Surrey (UK) Ltd v Mazandaran Wood & Paper Industries

On an application to serve proceedings out of the jurisdiction, the claimant must show a good arguable case, meaning the better argument, on the relevant jurisdictional gateway and its title to sue. Contracting-party identity is determined objectively. Receipt of an electronic communication in England does not establish that a contract was made there unless the communication constitutes legal acceptance. Under Article 4 of the Rome Convention 1980, the characteristic-performance presumption may be displaced where the circumstances as a whole show a closer connection with another country. The claimant must also show that England is clearly the appropriate forum. A serious failure to make full and frank disclosure on a without-notice application may independently justify setting aside permission.

The claimant, an English company, sought to pursue claims arising from alleged international sales of wood products to the defendant’s paper mill in Iran. The claimant obtained an order permitting service out of the jurisdiction. The defendant applied to set that order aside, challenging the claimant’s title to sue, the jurisdictional gateways, the applicable law, forum conveniens, and the adequacy of the claimant’s without-notice disclosure.

The court considered whether the claimant had the better argument that it was the contracting party, whether the contracts were made in England or governed by English law, whether England was clearly the appropriate forum, and whether the original application had been presented with the required candour.

1. The application was granted. The order permitting service out of the jurisdiction was set aside.
2. For title to sue and the jurisdictional gateways, the claimant bore the burden of showing a good arguable case, which required the better argument. The identity of the contracting party was an objective question. The evidence that the defendant had contracted with Surrey, rather than with “Lignum” or Mr Afkhami, fell well short of that standard. The absence of any reference to Surrey in the contemporaneous dealings was significant.
3. The principle in Entores Ltd v Miles Far East Corp [1955] 2 QB 327 (CA), approved in Brinkibon v Stahag Stahl und Stahlwarenhandels GmbH [1983] 2 A.C. 34, did not assist. Although acceptance of an instantaneous communication is generally effective when received, the communications relied upon were invitations to treat or counter-offers, not legal acceptances. The claimant therefore failed to show that the contracts were made in England.
4. The alleged contractual terms providing for English law were not shown to have been incorporated. Assuming that Article 4.2 of the Rome Convention 1980 created a presumption in favour of England, Article 4.5 required it to be disregarded. Viewed as a whole, the contracts were more closely connected with Iran, including because the goods were sourced abroad and delivered there. The contracts were therefore governed by Iranian law for the purpose of the gateway analysis.
5. Applying Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, the claimant failed to show that England was clearly the appropriate forum. The main issues concerned the quality of goods delivered in Iran and their effect on Iranian production processes. The location and language of witnesses and evidence favoured Iran, and the alleged juridical advantages of England carried little weight.
6. The without-notice evidence was seriously deficient, particularly as to title to sue, contract formation, the alleged contractual terms, and the quality dispute. That breach of the duty of full and frank disclosure independently justified setting aside the order. The service issue had fallen away and was not determined.