Verlox Internation Ltd & Anor v Igor Antoshin & Ors

Jurisdiction obtained through a party satisfying the gateway for service out cannot be transferred to another claimant by later assignment. A claimant cannot use a corporate vehicle to establish jurisdiction and then abandon it while continuing the same claim in its own name. The court may refuse substitution where the new claimant could not itself have obtained permission to serve out. Unusual circumstances and an asserted access to justice problem do not justify maintaining a claim in the absence of jurisdiction. The court may revoke permission to serve out where the original claimant no longer holds the relevant claim.

The proceedings concerned an alleged oral agreement governed by Russian law. The first claimant, a Belize company, obtained permission to serve the defendants out of the jurisdiction through the necessary or proper party gateway in CPR PD 6B para. 3.1(3), after the second claimant assigned the alleged contractual rights to it.

The second claimant later re-assigned the rights to himself and sought to amend the claim so that he replaced the first claimant. The defendants argued that the amendment would allow him to pursue a claim for which jurisdiction could not have been established in his own name. The central issue was whether substitution could be permitted after the jurisdictional basis relied upon by the original claimant had been removed.

1. Amendment refused. The application under CPR 17.1(2)(b) was misconceived because, once a statement of case had been served, an amendment removing, adding or substituting a party had to be made under CPR 19.4. The relevant discretion was under CPR 19.2(3) and (4).
2. The court applied NML Capital Ltd v Republic of Argentina [2011] 2 AC 495: an amendment substituting a claimant can expose an overseas defendant to a claim other than the one for which appearance was entered, so similar constraints apply to substitution as to adding a cause of action.
3. The court also applied Donohue v Armco Inc [2002] 1 Lloyd's Rep 425. Jurisdiction is territorial. An overseas party may be subjected to the English court only to the extent permitted by statute or rules. The court must examine the substance of the complaint and must not permit jurisdiction to be obtained by a mere device.
4. The first claimant obtained permission to serve out under the necessary or proper party gateway. The second claimant could not acquire that jurisdiction by taking an assignment back from the first claimant. Jurisdiction was not transferable. It was not desirable for the second claimant to remain a party under CPR 19.2(3).
5. The unusual circumstances alleged by the claimants, the defendants’ supposed acceptance of jurisdiction and the asserted access to justice problem did not justify maintaining a claim in the absence of jurisdiction. A further conditional assignment was ineffective because, on the claimants’ own case, the first claimant no longer had any claim to assign.
6. Since the first claimant no longer held the claim on which permission to serve out had been granted, the court revoked that permission under CPR 3.1(7), relying also on CPR 3.3(1) and CPR 11.6(c). The amendment application failed and the order granting leave to serve out was revoked.