Bulgarian Development Bank EAD v Ulas Investments EAD

For service out of the jurisdiction, the claimant must show a serious issue to be tried, a good arguable case within a jurisdictional gateway, and that England is clearly or distinctly the appropriate forum.

The property gateway extends to intangible property, including shares in an English registered company, and is not confined to disputes about legal title. A wider contractual or trust relationship does not displace the gateway where the claim principally concerns ownership of those shares. Forum convenience factors may be outweighed by the location of the property, the risk of related proceedings, and the likely application of English law. Minor irregularities in documents served under the Hague Service Convention do not invalidate service, particularly where a complete set is subsequently provided.

Bulgarian Development Bank EAD claimed that shares in an English registered company were held by Ulas Investments EAD as nominee and bare trustee. It sought declarations concerning beneficial ownership and injunctions requiring Ulas to authorise payment of liquidation proceeds.

Ulas applied under CPR Part 11 to set aside permission previously granted for service out of the jurisdiction and challenged the validity of service in Bulgaria under the Hague Service Convention. It argued that the dispute was principally contractual and connected with Bulgaria, and that the served documents were irregular.

The issues were whether the service-out requirements were met and whether service was valid.

1. Application dismissed. The claimant established a serious issue to be tried. The available documents gave it real prospects of proving either an express trust arising from the parties’ intention or a resulting trust based on its provision of the consideration.

2. The requirements under CPR r. 6.36 and CPR r. 6.37 were applied. The claimant had to show a serious issue, a good arguable case within a jurisdictional gateway, and that England was clearly or distinctly the appropriate forum.

3. The property gateway in PD 6B paragraph 3.1 (11) applied. Shares were intangible property within the jurisdiction because they were shares in an English registered company. The gateway was not limited to title disputes. Even if the parties’ wider relationship involved a joint venture or contractual obligations, the claim principally concerned ownership of, or rights relating to, the shares.

4. The claimant also had a good arguable case under several alternative gateways. A voluntarily created trust was tentatively connected with the place where the relevant agreement was made. A resulting trust might instead fall under PD6B paragraph 3.1 (15). Communication of authority to English liquidators could constitute performance, and therefore breach, in England. Injunctions requiring transfer of title or authority to pay could also involve an act in England.

5. Under Articles 6 and 7 of the Hague Convention on the Law Applicable to Trusts and their Recognition 1986, the English-law clause in the restructuring deed was not by itself a sufficiently potent indication that the ancillary trust was governed by English law. Nevertheless, England was arguably the place with which the trust was most closely connected, given the English situs of the shares, the restructuring and the securities created under it.

6. England was clearly and distinctly the appropriate forum. Bulgarian witnesses, language and possible expert evidence were significant, but posed no substantial impediment. The English location of the shares and liquidation proceeds, the risk of ancillary English proceedings, and the likely application of English law were compelling countervailing factors.

7. Service under the Hague Service Convention was valid. Minor disorganisation or possible omissions in the served papers did not establish non-compliance. In any event, the complete documents were subsequently supplied at the defendant’s request, curing any irregularity.

8. A further period was directed for Ulas to file an acknowledgment of service and then a defence. Costs and consequential matters were left for agreement or further directions.