Iranian Offshore Engineering And Construction Company v Dean Investment Holdings SA & Ors

Rule 25(2) of Dicey provides a default rule: where foreign law is not proved, the court applies English law. A claimant need not plead the existence of that rule, the applicable law, or foreign law merely because the claim is governed in principle by foreign law. If a defendant contends that applying English law by default would be inappropriate, it must ordinarily plead that contention as a reasoned denial of liability, identifying the matters relied upon. The default rule is not displaced merely because the foreign law governs the claim or belongs to a civil-law system. Procedural relief may still be available for a late amendment or other exceptional step where fairness permits.

The claimant brought claims arising from an alleged fraud and related wrongdoing concerning payments of approximately US$87 million. The fifth and sixth defendants pleaded that the claims were governed by Iranian law but did not plead the content of Iranian law or contend that Rule 25(2) should be disapplied.

At a pre-trial review, the claimant sought a ruling that the defendants could not contend at trial that the claims should fail because Iranian law had not been pleaded and proved. The central issue was whether that contention remained open on the existing pleadings and case-management history.

1. Default rule. Rule 25(2) applies unless a reason not to apply it is demonstrated. A claimant is not required to plead applicable law or foreign law where its pleaded case is complete and viable if determined under English law.
2. Pleading burden. A defendant seeking to contend that the default application of English law is inappropriate must ordinarily plead that contention as a reasoned denial of liability, in accordance with CPR 16.5(2)(a). The matters relied upon may include propositions of foreign law, but need not necessarily do so.
3. Limits of the rule. There is no absolute preclusion rule. The court may permit a late amendment, allow indulgence at trial, or raise the issue of its own motion. Such relief would ordinarily be rare where proper case management has occurred.
4. Authorities. The analysis of Arden LJ in OPO v MLA and Brownlie v Four Seasons Holdings Inc was compelling, although the relevant passages were obiter. The general observations in Belhaj v Straw and the approach criticised in Global Multimedia International Ltd v Ara Media Services were not followed to the extent that they suggested a general requirement for a claimant to plead foreign law merely because foreign law governed the claim.
5. Application and order. The defendants had not pleaded any case that Rule 25(2) was inappropriate. The pleaded assertion that Iranian law governed the claims did not disapply the rule. The claimant’s application substantially succeeded. Rule 25(2) would apply at trial and the trial would not involve consideration of Iranian law, subject to any successful application to amend the pleadings.