Kaefer Aislamientos SA De CV v AMS Drilling Mexico SA De CV & Ors

The good arguable case test for establishing jurisdiction is a single, flexible inquiry. The claimant must ordinarily show that it has the better argument on the available evidence. The court should resolve evidential difficulties where it can reliably do so. Where the nature of the issue or limitations of the evidence prevent a reliable assessment, a plausible, although contested, evidential basis may suffice. The test requires neither proof on the balance of probabilities nor a separate showing of much the better argument. It differs from the summary judgment test.

For jurisdiction agreements governed by Article 25 of the Brussels I Regulation (Recast), the requirement for clear and precise evidence of consensus informs the domestic test. Appellate courts should respect a first instance judge’s evaluative assessment within the permissible margin of reasonable disagreement.

The claimant sought payment for refurbishment and asbestos abatement works on a drilling rig. A purchase order signed by Atlantic Marine Services BV contained an English exclusive jurisdiction clause and directed invoices to AMS Drilling Mexico SA de CV. Neither company challenged jurisdiction. The claimant alleged that they had contracted for Atlantic Tiburon 1 Pte Limited, the rig’s owner, and Ezion Holdings Limited, its parent and a provider of financing, as undisclosed principals.

The Commercial Court declared that it lacked jurisdiction over the owner and its parent and set aside the pleadings and service abroad. The deputy judge considered the case against the owner arguable but found that the owner had the better argument. He found no good arguable case against the parent.

The claimant appealed with permission. The issues concerned the correct jurisdictional evidential test, its application to incomplete evidence, and appellate review of the judge’s assessment. A respondents’ notice also challenged his treatment of the contractual identification of the parties and the entire agreement clause as neutral.

1. The appeal was dismissed unanimously. Green LJ’s reasons were accepted by Asplin and Davis LJJ. Although the deputy judge had incorrectly separated good arguability from the better argument inquiry, his ultimate assessment applied the correct relative approach. That initial error did not vitiate his conclusion.

2. The three-limbed test in Goldman Sachs International v Novo Banco SA [2018] UKSC 34 governed. Ordinarily, a plausible evidential basis meant evidence showing that the claimant had the better argument. The court should overcome evidential difficulties where a reliable assessment remained possible. Where no reliable assessment could be made, a good arguable case could rest on plausible, contested evidence without necessarily establishing relative superiority. The claimant retained the burden. Neither the balance of probabilities nor the summary judgment standard applied, and the word much added no requirement.

3. Under Article 25 of the Brussels I Regulation (Recast), clear and precise evidence of consensus formed a component of the domestic test. Bols Distilleries (trading as Bols Royal Distilleries) v Superior Yacht Services Ltd [2006] UKPC 45 supported that approach. The requirement indicated the quality of evidence sought under each limb. Its relevance survived the extension of the provision to parties regardless of domicile.

4. The judge had reliably assessed the available evidence. He tested an unresolved issue about the owner’s repair obligations on an assumption favourable to the claimant. He also reached his conclusion on documents independently of disputed hearsay, which merely reinforced it. Missing documents did not automatically make the assessment unreliable or justify adverse conclusions. The findings against both alleged principals fell within the permissible range of evaluation. Davis LJ emphasised that appellate intervention required a material legal error, material factual omission, reliance on immaterial facts, demonstrable misunderstanding, or an unreasonable evaluation exceeding that range.

5. Undisclosed principal liability required actual authority, an intention to contract for the principal, and the absence of contractual or surrounding circumstances excluding intervention. As additional reasoning, the express identification of parties combined with the entire agreement clause weighed against undisclosed principal status. The clause did not unequivocally exclude that possibility. The approach in Aspen Underwriting Ltd v Kairos Shipping Limited [2018] EWCA Civ 2590 treated identification of parties as important evidence rather than necessarily dispositive. Correcting the judge’s treatment of those terms strengthened the refusal of jurisdiction.

6. The historical description of service abroad as exorbitant supplied no independent justification for raising the threshold. Jurisdiction hearings should proceed promptly and concisely. Although inadequate evidence may justify adverse conclusions in an appropriate case, demands for extensive disclosure should respect the interlocutory nature of the inquiry.

• Court of Appeal (Civil Division): [2019] EWCA Civ 10 . The appeal was dismissed unanimously. The declaration that the court lacked jurisdiction over the third and fourth defendants, and the setting aside of the pleadings and service abroad, remained effective.
• Court of Appeal: Flaux LJ granted permission to appeal on 15 February 2018.
• High Court, Commercial Court: Mr Peter Macdonald Eggers QC, sitting as a deputy High Court judge, declared that the court lacked jurisdiction over the third and fourth defendants and set aside the pleadings and service abroad. No citation for that judgment was supplied.