Standard Bank Plc & Anor v Just Group LLC & Ors

On an application to set aside service out of the jurisdiction, the claimant must establish a serious issue to be tried, a gateway under CPR 6.36, and that England and Wales is the proper forum. The gateway for a necessary or proper party requires more than related transactions or overlapping subject matter. The claims must involve one investigation, be closely bound up, or have a common thread. No general presumption makes England the proper forum merely because a foreign defendant is said to be a necessary or proper party. An exclusive foreign jurisdiction clause is a powerful factor, and cogent evidence is required to show a real risk of injustice in the foreign court. Material non-disclosure of a potentially applicable foreign jurisdiction clause in a without-notice application may alone justify setting aside permission.

Standard Bank brought claims against several defendants arising from trade-finance facilities and alleged failures by Ulaanbaatar Railways to pay assigned receivables into nominated bank accounts. Ulaanbaatar Railways, a Mongolian company, applied to set aside service out of the jurisdiction and sought a declaration that the court had no jurisdiction.

The bank relied on the necessary or proper party gateway in paragraph 3.1 of Practice Direction 6B, using claims against the borrower, guarantors and an alleged procurer of breaches as anchor claims. Ulaanbaatar Railways relied on an exclusive Mongolian jurisdiction clause in the underlying supply contract. The issues were whether the claim raised a serious issue to be tried, fell within gateway (3), and whether England was the proper forum.

1. Serious issue. The pleaded claim raised a serious issue to be tried. The evidence of Mongolian law showed a real prospect that the Ulaanbaatar acknowledgment created a collateral contractual obligation additional to obligations arising from the assignment. The fact that the alleged obligation was defined by reference to the supply contract did not prevent a collateral contract from existing.
2. Gateway (3). The bank had not shown the better of the argument that Ulaanbaatar Railways was a necessary or proper party. Applying AK Investments CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC7, a proper party ordinarily requires claims involving one investigation, close connection or a common thread. The claims against the borrower and guarantors concerned repayment under English-law finance agreements. The claim against Ulaanbaatar Railways concerned a different alleged contract, Mongolian law, different facts and different evidence. The claims could not conveniently or desirably be disposed of together under CPR 7.3 or CPR 19.2.
3. The proposed alternative route based on an alleged procurer of Ulaanbaatar Railways’ breaches was refused in the exercise of discretion. That subsidiary claim had no practical utility and could not properly provide the basis for service out.
4. Proper forum. The claim fell within the exclusive Mongolian jurisdiction clause in the supply contract. Mongolia was overwhelmingly the natural forum, having the principal factual evidence, witnesses and applicable law. Gateway factors did not create a general presumption in favour of England. The criticisms of Mongolian procedure and judicial independence did not amount to cogent evidence of a real risk of injustice.
5. Non-disclosure. The bank had failed to draw attention in its without-notice application to the potentially applicable exclusive jurisdiction clause. Applying Knauf UK GmbH v British Gypsum Ltd [2001] EWCA Civ 1570, this was a serious breach of the duty of candour. Even if the other grounds had failed, justice required the permission order to be set aside.

The set aside application was granted and service on Ulaanbaatar Railways was set aside.