Pezold v Border Timbers Ltd

For CPR Part 6.40(4), the court must be satisfied on the balance of probabilities that proposed service abroad will comply with the law of the country where service occurs. Comity requires more than a good arguable case on foreign law. The rule also applies where foreign law prohibits service of the claim itself, rather than merely prescribing an unlawful method. A foreign insolvency moratorium has no application to English proceedings unless the legislation clearly has extraterritorial effect. Service in England may remain permissible where the claimant has an arguable claim within an exclusive English jurisdiction clause.

The claimant sought an injunction restraining the defendant, a Zimbabwean company in judicial management, from settling or enforcing an ICSID award without his consent. An ex parte order authorised service by courier and email in Zimbabwe and by post and email on the defendant’s English solicitors.

The defendant applied to set aside the order, alleging that service contravened Zimbabwean law under CPR Part 6.40(4), and that there was no good reason for alternative service under CPR Part 6.15(1). The latter ground was substantially abandoned. The central issues were whether Zimbabwe’s statutory moratorium applied to the defendant after repeal of the former judicial-management legislation, whether it affected service of English proceedings, and whether service on the English solicitors could stand.

1. Application dismissed. The claimant established the relevant foreign-law position on the balance of probabilities. The court rejected the proposed good arguable case standard. Under CPR Part 6.40(4), the court had to satisfy itself that it was not authorising conduct unlawful under Zimbabwean law. The policy of comity supported that conclusion.
2. The defendant’s judicial-management orders were made under the Old Companies Act and remained effective after its repeal. The New Insolvency Act did not expressly or impliedly assimilate companies already in judicial management into the corporate-rescue regime. To imply such a result only upon a later repeal, without transitional or saving provisions, would go beyond legitimate statutory interpretation and amount to judicial legislation. Any resulting lacuna was for the legislature to cure.
3. Accordingly, the moratorium in section 126 of the New Insolvency Act did not apply to the defendant. The first and second methods of service were therefore not contrary to Zimbabwean law on that basis.
4. Alternatively, the court would have held that section 126 was procedural and domestic in scope. Applying the principle of territoriality, its references to legal proceedings and any forum did not extend to English proceedings or prohibit their commencement or service. The court regarded the issue as moot on the primary reasoning but expressed its conclusions because it had been fully argued.
5. The court also rejected the argument that service on the defendant’s English solicitors should be set aside merely because service elsewhere might be unlawful. The exclusive English jurisdiction clause, the arguable claim, and the absence of another effective forum supported lawful service in England. The application accordingly failed on every remaining ground.

The judgment describes an ex parte order made by HHJ Pelling QC on 9 April 2020 authorising alternative service. The defendant’s application to set aside that order was dismissed by the High Court.