Societe Generale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS & Ots

Alternative service under Civil Procedure Rules 1998, rule 6.15, requires a good reason assessed in all the circumstances. Knowledge of the claim form alone is insufficient. Culpable delay, abusive warehousing of proceedings, treaty non-compliance and an accrued limitation defence weigh strongly against relief. Where service abroad is governed by the Hague Convention or a bilateral treaty, comity means that alternative service contrary to the agreed mechanism should be ordered only exceptionally. A claimant who obtains a freezing order must progress the substantive proceedings or obtain the court’s sanction for delay. The claims were struck out, the freezing orders discharged and an inquiry under the cross-undertaking ordered.

Société Générale brought two claims against companies in the Goldas group concerning unpaid gold bullion and related guarantees. Freezing orders were obtained, but the claim forms were not validly served in Turkey or Dubai. Société Générale then left the English proceedings dormant for about eight years while pursuing insolvency proceedings in Turkey.

The Goldas defendants applied to strike out the claims, discharge the freezing orders and obtain an inquiry as to damages. Société Générale sought retrospective alternative service under rule 6.15, or dispensation with service under rule 6.16, together with summary judgment. The central issues were the validity of service, whether relief should be granted despite delay and limitation consequences, whether the proceedings had been abused, and whether the freezing orders had been wrongfully maintained.

1. Service in Dubai. Under article 10 of the Dubai bilateral treaty, service had to comply with Dubai law. Article 9.2 of the Dubai Civil Procedure Code required delivery at the company’s management to its authorised legal representative or representative, and only in their absence to an employee. An oral refusal, without physical tender or attempted transfer, was not delivery. Articles 13, 14 and 90 concerned the consequences of defective service in domestic proceedings; they did not establish that treaty service had occurred. The Folio 267 claim form was therefore not validly served in Dubai.
2. Alternative or dispensed service. The court applied the good-reason test under rule 6.15 and the exceptional-circumstances test under rule 6.16. All relevant circumstances had to be weighed. The defendants’ knowledge of the claim forms was important but insufficient. Société Générale had failed to serve within the claim-form validity period, knowingly allowed the limitation period to expire, breached undertakings to issue and serve as soon as practicable, and deliberately warehoused the proceedings while pursuing claims in Turkey. The loss of a potentially meritorious claim was not a good reason where the limitation defence had been allowed to accrue through the claimant’s own culpable delay.
3. Treaty service and abuse. Additional time and cost involved in Hague Convention or bilateral-treaty service did not ordinarily justify relief. Turkey’s objection to alternative Hague Convention methods, and the corresponding treaty arrangements with Dubai, engaged comity. Relief was therefore inappropriate. A claimant obtaining a freezing order must progress the substantive proceedings expeditiously or seek the court’s sanction for delay. Maintaining the orders for the benefit of foreign proceedings, without returning to court, was a serious abuse.
4. Orders. The applications under rules 6.15 and 6.16 were dismissed. The claim forms had expired without valid service and the claims were struck out. The freezing orders were discharged. The cross-undertaking was enforceable for loss caused by maintaining the orders from mid-April 2008, and directions were to be given for an inquiry as to damages.