Société Générale v Goldas Kuyumculuk Sanayi Ithalat Ihracat A.S. & Ors

Whether there is a good reason for retrospective alternative service under rule 6.15 of the Civil Procedure Rules 1998 is an evaluative question. Negligent legal advice is not invariably a reason against relief, but will seldom justify relief after limitation has expired unless it bears materially on that expiry.

Where the Hague Convention governs service, an alternative method inconsistent with the Convention should be authorised only in special circumstances. Speed and cost do not ordinarily suffice.

A cross-undertaking in damages is enforced equitably. The beneficiary must seek an inquiry promptly. Excessive delay may preclude enforcement even without demonstrated prejudice.

Société Générale issued two sets of English proceedings arising from deliveries of gold bullion, loans and guarantees. It obtained freezing injunctions but its attempts to serve the defendants in Turkey and Dubai were ineffective. It then left the English proceedings dormant for about eight years while pursuing Turkish insolvency proceedings.

Popplewell J, in [2017] EWHC 667 (Comm), refused retrospective alternative service or dispensation from service. He dismissed the claims, discharged the freezing injunctions and ordered an inquiry into damages under the cross-undertakings.

The bank appealed, alleging errors in the treatment of negligent legal advice, limitation and service governed by the Hague Convention. It also challenged the inquiry into damages and sought belatedly to add technical grounds concerning jurisdiction and waiver.

1. Appeal allowed in part. The refusal of retrospective alternative service, dismissal of the claims and discharge of the freezing injunctions were upheld. The order for an inquiry into damages was discharged.

2. The judge had put the law too high by treating negligent or incompetent legal advice as invariably a bad reason under rule 6.15 of the Civil Procedure Rules 1998. Unlike an extension under rule 7.6, alternative service does not carry the same disciplinary emphasis. The significance of negligent advice depends upon the circumstances. Nevertheless, after limitation has expired, such advice will seldom constitute a good reason for depriving a defendant of an accrued or arguable limitation defence unless it bears materially upon the expiry of the period.

3. The error was immaterial. The bank knew service was disputed, could have sought relief before limitation expired and instead warehoused the proceedings. The judge's overall evaluation was balanced and was neither vitiated by an error of principle nor plainly wrong.

4. Limitation is highly relevant to retrospective alternative service. A good reason should ordinarily explain or affect the failure to achieve service before limitation expired. There is no substantial difference in that respect between the approaches under rules 6.15 and 7.6.

5. Where service is governed by the Hague Convention, alternative service should be permitted only in special circumstances. Comity requires weight to be given to a contracting state's objections to other methods. Greater speed or lower cost will not ordinarily be enough. Any change to that binding approach was for the Supreme Court.

6. The inquiry under the cross-undertakings should not have been ordered. A beneficiary must seek enforcement promptly and with reasonable despatch. The defendants' eight-year delay was excessive. Absence of demonstrated prejudice was not decisive, and there was in any event potential prejudice because an earlier application might have allowed fresh proceedings or an application for alternative service before limitation expired.

7. Permission to add new technical grounds shortly before the appeal was refused. The points had not been raised below and should have accompanied the original application for permission to appeal.

1. Court of Appeal (Civil Division): By [2018] EWCA Civ 1093, unanimously allowed the appeal only to discharge the inquiry into damages. It otherwise upheld the refusal of service relief, dismissal of the claims and discharge of the freezing injunctions.

2. High Court, Commercial Court: Popplewell J, in [2017] EWHC 667 (Comm), refused retrospective alternative service and dispensation from service, dismissed the claims, discharged the freezing injunctions and ordered an inquiry under the cross-undertakings.