Bazhanov & Anor v Fosman & Ors

Permission to serve proceedings out of the jurisdiction requires a serious issue to be tried, a good arguable case that a jurisdictional gateway applies, and England to be the proper place for trial. The good arguable case standard is not the same as proof on the balance of probabilities. It requires a plausible evidential basis, while recognising the limits of interlocutory material. Where the alleged contract is itself relied on to establish a gateway, the claimant must show a good arguable case both that a contract exists and that the additional jurisdictional feature is present. Uncertain or incomplete negotiations, agreements to agree, and documents lacking sufficient certainty will not satisfy that threshold. Claims dependent on contractual or restitutionary rights may fail with the underlying claim. A strong foreign connection and the possibility of trial in the natural forum will ordinarily defeat an application to proceed in England.

The claimants, Alexey Bazhanov and Morrins Commercial Inc, brought proposed claims against Arkadiy Fosman, Olga Fosman and Akvilon LLC concerning the Masloprodukt business in Russia. They alleged agreements made or varied between June 2014 and May 2015, and sought to add claims for breach of contract, fiduciary duty, trust, estoppel and unjust enrichment.

Leggatt J had granted permission to serve the claim form out of the jurisdiction. The defendants applied to set that permission aside. The claimants applied to amend the claim form and particulars of claim. The central issues were whether the proposed claims disclosed a serious issue to be tried, whether the relevant jurisdictional gateways under CPR Practice Direction 6B were satisfied, and whether England was the proper place for resolution.

1. Disposition. Permission to serve the defendants out of the jurisdiction was set aside. The court declared that it had no jurisdiction to hear the claims. Permission to amend the claim form and particulars of claim was refused. The claim against Mrs Fosman was also dismissed because no proper basis for it was advanced.
2. Applicable jurisdictional requirements. Applying AK Investments v Kyrgyz Mobil [2011] UKPC 7, the claimants had to establish a serious issue to be tried, a good arguable case within a jurisdictional gateway, and that England was the proper place for the claim. The good arguable case standard had to be applied consistently with the analysis in Brownlie v Four Seasons Holdings Inc [2015] EWCA Civ 665 and the Supreme Court judgments discussed in the case. It required a plausible evidential basis, but was not a balance-of-probabilities test.
3. Contract claims. The claimants failed to show a good arguable case that any of the June 2014, November 2014 or May 2015 arrangements was an enforceable contract. The June discussions occurred in a social setting, left essential terms unresolved and contemplated further negotiations. The November document was too uncertain, including as to price, and amounted at most to an agreement to agree. The May document was also insufficiently certain and did not clearly amend or revive the June arrangement. The court could not use the claimants’ subjective understanding to cure deficiencies in the documents. The contractual gateways therefore failed.
4. Unjust enrichment and related claims. On the claimants’ own evidence, Russian law did not recognise the proposed unjust enrichment claim. Under Articles 14 and 10 of the Regulation (EC) No 864/2007, there was no arguable agreement selecting English law and no contractual relationship supplying the applicable law. The enrichment occurred in Russia. The claim therefore disclosed no serious issue to be tried. The fiduciary duty and estoppel claims depended on the alleged contract, while the trust claims were pleaded as remedies arising from the contractual or restitutionary claims and consequently stood or fell with them.
5. Forum. Even if jurisdiction had otherwise been established, England would not have been the proper forum. The dispute, business, witnesses, documents, alleged enrichment and likely applicable law were overwhelmingly connected with Russia. The claimants had not produced the positive and cogent evidence required to show that substantial justice could not be obtained there. The possibility that some causes of action might be unavailable in Russia did not make England the proper forum.

Not an appeal. The judgment concerned an application to set aside permission granted by Leggatt J on 15 December 2016 to serve the claim form out of the jurisdiction, together with an application for permission to amend.