Manek & Ors v IIFL Wealth (UK) Ltd & Ors

For service out of the jurisdiction, the claimant must establish the relevant jurisdictional gateway, a serious issue to be tried where required, and that England is clearly or distinctly the appropriate forum. Under the necessary or proper party gateway, the claim against the anchor defendant must survive the summary judgment test: it must be more than fanciful and have some degree of conviction.

For the tort gateway, the loss must result from substantial and efficacious acts committed within England by the defendant concerned. The court must assess the intrinsic potency and significance of the acts in the context of the case as a whole. Minor, insignificant or fortuitous acts, and acts of different parties, are insufficient.

The claimants, minority shareholders in an Indian company, alleged that they had been induced by fraudulent misrepresentations and intimidation to sell their shares at an undervalue. They sought to serve proceedings on the second and third defendants, resident in India.

The application challenged permission previously granted under the necessary or proper party and tort gateways in Practice Direction 3B. The court considered whether there was a real issue to be tried against the English anchor defendant and whether substantial and efficacious tortious acts causing the alleged loss had occurred in England.

1. Necessary or proper party gateway. The applicable jurisdictional requirements were identified by reference to Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7. The defendants conceded, for this application only, that there was a serious issue to be tried on the merits.
2. The Brownlie formulation, adopted by the Supreme Court in Goldman Sachs International v Novo Banco SA [2018] UKSC 34 and applied in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10, requires a plausible evidential basis for the gateway. Where factual assessment is possible, the court should decide the issue on the available material; where it cannot reliably do so, a flexible good arguable case standard applies.
3. For the question whether there was a real issue against the anchor defendant, the lower summary judgment test applied, following Lungowe v Vedanta Resources plc [2019] UKSC 20. The claim against IIFL UK depended on attributing the alleged representations by AS to that company or establishing vicarious liability. The evidence showed no more than a fanciful or imaginary case, and the gateway therefore failed.
4. Tort gateway. The relevant loss had to result from substantial and efficacious acts committed in England by the defendants concerned. In cases involving misrepresentations, the harmful event occurs where the representations were made. The approach in Metall und Rohstoff v Donaldson [1990] 1 QB 391 required consideration both of the intrinsic potency of each act and its significance in the context of all the relied-on facts.
5. The London meetings and the execution of replacement documents were minor or insignificant. The later sale by EMIF to WAG involved different parties and could not constitute substantial and efficacious acts by the second and third defendants. The tort gateway consequently failed.
6. The arbitration, non-disclosure and forum conveniens issues were not determined because they had become academic or were unnecessary to resolve. The court would hear the parties on the consequential order.