the gateway. Where the anchor claim is properly pursued in England, that may be a strong factor supporting service on closely connected defendants abroad.

Standard Bank Plc sought recovery of funds advanced to EFAD Real Estate Company WLL under an Islamic finance agreement. The bank also alleged breach of contractual security obligations, deceit, inducing breach of contract and conspiracy.

The second and third defendants, based in Kuwait, challenged jurisdiction. The bank had obtained permission to serve them out of the jurisdiction and relied principally on the necessary-or-proper-party gateway in paragraph 3.1(3) of CPR PD 6B. EFAD RE had agreed to the non-exclusive jurisdiction of the English court and had not challenged jurisdiction.

The issues were whether the bank had a serious issue to be tried, whether the second and third defendants fell within the jurisdictional gateway, and whether England was clearly or distinctly the appropriate forum.

1. Application dismissed. The bank satisfied the requirements for service out of the jurisdiction against the second and third defendants.
2. The serious-issue threshold was relatively low, but the evidence required had to reflect the seriousness of allegations of dishonesty. The court should not conduct a mini-trial involving extensive documents, witness statements and detailed factual analysis. The relevant question was whether there was a real, rather than fanciful, prospect of success. The defendants identified no decisive point demonstrating that the claim was unsustainable: [2013] UKSC 5 and [2013] EWHC 2926 (Comm).
3. There was a real prospect that the December Murabaha was legally binding despite non-compliance with the conditions precedent. Those conditions were reasonably arguable as conditions of EFAD RE’s right to request further transactions, rather than conditions precedent to the contract’s coming into force. They were included for the bank’s benefit and could be waived. The bank had a real prospect of establishing breach, deceit and related liability.
4. The claims against EFAD RE and the individual defendants involved a single factual investigation. The second and third defendants were therefore necessary or proper parties under paragraph 3.1(3) of CPR PD 6B and CPR 19.2(2). The court was not required to predict whether the anchor defendant would actively defend the claim. Nor did the possibility that the individual claims might add little to the debt claim prevent them from being proper parties.
5. England was clearly or distinctly the appropriate forum. Although relevant factors pointed to Kuwait, the claim against EFAD RE would proceed in England under the jurisdiction clause, and the individual defendants were necessary or proper parties to substantially the same claims. The reasoning in Erste Group Bank v JSC “VMZ Red October” [2013] EWHC 2926 (Comm) was applicable.
6. The contingent application by EFAD RE for a stay did not arise. If it had arisen, it would have been dismissed. The bank was entitled to proceed in England under the jurisdiction clause.

First-instance decision. The judgment records no prior appellate decision.