Judge Mackie QC:
- This is a dispute about service of an Arbitration Claim Form in Thailand. The parties entered into contracts containing London arbitration clauses. The Claimant has given notice of arbitration but the Defendant has declined to agree to the appointment of an arbitrator. So the Claimant has applied to the court for appointment of an arbitrator. The main issue is this. Is the fact that this is an arbitration dispute a reason why the Court should be readier to make a retrospective order for service than it would be in other cases?
- Unfortunately this application was listed for only an hour and a half despite there being two bundles to consider and a substantial number of cases. Rather than stand the case out and increase the cost and delay I decided, with the consent of the parties, to deal only with the issue of retrospective service as this seemed likely to be determinative, whatever the position on the other points.
The applications
- The matters before the Court are first the Defendant's Application dated 13 February 2012 challenging the Court's jurisdiction on the grounds that the Arbitration Claim Form was not served on the Defendant in Thailand by a method permitted by the laws of Thailand within CPR 6.40 (3) (c) and, secondly, consequential orders under CPR 11 (6) or (7). The Claimant does not pursue its application that the Defendant's Application was out of time but it does seek an order for the appointment of the arbitrator or alternatively for directions for prompt determination of that matter which is the only issue in the case. If the Court determines that the Arbitration Claim was not validly served and does not waive the irregularity under CPR 3.10 or dispense with service under CPR 6.16, the Claimant asks the Court to make retrospectively an order under CPR 6.15 for substituted service permitting service by the means that have been employed. For the reasons I have given I will deal only with the CPR 6.15 point.
Business background
- The Claimant's underlying claim is for damages for the allegedly unlawful use made by the Defendant of specifications (at loadport in Thailand) which the Claimant developed for two grades of Bitumen. The Claimant's case is that these specifications were commercially confidential, in the nature of trade secrets, and its property and that the Defendant contractually agreed to keep the specifications confidential. There was a series of 16 supply contracts from July 2002 to March 2006. There is also an umbrella supply agreement dated 1st January 2005 with an associated brief Product Manufacture Agreement of the same date. All the contracts have London arbitration clauses apart from one which provides for Hong Kong arbitration. The Claimant seeks damages for its alleged losses caused by the Defendant supplying the Bitumex Multigrades to the Claimant's competitors.
- There was correspondence about the dispute in 2007 but nothing further seems to have happened for four years until, out of the blue, the Claimant's new solicitor Mr Howe wrote on 28 October 2011 inviting the Defendant to settle the claim warning that arbitration would be started if proposals were not received within seven days. On 9 November the Claimant gave notice of arbitration under the supply contracts and other agreements referred to above. It invited the Defendant to agree to the appointment of a single arbitrator as the clauses were silent about the number to be appointed in the event of dispute. The Claimant proposed Mr John Marin QC, Mr Michael Howard QC and Mr Stephen Ruttle QC each of whom had confirmed that they were able and willing to act. At the end of the 28 days given for response the Defendant replied suggesting that it did not know about the dispute and asking for information. The 28 days is required by Section 16(3) of the Act. The deadline given by the first solicitor's letter was ludicrously short particularly after such a long interval. It is, if not excusable, understandable that the Defendant has, in procedural terms, responded in kind.
- The Arbitration Claim Form was issued on 15 December 2011 and Mr Justice Flaux gave permission for its service on the Defendant at its registered office at 299 moo 5, Sukhumvit Road, Tumbon Chen Nern, Aumphur Rayong, Rayong, Thailand. In his Witness Statement seeking permission for service Mr Howe recorded the advice he had received from Thai lawyers Blumenthal Richter & Sumet that physical service of the arbitration claim form and related documents was permitted by Thai law indicating that this was how service would be effected. Blumenthal then took steps to serve the documents. On 22 December 2011 they sent a complete copy of the Arbitration Claim and all other documents by registered mail to the Defendant's registered offices at 299 moo 5, Sukhumvit Road, Tumbon Chen Nern, Aumphur Rayong, Rayong. Ms. Sukanya Putthachart, an IRPC employee, acknowledged receipt of those documents on behalf of the managing director of IRPC at its registered address at 18.00 the next day, 23 December 2011. The receipt of the documents is confirmed by the Defendant's lawyer Chalermchai Somboonpakorn. Mr Wormington for the Claimant says that this was an efficient, prompt and effective way of bringing the documents to the Defendant's attention.
- The steps taken to achieve by hand delivery of the documents at the registered office have generated more controversy. It is common ground that on Thursday 22 December 2011 in the afternoon they were accepted by Ms. Supamas to give to the Defendant's Senior Executive Vice President, Mr. Nunthachai Prapawatwech, and she forwarded them to his office where they were received the next morning. By the afternoon they were in the hands of its legal department. Ms. Supamas was in the Defendant's Community Learning Centre at 250/11 moo 5, Sukhumvit Road when she received the documents.
- The Defendant contends that this was not valid service under Thai Law. Service of the claim form out of the jurisdiction in Thailand is governed by CPR 6.40(3)(c), and may be "by any other method permitted by the law of the country in which it is to be served". The phrase "permitted by the law of the country …" does not mean "not prohibited under the law of the country …". Instead, it means "permitted as a method of service under the law of the country …"- see Amalgamated Metal v Baron [2010] EWHC 3207 (Comm) at [37]-[40], Abela v Baadarani [2011] EWCA Civ 1571 at [22]. So far as an application for substituted service is concerned, Mr Hatt for the Defendant says that the same considerations apply: The Claimant must in the usual case show that the method of service which is to be retrospectively validated was good service by the local law (Abela at [23]; Bayat Telephone Systems v Cecil [2011] EWCA Civ 135 at [68]).The enquiry is therefore whether what was done in Thailand constituted valid service under Thai law.
- The Defendant's position is that there was no such valid service. The Order obtained was for personal delivery of the claim form at D's registered address. The Defendant's evidence comes from an independent expert, Mr Pasit Asawawattanaporn, the Secretary-General of the Law Reform Commission in Thailand and a former judge whose judicial appointments included that of Chief Judge attached to the Office of the President of the Supreme Court. Mr Pasit's evidence is that, under Thai law, valid service of process such as the arbitration claim form requires service by an officer of the Thai Court at a registered office address of the defendant. Valid service under Thai law has therefore not taken place.
- The Claimant responds with further evidence and submissions. I am not deciding this issue for reasons I have given and it has not been fully argued. I will assume, for the purpose of the application only and subject to the Claimant seeking to argue the point, that the Defendant is right and that service is invalid. I have set out the facts however as they are relevant to the points I do have to decide.
Further facts
- It is common ground between the parties that there are no bilateral service conventions agreed between the U.K. and Thailand nor are there any other service conventions to which they are both parties. If the Court holds that the Defendant is correct that the only method of service of foreign process permitted under Thai law is through diplomatic channels resulting in service by Thai Court officials, then the only available means of service is by CPR 6.42 "Service through foreign governments, judicial authorities and British Consular Authorities".The Courts Foreign Process Section have advised that service in Thailand through CPR 6.42 will take "around 12 months"
Retrospective Service
- Before turning to the competing submissions I summarise the relevant law as it now stands. CPR6.15 provides in relevant part:
(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place.
(2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service.
- The power of the Court to make such an order in relation to service out of the jurisdiction was considered twice by the Court of Appeal in 2011 in Bayat and Abela. In Bayat Stanley Burnton LJ (with whom Wilson and Rix LJJ agreed) said this;
[65] In modern times, outside the context of the EU, the most important source of the consent of States to service of foreign process within their territory is to be found in the Hague Convention (in relation to the State parties to it) and in bilateral conventions on this matter. Because service out of the jurisdiction without the consent of the State in which service is to be effected is an interference with the sovereignty of that state, service on a party to the Hague Convention by an alternative method under CPR 6.15 should be regarded as exceptional, to be permitted in special circumstances only.
[66] It follows, in my judgment, that while the fact that proceedings served by an alternative method will come to the attention of a defendant more speedily than proceedings served under the Hague Convention is a relevant consideration when deciding whether to make an order under CPR r 6.15, it is in general not a sufficient reason for an order for service by an alternative method.
[67] Quite apart from authority, I would consider that in general the desire of a Claimant to avoid the delay inherent in service by the methods permitted by CPR r 6.40, or that delay, cannot of itself justify an order for service by alternative means. Nor can reliance on the Overriding Objective. If they could, particularly in commercial cases, service in accordance with CPR r 6.40 would be optional; indeed, service by alternative means would become normal. In fact this view is supported by authority: see the judgment of the court in Knauf UK GmbH v British Gypsum Ltd [2001] EWCA Civ 1570, [2001] 2 All ER (Comm) 960, [2002] 1 WLR 907 at para 47:
"It was argued by Peters before the judge that the Hague Convention and the Bilateral Convention were a 'mandatory and exhaustive code of the proper means of service on German domiciled defendants', which therefore excluded alternative service in England. The judge did not accept that submission, pointing out that those Conventions were simply not concerned with service within the English jurisdiction. Peters did not repeat that submission on its appeal. Nevertheless, it follows in our judgment that to use Rule 6.8 as a means for turning the flank of those Conventions, when it is common ground that they do not permit service by a direct and speedy method such as post, is to subvert the Conventions which govern the service rule as between Claimants in England and defendants in Germany. It may be necessary to make exceptional orders for service by an alternative method where there is 'good reason': but a consideration of what is common ground as to the primary method for service of English process in Germany suggests that a mere desire for speed is unlikely to amount to good reason, for else, since Claimants nearly always desire speed, the alternative method would become the primary way."
[68] Service by alternative means may be justified by facts specific to the defendant, as where there are grounds for believing that he has or will seek to avoid personal service where that is the only method permitted by the foreign law, or by facts relating to the proceedings, as where an injunction has been obtained without notice, or where an urgent application on notice for injunctive relief is required to be made after the issue of proceedings. In the present case, the only reason for urgency in serving the Defendants arose from the Claimants' delay in seeking and obtaining their permission to serve out of the jurisdiction: a delay resulting in part from their decision not to proceed with their claim until they had obtained funding for the entire proceedings. Furthermore, their application for permission to serve out was not particularly complicated.
[69] This does not mean that a Claimant cannot bring proceedings to the attention of a defendant by email, fax or other more speedy means than service pursuant to CPR r 6.40. The Claimants could have done so in the present case. But, as I have indicated, service is more than this. In my view, the judge confused this possibility with service itself.
Rix LJ said this;
[113] 40. It may be that orders permitting alternative service are not unusual in the case of countries with which there are no bilateral treaties for service and where service can take very long periods, of up to a year (cf Marconi v PT Communications International Ltd [2004] EWHC 129 (Comm), [2004] 1 Lloyd's Rep 594 (David Steel J) at 44-45). In the present case, that did not apply to any of the defendants, and I would prefer to leave such cases out of account. The rule, CPR 6.15(1), expressly requires "good reason", and it may be that some flexibility should be shown in dealing with such cases, especially where litigation could be prejudiced by such lengthy periods.
- In Abela Longmore LJ, with whom the other members agreed said this at 22;
Nevertheless the exercise of this power is liable to make what is already an exorbitant power still more exorbitant and I am persuaded by Mr Greatorex that it must indeed be exercised cautiously and, as Stanley Burnton LJ said in para 65 of Cecil v Bayat, should be regarded as exceptional. It would, therefore, usually be inappropriate to validate retrospectively a form of service which was not authorised by an order of an English judge when it was effected and was not good service by local law. CPR 6.40 permits three methods of service including service through the British Consular authorities and any additional method of service should usually not be necessary. The fact that CPR 6.40(4) expressly states that nothing in any court order can authorise or require any person to do anything contrary to the law of the country in which the document is to be served does not mean that it can be appropriate to validate a form of service which, while not itself contrary to the local law in the sense of being illegal, is nevertheless not valid by that law.
[23] It follows that a Claimant who wishes retrospective validation of a method of service in a foreign country must (save perhaps where there are adequate safeguards which were not present in this case) show that the method of service which is to be retrospectively validated was good service by the local law.
Claimant's Submissions
- The proceedings to be served are in support of an agreement by which the parties have consented to resolve their dispute by arbitration in London and there are no bilateral or other service conventions available to assist service that the Court should exercise its power readily. The likely delay of reservice will create wholly inordinate delay (equal to the entire duration of some time limits) and would cause real injustice to the Claimant where
(a) The Defendant and the Claimant have agreed to resolve the underlying dispute between them by arbitration in London under English law; the Arbitration Act 1996 (the "Act") applies to regulate and facilitate that arbitration;
(b) In breach of its agreement to arbitrate the Defendant has failed to co-operate in the appointment of an arbitrator and the Arbitration Claim Form has been issued in aid of the arbitration for the purpose of obtaining the Court's assistance in constituting the Tribunal;
(c) by agreeing to arbitrate their disputes in England the parties have impliedly agreed that the usual ancillary proceedings may be brought before the English Court to assist and protect the arbitration; the Defendant has implicitly agreed or should be taken to have accepted that such ancillary proceedings can be commenced against it expeditiously by ordinary methods of commercial communication (use of post or hand delivery to their offices) and/or by methods that do not involve inordinate delay;
(d) the object of arbitration under the Act is "fair resolution of the disputes by an impartial tribunal without unnecessary delay and expense" (section 1(a)); this principle should guide the Court when exercising its powers to deal with procedural matters concerning arbitrations;
(e) Service under CPR 6.42 would take around 1 year and involve inordinate and unnecessary delay; effectively to require the Claimant to use CPR 6.42 would reward the Defendant's breach of the arbitration agreement;
(f) The principle underlying the Act is that the Arbitration should be conducted without delay and avoiding unnecessary expense and the parties are to be taken as subscribing to that principle;
(g) The long established policy of this Court is to promote and facilitate the conduct of international arbitration in London;
(h) As a matter of routine the Court will make orders for substituted service of Arbitration Claim Forms on the London legal representatives conducting an arbitration; the same considerations justifying substituted service apply to the situation in this case (see Commercial Court Guide paragraph O 4.4 and PD 62 paragraph 3.1);
(i) Since there is no bilateral service treaty between the UK and Thailand nor are they common parties to any other service convention, the making of a substituted service order will not circumvent the provisions of any such treaty or convention;
(j) Use of CPR 6.42 is almost bound to require a series of extensions to the validity for service of the Claim Form.
(k) The Defendant will suffer no prejudice.
Defendant's Submissions
- A delay of 12 months is not a good reason for circumventing the law of Thailand: precisely the same point was made to Judge Chambers QC in Amalgamated Metal (see [87]) to no avail (see [95]-[101]). It has been open to the Claimant to serve the claim form properly and it has only itself to blame for any delay which results from not having done so.
- An order for alternative service "is liable to make what is already an exorbitant power still more exorbitant" (Abela at [22]). The present case is far from being the exceptional case in which this power should be exercised so as to make a Thai company party to foreign proceedings in circumstances in which it would not have been made party to proceedings in its local court.
- The fact that the claim form has been brought to the Defendant's attention is nothing to the point. Every defendant who makes an application under CPR Part 11 knows of the claim form and wishes nonetheless to dispute the Court's jurisdiction. (See Amalgamated Metal at [102].) The party who is not aware of the claim form will not make the application.
- The arbitration context does not make this case exceptional and does not take it outside the normal course set out in Amalgamated Metal and Abela. The kinds of exceptional circumstance in which an order for service by an alternative means might be made were contemplated by the Court of Appeal in Bayat as being "facts specific to the defendant…or relating to the proceeding…," (see above [68]). There are no such relevant facts in this case. Arbitration claim forms are not in a special category of claim form for which the normal rules of service do not apply, either within the jurisdiction or outside it.
Decision of the Court
- The rules for service in the CPR serve an important purpose and should in general be strictly complied with. The cases explain that if alternative or retrospective service was easily granted compliance with the Rules would become optional. Retrospective service is exceptional and is permitted in special circumstances only. The fact that alternative means may be much quicker than the Hague Convention is relevant but not of itself usually sufficient to be exceptional. Retrospective service can be justified by facts special to the proceedings.
- There is no bilateral agreement for service between the UK and Thailand so no direct obligations between the countries are being overlooked if retrospective service is permitted. Service through the Thai judicial authorities will probably take a year to compete.
- This is not a case where the English court is presuming to try a dispute itself, which, on the Defendant's case, has not been served to the standards required by local law for a trial in Thailand. The court is not in jurisdictional competition with Thailand. This court is not being asked to try a dispute at all. It is being asked to assist the progress of an international arbitration in London, the method chosen by the parties for resolving their contractual disputes. Under the Arbitration Act 1996 the parties are committed to fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. (Section 1(a)). The Defendant has in breach of Section 16 failed to join in the appointment of an arbitrator and the Court is asked to appoint one so that the arbitration may proceed. The Defendant is fully aware of the existence of the arbitration and the specific service steps referred to above have been taken to reinforce the information already in its possession. The Defendant is relying on formalities relating to the appointment of an arbitrator by the Court which do not apply to the initiation of the arbitration process itself. The Defendant is knowingly causing unnecessary delay and expense in the arbitration process.
- I disagree with Mr Hatt's submissions that the fact that this is an arbitration case does not take it out of the norm. These considerations seem to me to be facts relating to the proceedings which are crucial. They are facts which make the case exceptional in the sense explained in Bayat. They are considerations beyond the mere advantage of obtaining a speedier process than compliance with the local process would produce. I will therefore order retrospective service as permitted by CPR 6.15 but subject to conditions.
- The Claimant seeks more than $75,000,000 from the Defendant. I have referred to the inappropriately short time limits imposed by the Claimant. If a more reasonable approach had been adopted the Defendant might well have acted differently. Further, despite the size of the claim, no detailed letter of claim or draft Points of Claim or other pleading has been submitted by the Claimant. I am therefore provisionally minded to order first that retrospective service take effect from a forthcoming date by which the Claimant must have provided details of its claim to the Defendant of the kind that a full letter of claim or draft pleading would contain and secondly that there either be no costs of the application or that these be costs of the arbitration.
- I will hear argument from the parties if either wishes. I will also hear the application to appoint the arbitrator. It may however save further time and expense if I say first that each of the three names put forward would make an admirable arbitrator for this dispute and secondly that it would be understandable if the Defendant wished to propose fresh names not canvassed so far in this dispute.
Conclusion
- In substance the Claimant's application succeeds. I shall be grateful if Counsel will, not less than 72 hours before hand down of this judgment, let me have, corrections of the usual kind and a draft order, both preferably agreed, as well as a note of any matters to be raised at the resumed hearing. If the parties can agree all outstanding matters, so much the better, and in that case attendance will not be required at the hand down.
