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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Integral Petroleum SA v SCU-Finanz AG [2014] EWHC 702 (Comm) (14 March 2014) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2014/702.html Cite as: [2014] EWHC 702 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice 7 Rolls Building, Fetter Lane London, EC4A 1NL
		14 March 2014

The Hon. Mr Justice Popplewell :

Introduction

1. This is an application by the Defendant ("SCU-Finanz") to set aside a judgment entered in default of service of defence in favour of the Claimant ("Integral") for US$ 1,078,547 plus costs to be assessed. SCU-Finanz contends that the judgment must be set aside as of right pursuant to CPR 13.2; alternatively that the Court ought to exercise its discretion to set aside the judgment pursuant to CPR 13.3 because it has defences with a real prospect of success. Integral contends that CPR 13.2 is not engaged, that SCU-Finanz does not have any defence with a real prospect of success, or alternatively if it has, that the Court ought not to exercise its discretion to set aside the judgment because the application was not brought promptly.

Integral's claim

2. Integral and SCU-Finanz are both limited liability Swiss companies engaged in oil trading. Integral's claim is as buyer under a supply contract dated 18 October 2011 ("the Supply Contract") under which SCU-Finanz agreed to sell and deliver a quantity identified in clause 4 as :

"INTENTION TO LOAD UP TO 400,000 METRIC TONS PER YEAR (UP TO 40,000 METRIC TONS PER MONTH) TO BE SPECIFIED AS PER SEPARATE ADDENDUM IN SELLER'S OPTION". The product to be supplied was identified in clause 3 as "GASOIL, FUEL OIL, NAPHTHA, GASOLINE, JET, KEROSENE (TO BE SPECIFIED IN THE SEPARATE ADDENDUMS) AS USUALLY PRODUCED BY TURKMENBASHI COMPLEX OF REFINERIES ("THE PRODUCT")". Delivery obligations were identified in Clause 5 as "FOB TURKMENBASHI PORT, FCA TURKMENBASHI, FCA SEIDI (TO BE SPECIFIED IN SEPARATE ADDENDUMS) WITHIN THE PERIOD 01.11.2011 – 31.10.2012 (EXACT PERIOD OF DELIVERY OF EACH LOT TO BE SPECIFIED IN SEPARATE ADDENDUMS) IN MULTIPLE CARGO LOTS IN BUYER'S OPTION". Clause 6 provided: "THE UNIT PRICE IN US DOLLARS PER METRIC TON SHALL BE EQUAL TO THE PURCHASE PRICE FROM TURKMENBASHI COMPLEX OF REFINERIES PLUS USD 17.00 PER METRIC TON (EXACT PURCHASE PRICE FROM TURKMENBASHI COMPLEX OF REFINERIES FOR EACH LOT/CONTRACT TO BE AGREED BY THE SELLER AND THE BUYER AND TO BE SPECIFIED IN THE SEPARATE ADDENDUMS)."

3. Clause 11 of the Supply Contract provided for English law and the exclusive jurisdiction of the English High Court.
4. Integral's claim is for failure on the part of SCU-Finanz to deliver any product pursuant to the Supply Contract. The evidence before me as to what happened during the currency of the contract was extremely sparse, but it appears that there was never any agreement on any of the matters which required to be specified in addenda for the purposes of clause 3 (identifying the product), clause 4 (identifying lifting quantities) clause 5 (identifying the place of loading and delivery dates) or clause 6 (identifying refinery prices on which the contractual prices were based).

Procedural Chronology

5. On 11 February 2013 Integral issued its claim form. The claim form and response pack was served on 21 March 2013 on SCU-Finanz at its registered address in Switzerland by the Swiss courts via the Foreign Process Section of the High Court, pursuant to CPR Rule 6.33(1)(b)(iii). The Response pack included a draft form of acknowledgement of service in which the standard form had been altered in manuscript so as to provide that, in the event that an acknowledgement of service was entered but no defence filed, judgment might be entered within 36 days of the date of service of the particulars of claim. This was an error. The relevant period in the Commercial Court is 28 days by virtue of CPR 58.10(2).
6. SCU-Finanz filed an acknowledgement of service which was received by the Court and Integral on 15 April 2013. The acknowledgement of service indicated an intention to defend and intention to contest jurisdiction (although no application was subsequently made pursuant to Part 11 within the 28 days allowed). In the box designated for identifying the business address of the Defendant's solicitor or European Lawyer or the Defendant's own business address, the acknowledgement of service identified Me Errol Cohen and gave a postal address in Paris. The box in which there could be provided a telephone number, fax number, DX number and e-mail address were left blank.
7. The matter was being dealt with on behalf of Integral by Mr Parish, a partner of Holman Fenwick Willan LLP ("HFW") and his assistant Ms Hodson. They surmised that the reference to "Me" Errol Cohen indicated that he was a "Maitre" and therefore a French Avocat. Having made the necessary enquiries they identified that that was so and that his e-mail address was [email protected].
8. On 14 May 2013 Ms Hodson sent an e-mail to Maitre Cohen at that e-mail address stating that their client had suddenly and unexpectedly been taken ill and therefore there would be a delay in serving the Particulars of Claim. Time for service (28 days from acknowledgement of service: CPR 58.5) had in fact already expired the previous day. The e-mail asked for agreement to an extension up to close of business on 6 June 2013. Following a chasing e-mail on 21 May 2013 Maitre Cohen responded by e-mail later that day confirming approval to the extension sought.
9. Although the e-mail requesting an extension had referred to the fact that the parties were permitted to agree up to a maximum of 28 days and had referred to the extension sought to close of business on 6 June 2013 as the full extension, there had been a miscalculation: 28 days would in fact have permitted an extension to 10 June 2013. Nevertheless the extension which was in fact sought and in fact agreed was to 6 June 2013. This is reflected in a letter sent by HFW to the Court dated 27 May 2013 confirming that an extension up to 6 June had been agreed.
10. Prior to sending that letter, Miss Hodson had noticed the error in calculating the 28 days. On 22 May 2013 she sent an e-mail to Maitre Cohen explaining that 28 days would in fact run to 10 June 2013, not 6 June 2013, and seeking agreement to the revised deadline of 10 June 2013. There was no response to that e-mail.
11. The Particulars of Claim were sent by e-mail on 10 June 2013 at 1841 to Maitre Cohen at the e-mail address identified above, from which he had corresponded, by way of purported service. Since they were sent after 4.30 pm, under CPR 6.26 the time of service would be deemed to be the following day, 11 June 2013. SCU-Finanz challenge the validity of service on the grounds that e-mail was not a permitted method of service and that in any event service was 5 days out of time.
12. If that constituted service of the Particulars of Claim, the 28 day period for service of a defence expired on 9 July 2013. No defence having been served, Integral filed with the Court an application for judgment in default on 17 July 2013. In doing so it filed a certificate in purported compliance with CPR 6.17(2) signed by Mr Parish certifying that the Particulars of Claim had been served in accordance with the rules. Judgment in default was entered for US$ 1,078,547 the same day.
13. On 13 September 2013 SCU-Finanz became aware of the judgment in default.
14. On 6 December 2013 English solicitors, Thomson Webb and Corfield, wrote on behalf of SCU-Finanz to HFW setting out various alleged defences and seeking Integral's consent to the default judgment being set aside. Such consent was not forthcoming, and accordingly this application to set aside the judgment was prepared and filed on 24 December 2013, although it was not issued in the court office until 30 December 2013.

The application under CPR 13.2

15. CPR 13.2 provides that the Court must set aside a judgment entered in default of a defence under Part12 if judgment is wrongly entered because any of the conditions in CPR 12.3(2) was not satisfied. Under CPR 12.3(2), judgment in default of defence may only be obtained if the time for filing a defence has expired. Under CPR 15.4(1)(a) and CPR 58.10(2), the period for filing a defence is 28 days after service of the particulars of claim. The critical question is therefore whether sending the Particulars of Claim by e-mail to Maitre Cohen constituted or should be deemed to constitute "service of the particulars of claim" so as to start time running for service of the defence.
16. CPR 6.20 governs the method of service of documents other than the Claim Form (where permission to serve the Claim Form out of the jurisdiction is not required; where it is, the governing provision for other documents is CPR 6.38). CPR 6.20(d) provides that "a document may be served….. by fax or other means of electronic communication in accordance with Practice Direction 6A." CPR 6.23 provides that a defendant must provide an address for service, which must be within the UK, subject to limited exceptions. One such exception provided for by CPR 6.23(2)(b) is the nomination of a business address within an EEA State of a European Lawyer nominated to accept service of documents. CPR 6.23(4) permits service by the document being "sent or transmitted to or left at" that address (or personal service or another method specifically ordered by the Court). CPR 6.23(6) provides:

"Where a party indicates in accordance with the Practice Direction 6A that they will accept service by electronic means other than fax, the e-mail address or electronic identification given by that party will be deemed to be at the address for service"

17. CPR 6.23 is concerned with the address at which service is to be made. If service is by e-mail, it is not apposite to identify it as being received at a particular place because an e-mail can be opened and read at any place from which the e-mail account may be accessed. Rule 6.23(6) therefore deems the designated e-mail address to be the address for service by e-mail, and is the operative provision. It would not be sufficient, for example, to show that an e-mail sent to a different e-mail address had in fact been opened at the postal address for service given in CPR 6.23(1) or (2). That is not what is meant by "transmission to" such address in CPR 6.23(4).
18. The relevant part of Practice Direction 6A is paragraph 4 which provides:

"4.1 Subject to the provisions of Rule 6.23(5) and (6), where a document is to be served by fax or other electronic means –

(1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving –

(a) that the party to be served is willing to accept service by fax or other electronic means; and

(b) the fax number, e-mail address or other electronic identification to which it must be sent; and

(2) the following are to be taken as sufficient written indications for the purposes of paragraph 4.1(1) –

……

(b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or

(c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court.

4.2 Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipient's agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received)."

19. It is apparent that the conditions in Practice Direction 6A were not fulfilled in the case of Maitre Cohen's e-mail address. It had not been included in the acknowledgement of service, in the box provided, as an e-mail address at which documents could be served, and the Defendant had not indicated in writing that that or any e-mail address might be used for service; nor was it set out on the writing paper of Maitre Cohen (at least not on any which was in evidence on this application as having been sent to or received by Integral or its representatives); and in any event there had not been the inquiry about limitations which is required by paragraph 4.2.
20. Mr Collins QC on behalf of SCU-Finanz submitted that the purported service was defective in two respects. Sending the Particulars of Claim by e-mail to Maitre Cohen's e-mail address was not a permitted method of service. In any event it was 5 days late: the time for service had expired on 6 June 2013, whereas the Particulars of Claim were sent after office hours on 10 June, which, if it were service at all, would count as service on 11 June. Defective service meant that the Particulars of Claim had not been served so as to start time running for the service of a defence. Accordingly the time for service of a defence had not arisen at the date of judgment in default.
21. Mr Cogley QC submitted on behalf of Integral that these two failures to comply with the rules or practice direction did not prevent the Particulars of Claim having been "served" for the purposes of commencing time running for the service of a defence. He relied in particular upon CPR 3.10 which provides as follows:

"Where there has been an error of procedure such as a failure to comply with a rule or practice direction –

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to remedy the error."


 


22. Authoritative guidance on the scope of this provision is to be found in the decision of the House of Lords in Phillips v Nussberger (reported sub nom Phillips & Another v Symes & Others (No 3)) [2008] 1 WLR 180. In that case the claimant claimed US$ 3 million as the price of a rare alabaster statue of the Egyptian pharaoh Akhenaten from the second defendant Mrs Nussberger, a Swiss national, and the third defendant Galerie Nefer AG, a Swiss company of which Mrs Nussberger was sole officer and proprietor. The issue was whether the English court was first seised of proceedings for the purposes of Article 21 of the Lugano Convention, a question which so far as English proceedings are concerned depends upon the date of service: Dresser UK Limited v Falcongate Freight Management Limited [1992] QB 502. At the time of the issue of the relevant Swiss proceedings by Mrs Nussberger and Nefer, the service which had taken place of English proceedings was personal service on Mrs Nussberger by the Swiss authorities pursuant to the Hague Convention of a package which included the particulars of claim in English and German translation, and a copy of the claim form in German translation, but not the claim form itself in English. This was because the English language claim form had erroneously been stamped "not for service out of the jurisdiction" and, unbeknownst to the claimant, it had been removed from the package of documents by the Swiss authorities before service. No documents at all were served on Nefer because of an error on the part of the Swiss post office. Peter Smith J made an order dispensing with service under CPR 6.9 and declaring that the English court was first seised. The Court of Appeal discharged the order and stayed the proceedings pursuant to Article 1 of the Lugano Convention. The House of Lords allowed the appeal and restored the Judge's order.
23. Lord Brown, with whom all members of the Judicial Committee agreed, said :

"29. It is clear that the claim form should have been included amongst the documents served upon the second and third defendants on 19 January 2005. That is provided for by CPR r 7.5 which dictates the period within which the claim form "must be served on the defendant" (six months if it is to be served out of the jurisdiction). It is no less clear, however, that (i) but for the error made by the Swiss judge or his clerk in removing the claim form from the package of documents sent to the Swiss authorities under the Hague Convention specifically for service, it would have been served, (ii) the documents in fact served included both the German translation of the claim form and (served again in English and this time in German translation too) the particulars of claim which set out in altogether greater detail than the claim form itself the nature of the claimants' case, and (iii) the second and third defendants accordingly suffered no prejudice from the omission of the English language claim form from the package of documents served but rather used the omission as the opportunity to seek to achieve first seisin in Switzerland.

30. In these circumstances essentially two questions fall for your Lordships' consideration: first, is there power in the court by virtue of CPR rr 3.10 and 6.9 to determine that the service of documents actually effected on 19 January 2005 constituted sufficient service for the court then to be seised of the proceedings as definitively pending before it under the Dresser rule? Secondly, if so, ought the court in its discretion to exercise that power?

31. I have already set out the relevant rules. It seems to me at least arguable that even without resort to Rule 6.9 the court could simply order under paragraph (b) of Rule 3.10 that the second and third defendants are to be regarded as properly served, certainly for the purposes of seisin. The "error of procedure" here was, of course, the omission of the English language claim form from the package of documents served: there was in this regard "a failure to comply with the rule" (Rule 7.5). But that, says paragraph (a) of Rule 3.10, "does not invalidate any step taken in the proceedings unless the court so orders". The relevant "step" taken here was service of the proceedings out of the jurisdiction.

32. It seems to me that this was essentially the view taken by the majority of the Court of Appeal (McCowan LJ and Sir John Megaw, Lloyd LJ dissenting) in Golden Ocean Assurance Ltd v Martin (The Goldean Mariner) [1990] 2 Lloyd's Rep 215. Several defendants were there served out of the jurisdiction with copies of the writ, but in each case the wrong copy, addressed not to him but to a different defendant. Another defendant, by an oversight, was served with no writ at all, only a form of acknowledgment of service. The court's procedure at that time was governed by the Rules of the Supreme Court and the rule in point was RSC Ord 2, r 1. For present purposes I can see no material differences between that rule and CPR r 3.10. All three members of the court accepted that RSC Ord 2, r 1 was a most beneficial provision, to be given wide effect. The majority held that service, the step in the proceedings which had plainly been attempted, was to be regarded as valid in the case of all of the above defendants. In the case of the defendants served with the wrong copy writs, Lloyd LJ, at p 219, accepted that the court had discretion: "The service was grossly defective. But service, or purported service, it remained." Unlike the majority, however, he would not have exercised that discretion in the claimant's favour. As to the defendant served only with an acknowledgment of service, Lloyd LJ, at pp 218-219, thought it

"an omission which is so serious that . . . [i]t cannot be described '… as a failure to comply with the requirements of the Rules by reason of something left undone.'. . . The service of the form of acknowledgment cannot make up for the absence of the writ."

The majority thought otherwise. There was, be it noted, no rule at that time akin to CPR r 6.9. For my part I regard the errors and omissions committed in the process of effecting service there as if anything more, rather than less, serious than the error here (given the documents that were served here).

33. The Court of Appeal [2006] 1 WLR 2598, para 104 thought The Goldean Mariner "simply not in point" because

"there was no question in that case of the retrospective validation of an ineffective attempt to serve the writ operating to affect, let alone to alter, the priority between English and foreign proceedings under an international Convention."

With respect, I cannot accept this reasoning. The question in the The Goldean Mariner, just as the question here, is whether the "attempt to serve the writ" was or was not "ineffective". It was held, there to have been, not ineffective, but effective. That was not a "retrospective validation". Why should service not similarly be declared to have been effective here? The question is purely one for our domestic law, just as the question of when an English court is seised of proceedings is purely one for domestic law (and, indeed, the question of precisely what documents have to be served to achieve effective service out of the jurisdiction under the Hague Convention is purely one for domestic law).

34. As I have said, therefore, it may not be necessary to invoke Rule 6.9 at all in order to declare the service of documents effected on 19 January 2005 to have been valid and effective. But assume, as both courts below clearly thought, that it is necessary for the court actually to dispense with service of the claim form under Rule 6.9 before the service in fact effected can be declared valid. Is that within the court's power? The court below concluded not, on the basis that an order under Rule 6.9 would by its very nature involve the retrospective validation of what ex hypothesi would otherwise fall to be regarded as ineffective service. And this essentially is the argument by which the second and third defendants now seek to uphold the Court of Appeal's judgment."

24. A number of observations fall to be made. First, these remarks about CPR 3.10 were not part of the ratio of the decision, which upheld the order dispensing with service under CPR 6.9, which it had been assumed in both courts below was necessary (see[34]). What was said about the effect of CPR 3.10 was no more than it was "at least arguable" that it applied. Nevertheless these were considered statements and the language in which they were expressed suggests more than mere arguability.
25. Secondly, the purposes for which CPR 3.10 was said arguably to apply were qualified as being at least for the purposes of seisin. Mr Collins QC sought to draw on this as a distinguishing feature. But if CPR 3.10 can apply to originating process so as to alter what would otherwise be priority between competing jurisdictions, I see no grounds for interpreting it more narrowly in the context of service of particulars of claim in the course of proceedings for the purposes of commencing time running for service of a defence.
26. Thirdly, for the purposes of CPR 3.10(a) the relevant step which was treated as valid was the very service of the proceedings out of the jurisdiction, not some subsequent step ([31] last sentence).
27. Fourthly, the logic of the passage is that CPR 3.10(a) treats as valid steps which fall within the scope of CPR 3.10 automatically, without the need for an order remedying the error under CPR 3.10(b), subject only to an order of the court invalidating the step ("unless the court so orders"). Although at [31] Lord Brown envisaged that the court could make an order under 3.10(b) that Mrs Nussberger and Nefer were properly served, that necessarily involved the error of procedure being of a kind which engaged CPR 3.10, and therefore CPR 3.10(a); the subsequent discussion at [33] to the effect that the Judge's order in that case was not retrospective validation of service, suggests that Lord Brown had in mind the automatic effect under CPR 3.10(a), to which he referred at [31](in the absence of an invalidating order), not the remedying of an error by a subsequent order of the court under CPR 3.10(b).
28. Fifthly, Lord Brown approved two aspects of the decision of the Court of Appeal in The Goldean Mariner [1990] 2 Lloyd's Rep 215:

(a) He approved the unanimous view of the Court of Appeal in that case that RSC order 2 Rule 1 was a beneficial provision to be given wide effect, and further observed that in this respect it was not materially different from CPR 3.10. It is clear from [32] that CPR 3.10 is to be given wide effect so as to be used beneficially to cure defects.

(b) He approved the majority decision in The Goldean Mariner that the rule was engaged even where all that had been served was an acknowledgement of service and there had been no service of the writ. This suggests a very wide ambit to the rule, which is capable of curing a defect which consists of non-service of the very document by which originating process is initiated.

29. Sixthly, Lord Brown's observations at [31] that CPR 3.10 was engaged were addressed to the position not only of Mrs Nussberger, on whom there had been service by a permitted method of a package of documents which included the German translation of the claim form and particulars of claim in both languages, but also to the position of Nefer, the third defendant, on whom there had been no service at all. In this he went further than the majority in The Goldean Mariner, where there had at least been some service, of the acknowledgment of service form if not the writ. I have some difficulty in treating an "error of procedure" in CPR 3.10 as encompassing circumstances where there is no purported service of any document of any kind, particularly where CPR 3.10(a) automatically validates subsequent steps in the proceedings if CPR 3.10 is engaged. I would be inclined for my part to treat the remedy in such case as lying, if at all, with the discretionary power to dispense with service under CPR 6.9. Nevertheless the reference by Lord Brown in [31] to CPR 3.10(b) applying to the third defendant, Nefer, is indicative of the view of the Judicial Committee that CPR 3.10 is a beneficial provision to be given very wide effect indeed.
30. Seventhly, Phillips v Nussberger and The Goldean Mariner were cases concerned with service of originating process. I am concerned in this case not with service of a claim form, so as to seise the court of jurisdiction over a defendant, but with service of a subsequent document in the course of proceedings which are already under way, in which jurisdiction has already been established. I shall return to this distinction.
31. Mr Collins QC relied in particular on two cases. The first was the decision of Mackay J in Olafsson v Gissurarson [2007] 1 Lloyd's Rep 182. In that case service of proceedings was effected personally on the defendant in Iceland, but service was not in accordance with the procedure permitted in that country, which required a written receipt to be signed. No steps were taken by the defendant and judgment was entered in default of acknowledgement of service. When the defendant applied to set aside the judgment, the claimant applied for relief under CPR 3.10 and/or 6.9.
32. Mackay J held that CPR 3.10 could not be used retrospectively to validate the service of the claim form. He treated there as having been a failure to serve it because the purported service was by a method not permitted in Iceland. He held that in the words of Neuberger LJ in the Court of Appeal in Phillips v Nussberger, it was a "no service at all" case (see [26]). It is clear that the decision was heavily influenced by the judgments of the Court of Appeal in Phillips v Nussberger, which had then recently been given, but which were subsequently overtaken by the decision in the House of Lords which allowed the appeal (see [19, 20, 26 and 29]). The effect of the subsequent decision of the House of Lords is to cast serious doubt on the reasoning adopted.
33. The other case relied on by Mr Collins QC in this context was Fairmays v Palmer [2006] EWHC 96 (Ch), in which the Court was concerned with an application pursuant to CPR 13.2 to set aside a judgment in default of acknowledgement of service. At paragraph 1 of the judgment Evans-Lombe J set out the provisions of CPR 13.2 and 12.3 and observed:

"It follows from these provisions of the CPR, as is obvious, that judgment cannot be obtained in default of acknowledgement of service unless the proceedings have been properly served in accordance with the Rules."

He was not referred to CPR 3.10 and no issue arose as to the application of CPR 3.10 in that case. I do not find his observation of any assistance in relation to the issues I have to decide.

34. Returning to the facts of the instant case, in my view the error of procedure in serving the Particulars of Claim by e-mail was a failure to comply with a rule or practice direction which falls within CPR 3.10. Accordingly under CPR 3.10(a) such service is a step which is to be treated as valid, so as to commence time running for the service of the defence, and disentitle SCU-Finaze in this case to bring itself within CPR 13.2. In reaching that conclusion I have taken into account the following considerations.
35. Phillips v Nussberger establishes that CPR 3.10 is to be construed as of wide effect so as to be available to be used beneficially wherever the defect has had no prejudicial effect on the other party. The instant case is a good example where such beneficial use is called for. Service by e-mail on Maitre Cohen was sufficient to bring the Particulars of Claim to his attention. He was SCU-Finanz's chosen lawyer appointed for the purpose of receiving the document. The document reached the appropriate destination in just the same way as if it had been sent by post to the Paris address given in the acknowledgement of service which would have constituted good service. He ought reasonably to have known, as a European accepting the burden of acting for a client in English High Court proceedings, that particulars of claim required to be answered by a defence, and that in default judgment might be entered. What was effected was purported service, not merely transmission for information only (cf Asia Pacific (HK) Ltd v Hanjin Shiping Co Ltd [2005] EWHC 2443 (Comm)).
36. Service by e-mail is a permitted method of service under CPR 6.20, albeit that what is permitted is service in accordance with the requirements of Practice Direction 6A. The error is therefore more readily characterised as a failure to comply with a practice direction than a rule. But however characterised, the substantive defect is in using a method which English procedural law regards as a permissible method in circumstances where the formalities necessary to make it a permitted method had not been concluded. Maitre Cohen had been identified as the chosen legal representative for the Defendant and he had corresponded with the Claimant's solicitors about when the Particulars of Claim should be served from the very e-mail address to which they were then sent. I can envisage circumstances in which purported "service" by a method which is not permitted by the rules at all is sufficiently distant from what is required by the rules as arguably to fall outside CPR 3.10. Moreover I should not be thought to be endorsing any proposition that CPR 3.10 can be used as a matter of course to circumvent service out of the jurisdiction of originating process by effecting service on a firm of solicitors or other lawyers as a matter of practical convenience without seeking an order for service by an alternative method. But I would not accept Mr Collins QC's submission that any defect in the method of service is outside CPR 3.10. The method of service applied in this case, namely service by e-mail, is one which in the 21^st century is a common and effective way of transmitting a document and one which the Rules envisage may be used, albeit with certain conditions which are set out in the practice directions.
37. This case is not concerned with service of originating process but service of particulars of claim. To my mind this is a significant distinction. A narrower approach to CPR3.10 is justified when it is sought to be applied to the service of originating process, because such service is what establishes in personam jurisdiction over the defendant. Phillips v Nussberger indicates that even for service of originating process the rule is to be given a wide effect, and that is so where the application of the rule affects the establishment of in personam jurisdiction in one of two competing jurisdictions. But the effect to be given to CPR 3.10 is even wider when concerned with documents which are other than those by which the proceedings are commenced. What the rules are concerned with in relation to the service of such subsequent documents is simply bringing them to the attention of the other party in circumstances in which that other party knows or should realise that a step has been taken which may have procedural consequences. This contrasts with the service of originating process which fulfils other functions: it establishes in personam jurisdiction, and it is what engages a wide range of powers in the Court, such as those under s.37 of the Senior Courts Act 1981 and under an inherent jurisdiction. CPR 3.10 is particularly apposite for treating as valid a step whose whole function is to bring a document to the attention of the opposing party where such function has been fulfilled. It prevents a triumph of form over substance
38. It may be said that the effect of treating service of particulars of claim as being valid is no less significant than the effect of treating service of a claim form as being valid in the context of the present application, because a failure to respond by way of defence or acknowledgement of service respectively can lead to the same consequences of judgment being entered in default without consideration of the merits. But nevertheless given that the purpose of service of documents subsequent to proceedings having been validly commenced is essentially limited to bringing their contents to the attention of the other party as a procedural step, there is in my view every reason to give CPR 3.10 very wide application so as to be capable of application where that purpose has been fulfilled.
39. That is particularly so in the current context where the issue of service governs whether there is an absolute right to have set aside a judgment in default of defence. The regimen in place in CPR 13.3 ensures that there will be no injustice to a defendant by the validation of such service where he has a defence with a real prospect of success, or there is some other good reason for setting aside the judgment or allowing the claim to go to trial, and where justice requires the exercise of the discretion to permit this to occur. Therefore treating service of particulars of claim by e-mail as effective ought not to prejudice a defendant in any material respect even if (which is not this case) the service was not sufficient to bring the document to the attention of the defendant or his chosen legal representative. Conversely, however, to treat such service as outside the scope of CPR 3.10 so as to entitle a defendant to set aside judgment under Rule 13.2 as of right would confer an unjustified benefit on a defendant who could rely upon a technical defect which has had no practical effect, and caused no prejudice, so as to deprive the claimant of a judgment to which, on the present hypothesis, he is entitled.
40. These reasons apply with even greater force to the applicability of CPR 3.10 to the other deficiency relied on in relation to service of the Particulars of Claim, namely that it was 5 days out of time.
41. I have not overlooked the argument of Mr Collins QC which criticised the errors made by Mr Parish and Miss Hodson in relation to the Particulars of Claim, and relied in particular on the fact that the judgment was only obtained by filing a certificate pursuant to CPR 6.17(2) which erroneously certified that the Particulars of Claim had been served in accordance with the Rules. However CPR 12.3 does not make it a requirement, as a necessary precondition to obtaining a default judgment, that any certificate of service be filed, still less one which is in all respects accurate and compliant with the rules and prescribed forms. CPR 6.17(2) is a freestanding requirement to file a certificate of service, which is independent of CPR 12.3: see Henriksen v Pires [2011] EWCA Civ 1720 at [27]. An erroneous certificate of service may have an impact upon the discretion to be exercised under Rule 13.3; in an extreme case of a deliberately dishonest certificate (which is not this case) it might constitute a good reason for setting aside the judgment under CPR 13.3 (1)(b) irrespective of the merits of any defence. But it cannot bring the case within CPR 13.2 so as to allow the defendant to set aside judgment as of right.
42. For these reasons the reliance by SCU-Finanz on CPR 13.2 fails. There was service of the Particulars of Claim within the meaning of CPR 15.4 and 58.10(2) when they were sent by e-mail to Maitre Cohen on 10 June 2013, so that the time for service of the defence had expired by the time judgment in default was entered.
43. It is irrelevant in this context that the acknowledgement of service had been amended in manuscript to provide that the relevant period was 36 days (which did not expire until 18 July 2013, the day after judgment was entered). There is no evidence that that was relied on by Maitre Cohen or anyone else on behalf of SCU-Finanz. Had it been, that would have been a factor of relevance for the purposes of the exercise of a discretion under CPR 13.3. It is not capable of bringing the case within CPR 13.2 because time had in fact expired.

The merits

44. The court may set aside a default judgment under CPR 13.3 if:

"(a) the defendant has a real prospect of defending the claim; or

(b) it appears to the court that there is some other good reason why:

(i) the judgement should be set aside or varied; or

(ii) the defendant should be allowed to defend the claim."

45. Scu-Finanz advances three separate defences which it contends have a real prospect of success:

(1) The Supply Contract is not binding on SCU-Finanz because it bears only one of the two authorised signatures which are required as a matter of Swiss law.

(2) Integral failed to open a letter of credit pursuant to clause 7 of the Supply Contract, which is a condition precedent to any obligation on the part of SCU-Finanz to deliver product;

(3) The loss claimed raises issues of quantification and/or is excluded by clause 13 of the Supply Contract.

Supply Contract Binding?

46. On behalf of SCU-Finanz it is submitted that the contract is not binding as a matter of Swiss law as it did not bear the joint signatures of two officers of the company. The relevant content of Swiss law was put forward on behalf of SCU-Finanz by reference to an English language text book, and was not put in issue for the purposes of this application by Integral. Integral's position is that signature of the agreement is a matter of validity which is governed by English law, not Swiss law, under the relevant conflict of laws principles.
47. The evidence of Swiss law was as follows:

(1) In order for companies to effect legal transactions, representatives must be authorised to create rights and obligations on behalf of the company by their signature. In Swiss law this function is primarily fulfilled by one or more "prokurists" who hold this general representation power, call the "prokura".

(2) Article 458 of the Code of Obligations, which is part of the Swiss Civil Code, defines the holder of a prokura as a person who is expressly or impliedly authorised by the proprietor of a trading manufacturing or similar business enterprise to conduct the business and to sign for the business "per procura".

(3) Under Article 459, as regards third parties acting in good faith, prokurists are deemed to be authorised to bind the principal in all types of legal transactions on its behalf which may be within the objectives of the trade or business of the principal.

(4) A restriction on this broad authority vested in the prokurist is only possible in two ways (save in relation to real property). The first is by limiting the authority to the business area of a branch. The second is by prescribing that joint signature is required. Those permitted limitations are reflected in Article 460 of the Code of Obligations which provides in terms that where a prokura is issued in favour of more than one person, all are required to sign together as joint signatories, and the signature of one alone without the prescribed signature of the others is not binding.

(5) There is a Swiss Register of Commerce, whose main function is to publicise certain matters relating to business enterprises. The prokura is effective upon registration in the Register. The entry specifies the extent and type of the prokura. In particular, it will identify whether the signatory power is joint such that by virtue of Article 460 the single signature of one is insufficient to bind the company.

(6) Publication in the Register is intended to give anyone who may be interested information concerning the factual and legal circumstances which relate to the business enterprise, including amongst other things the persons authorised to represent it. The legal effect of registration in the Register of Commerce is set out in Article 933(1) of the Code of Obligations: entries in the Register are considered express notice to third parties as a matter of record, such that a person cannot assert lack of knowledge of a matter validly registered. A correct entry in the Register of Commerce is not contestable and serves as effective worldwide notice for the purposes of Swiss law. It is not possible to invoke a concept of excusable ignorance.

48. The two officers of SCU-Finanz were at the material time Albert Bass and Marine Vartanyan. Their names were registered and published in the Register as prokurists. The Register is available on a website in three languages, each of which made clear that their power of signature was joint.
49. The Supply Contract was signed by Ms Vartanyan alone and no other signatory on behalf of SCU-Finanz. Her initials were on each page and her full signature on the final page under the words "FOR SCU-FINANZ AG". Next to her signature is what appears to be a stamp which reads " SCU SWISS CREDIT UNION".
50. Accordingly it is common ground on the evidence currently before the Court that if the question is governed by Swiss Law, the Supply Contract is not enforceable against SCU-Finanz because it only bears one of the two necessary signatures.
51. On behalf of SCU-Finanz Mr Collins QC submits that :

(1) The relevant conflict of laws principle is that which governs a company's capacity, which is in this respect the law of the company's constitution. He relies on Rule 175 in Dicey, Morris & Collins: The Conflict of Laws 15^th Edn which provides:

"(1) the capacity of a corporation to enter into any legal transaction is governed both by the constitution of the corporation and by the law of the country which governs the transaction in question

(2) all matters concerning the constitution of a corporation are governed by the law of the place of incorporation."

(2) The relevant question is whether the company can contract by means of the signature of a single prokurist; or to put it another way, whether Ms Vartanyan had the power and authority to enter into a contract so as to bind the company by her sole signature.

(3) Those are questions of capacity governed by the company's constitution. What is meant by "constitution" for the purposes of this rule must be given a broad internationalist interpretation and comprises all the sources of power of the company including constitutional documents, relevant statutes and other rules of law of the place of incorporation: Haugesund Kommune and Another v Depfa ACS Bank (Wickborg Rein and Co part 20 defendant) [2012] QB 549 at [48].

(4) This is a conflicts principle which is not within the Regulation (EC) No 593/2008 ("the Rome 1 Regulation") which in Article 1 paragraph 2 expressly excludes from its scope of operation (amongst other things) :

"(f) questions governed by the law of companies and other bodies corporate or unincorporated, such as the creation, by registration or otherwise, legal capacity, internal organisation or winding-up of companies and other bodies, corporate or unincorporated, and the personal liability of officers and members as such for the obligations of the company or body;

(g) the question whether an agent is able to bind a principal, or an organ to bind a company or other body corporate or unincorporated in relation to a third party; …"

52. Mr Cogley QC on behalf of Integral submits that:

(1) Questions of capacity are not engaged. The nature of the transaction is one which the company's constitution allows the company to enter into. There is no suggestion that SCU-Finanz cannot enter into oil supply contracts of the type in issue in these proceedings.

(2) The relevant conflicts principle is that which governs the validity of contracts or other documents, either material validity or formal validity. The relevant question is simply whether the Supply Contract is invalid for want of a second signature. That is a matter of validity not capacity and is governed by English law under Article 10 or 11 of the Rome 1 Regulation which govern material and formal validity respectively in the following terms:

"Article 10

Consent and material validity

1. The existence and validity of a contract, or of any term of a contract, shall be determined by the law which would govern it under this Regulation if the contract or term were valid.

2. Nevertheless, a party in order to establish that he did not consent, may rely upon the law of the country in which he has his habitual residence if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law specified in paragraph 1.

Article 11

Formal validity

1. A contract concluded between persons who, or whose agents, are in the same country at the time of its conclusion is formally valid if it satisfies the formal requirements of the law which governs it in substance under this Regulation or of the law of the country where it is concluded.

2. A contract concluded between persons who, or whose agents, are in different countries at the time of its conclusion is formally valid if it satisfies the formal requirements of the law which governs it in substance under this Regulation, or of the law of either of the countries where either of the parties or their agent is present at the time of conclusion, or of the law of the country where either of the parties had his habitual residence at that time.

3. A unilateral act intended to have legal effect relating to an existing or contemplated contract is formally valid if it satisfies the formal requirements of the law which governs or would govern the contract in substance under this Regulation, or of the law of the country where the act was done, or of the law of the country where the person by whom it was done had his habitual residence at that time."

(3) That this is the relevant conflicts principle is supported by the Giuliano Lagarde Report (O.J.E.C. 282/1) which is the official commentary on the Rome Convention which includes (by reference to the relevant article dealing with formal validity):

"… It is clear that there are numerous requirements as to formal validity which are laid down and with regard to the contract itself, taken as a whole and not stage by stage. This is the case where for example two signatures are required or where the contract has to be made in duplicate."

53. In seeking to characterise the issue in order to identify the correct conflicts principle, the concepts of "capacity" and "validity" must be interpreted by reference to a broad internationalist approach, not by reference to any concepts of domestic law: see Haugesen v Depfa at [47]. "Capacity" is often used to convey the concept of whether someone can do something as a matter of physical or legal capability. For natural persons it may connote legal capability determined by reference to age or infirmity. For legal persons it may connote legal capability by reference what the objects or powers of a company or public body enable it to do. Even in such sense, it may have a wider connotation in its application to domestic law concepts than merely the inherent ability to enter into a particular type of transaction. It covers both the narrower and the wider sense in which the expression "ultra vires" is used in English law (see the classic passage in the judgment of Slade LJ in Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 at 276-278). In this respect questions of a "power" under a company's constitution are categorised as questions of capacity just as are those which govern its legal ability to enter into a transaction of a particular type: see Haugesen v Depfa.
54. By contrast "validity" is often used to convey the concept of whether a contract or transaction is binding or effective by reference to the particular circumstances of the transaction itself, rather than by reference to any characteristics of a contracting party. This is the sense in which the concept is used for the purposes of the relevant conflict of laws principles. Material validity is concerned with the existence and validity of a binding contract by reference to such matters as formation, consideration, fraud, duress, misrepresentation, mistake or legality: see Dicey Morris and Collins at paragraph 32-107. Material validity is concerned with matters which are intrinsic to the contract, by contrast with matters relating to the power or authority of those making the contract, which are extrinsic to the contract. As it is put in Dicey Morris & Collins at paragraph 32-121, material validity is concerned with "something in the nature of the contract" which wholly or partially invalidates it.
55. Similarly, the conflicts concept of formal validity is concerned with something intrinsic to the contract or document itself. It is concerned with rules which require certain attributes as a matter of form for contracts or documents of that particular type, whether it be that they be in writing, signed, executed as a deed, executed before a notary or that they must comply with some other requirement of form or procedure in execution. The essential criterion for an issue of formal validity is whether the validity is a matter of form rather than substance, the dichotomy identified at paragraph 32-128 of Dicey Morris & Collins. It is in this sense that the Giuliano Lagarde report gives the example of a requirement of two signatures.
56. In seeking to identify the relevant conflicts principle in this case, I find instructive what Lord Hoffmann said of companies in the domestic context in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 at 506B-G:

"Any proposition about a company necessarily involves a reference to a set of rules. A company exists because there is a rule (usually in a statute) which says that a persona ficta shall be deemed to exist and to have certain of the powers, rights and duties of a natural person. But there would be little sense in deeming such a persona ficta to exist unless there were also rules to tell one what acts were to count as acts of the company. It is therefore a necessary part of corporate personality that there should be rules by which acts are attributed to the company. These may be called "the rules of attribution."

The company's primary rules of attribution will generally be found in its constitution, typically the articles of association, and will say things such as "for the purpose of appointing members of the board, a majority vote of the shareholders shall be a decision of the company" or "the decisions of the board in managing the company's business shall be the decisions of the company." There are also primary rules of attribution which are not expressly stated in the articles but implied by company law, such as

"the unanimous decision of all the shareholders in a solvent company about anything which the company under its memorandum of association has power to do shall be the decision of the company:" see Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd. [1983] Ch. 258.

These primary rules of attribution are obviously not enough to enable a company to go out into the world and do business. Not every act on behalf of the company could be expected to be the subject of a resolution of the board or a unanimous decision of the shareholders. The company therefore builds upon the primary rules of attribution by using general rules of attribution which are equally available to natural persons, namely, the principles of agency. It will appoint servants and agents whose acts, by a combination of the general principles of agency and the company's primary rules of attribution, count as the acts of the company. And having done so, it will also make itself subject to the general rules by which liability for the acts of others can be attributed to natural persons, such as estoppel or ostensible authority in contract and vicarious liability in tort."

57. The issue in this case is similarly one of attribution. It is concerned with whether the act of an individual, Ms Vatanyan, in signing a document is a sufficient act on its own to bind the company. That is a question which is concerned with the power or authority of natural persons to make their acts the acts of the company. That question engages the rules of attribution of acts of individuals to a company, which for the reasons explained by Lord Hoffmann are to be found primarily in the rules contained in a company's constitution, supplemented by rules of agency. Framed in the language used in characterising conflicts questions, this is not an issue of validity, whether material or formal. It is not concerned with a matter of form or substance which is intrinsic to the contract as such. It is concerned with matters which are peculiar to one of the parties. It addresses the manner in which a contract is purportedly concluded by reference to the specific attributes of the legal and natural persons involved. It is properly to be characterised as engaging the conflicts principles governing capacity, insofar as the constitution of the company, in its broad sense, contains the rules as to what acts are to be attributed to the company; and the conflicts principles governing agency, insofar as the rules of agency supplement the rules in the company's constitution for the purposes of attribution.
58. A company can only act through natural persons. Which persons, what acts and how such acts are carried out, are all questions which may affect the issue of whether the acts are within the authority or power of the natural person in a way which allows them to be treated as the acts of the company itself. Those questions are ones to which it is peculiarly apposite that the law governing the constitution of the company should primarily provide the answer, because such constitution (in the wide sense in which the term is used in Haugesen v Depfa of identifying the rules which the constitutional system of law applies to such a company) is the primary source for the rules which define the authorities and powers which enable the persona ficta of a company to act through natural persons.
59. The principle that the functions and powers of the organs and officers of a company, and who are the corporation's officials authorised to act on its behalf, are matters for the law of its constitution is well established: see Carl Zeiss Stiftung v Rayner Keeler (No 2) [1967] 1 AC 853, at 919, 939, 972; Sierra Leone Telecommunications Co Ltd v Barclays Bank Plc [1988] 2 All ER 821 at 827; Damon Compagnia Naviera SA v Hapag-Lloyd International SA [1985] 1 WLR 435; Dicey Morris & Collins paragraph 30-28:

"The principle of Rule 175(2) has been increasingly accepted by the authorities. The cases at least establish that the law of the place of incorporation determines the composition and powers of the various organs of the corporation…..[and] who are the corporation's officials authorised to act on its behalf….."

60. The constitution of SCU-Finanz, in its broad conflicts sense, includes the rules of attribution in the Code of Obligations which define what acts of which natural persons are to be attributed to the company. It is in those constitutional provisions that there is to be found the system of rules which identify that the company may act through prokurists, and a definition of the extent of the power and authority of such prokurists to act in a way which is treated as an act of the company itself, including the limitation in Article 460 that joint prokurists cannot bind the company except jointly.
61. If resort were had to the agency conflicts rule, it too would require the application of Swiss law as the law governing the agency relationship between the company and its officers/prokurists. The agency conflicts rule is that for the purposes of determining the binding nature of a contract between the principal and a third party, the question of whether an agent has actual authority from his principal to enter into the contract, express or implied, is governed by the law which regulates the relationship of agency between agent and principal; by contrast questions of ostensible authority are governed by the putative proper law of the contract, because they depend not upon the internal relationship between agent and principal but upon the communications and dealings directly between the principal and the third party: see Dicey Morris & Collins Rule 244 and following; Haugesen v Depfa at [7] and footnote 2 and [147].
62. The authors of Dicey Morris & Collins emphasise the dominance of the capacity/constitution principle over the agency principle for corporate entities, where the latter is concerned with actual rather than ostensible authority, at paragraph 33-451:

"In applying clause (2) of this Rule [Rule 244 which provides that the existence and scope of an agent's actual authority is governed by the law applicable to the relationship between principal and agent] the concept of "the law applicable to the relationship between principal and agent" must here be understood as including the law of the place of incorporation or formation of the company or other body corporate. Although in most cases a contractual relationship will exist between a corporation and an agent who seeks to conclude a contract upon its behalf (e.g. a contract of employment or a director's service contract), the source of the agent's (actual) authority to represent the corporation must ultimately derive from the law of the place of incorporation, which regulates the company's capacity and internal management, including the identification of the persons authorised to act on the corporation's behalf. For example, if a company's constitution provides that contracts above a particular value may only be entered into by a director, an employee who does not hold that position should not be considered to have actual authority even if his contract of employment is governed by a different law, under which no similar restriction exists. Similarly, if a mandatory provision of the company's legislation of the law of the place of incorporation requires that entry into a particular category of contract requires a resolution of the board of directors, no person can be considered to have actual authority without that resolution."

63. In the instant case no questions of ostensible authority arise on the evidence before the Court. In the course of his oral argument in reply Mr Cogley QC advanced for the first time a contention that there was ostensible authority. He submitted that I should infer such ostensible authority from the absence of any evidence from SCU-Finanz "to indicate that Ms Vartanyan was not authorised to act or bind the company in the way she did". Mr Cogley QC characterised this as "a relatively slim point" and "not the strongest case at trial for ostensible authority". In my view it is hopeless. Any grounds for supporting the binding nature of the Supply Contract on the basis of ostensible authority would have to be identified and supported by evidence from Integral. There is nothing to be inferred from an absence of evidence from SCU-Finanz on an issue which it falls to Integral to allege and support by evidence, still less in circumstances where the argument was not advanced until oral submissions in reply. In any event Mr Cogley QC was unable to articulate whom I should infer was doing any holding out on behalf of the company or what such holding out comprised. If this were an argument which Mr Cogley QC had even got off the ground, which it is not, it would be one which SCU-Finanz would have a realistic prospect of defeating, and cannot assist Integral in the context of the issue which currently arises under CPR 13.3.
64. For these reasons the issue in this case of whether SCU-Finanz is bound by a contract which is signed by only one of the two prokurists appointed by the company is governed by the law of the company's constitution, Swiss law. That is the relevant rule of attribution which is engaged. Swiss law answers the question in the negative. Accordingly SCU-Finanz has what is, on the current evidence, a complete defence to the claim.
65. This conclusion renders it unnecessary to decide whether Mr Collins QC is right in his alternative submission that if English law applies, the effect of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 ("the 2009 Regulations") is to require the Supply Contract to be enforceable under Swiss law. The 2009 Regulations apply sections 43 and 44 of the Companies Act 2006 in a modified form to overseas companies and identify circumstances in which they are to be bound by contracts or the execution of documents in the following terms:

"Sections 43, 44 and 46 of the Companies Act 2006 apply to overseas companies, modified so that they read as follows-

Company Contracts

43.-(1) Under the law of England and Wales or Northern Ireland a contract may be made-

(a) by an overseas company, by writing under its common seal or in any manner permitted by the laws of the territory in which the company is incorporated for the execution of documents by such a company, and

(b) on behalf of an overseas company, by any person who, in accordance with the laws of the territory in which the company is incorporated, is acting under the authority (express or implied) of that company.

(2) Any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of an overseas company.

Execution of documents

44.-(1) Under the law of England and Wales or Northern Ireland a document is executed by an overseas company-

(a) by the affixing of its common seal, or

(b) if it is executed in any manner permitted by the laws of the territory in which the company is incorporated for the execution of documents by such company.

(2)A document which-

(a) is signed by a person who, in accordance with the laws of the territory in which an overseas company is incorporated, is acting under the authority (express or implied) of the company, and

(b) is expressed (in whatever form of words) to be executed by the company, has the same effect in relation to that company as it would have in relation to a company incorporated in England and Wales or Northern Ireland if executed under the common seal of a company so incorporated.

(3) in favour of a purchaser a document is deemed to have been duly executed by an overseas company if it purports to be signed in accordance with subsection (2).

A "purchaser" means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.

(4) Where a document is to be signed by a person on behalf of more than one overseas company, it is not duly signed by that person for the purposes of this section unless he signs it separately in each capacity.

(5) References in this section to a document being (or purporting to be) signed by a person who, in accordance with the laws of the territory in which an overseas company is incorporated, is acting under the authority (express or implied) of the company are to be read, in a case where that person is a firm, as references to its being (or purporting to be) signed by an individual authorised by that firm to sign on its behalf.

(6) This section applies to a document that is (or purports to be) executed by an overseas company in the name of or on behalf of another person whether or not that person is also an overseas company."

66. Mr Cogley QC made an unpersuasive submission that Integral could bring itself within s. 44(2) by virtue of what Ms Vanyatan "purported" to do, relying on s. 44(3). More promising was his submission that in any event the 2009 Regulations provided for a permitted method of contracting but were not exclusive or prescriptive, as is reflected in the permissive language "may". That the regimen is not exclusive is clear from Rimpacific Navigation Inc v Daehan Shipbuilding Co Ltd [2010] 2 Lloyd's Rep 236 at [30]-[31] and the cases there cited. Mr Collins QC accepted that overseas companies might be bound as a result of the English law doctrine of ostensible authority, if English law were the law governing the contract, in addition to being bound by the circumstances provided for in sections 43 and 44.
67. I strongly incline to the view that these provisions can not assist SCU-Finanz if, contrary to my earlier conclusions, English law applies. If the question were governed by English law because it were a matter of formal validity, then the English law which would be relevant would be that which governs formal validity In this case that would mean that the contract need not be in a document at all, let alone signed. Concepts of authority (s. 43) and documentary execution (s.44) would be inapposite as an exclusive guide to validity. As it is I express no concluded view.

Clause 7

68. Clause 7 provided

7. PAYMENT

THE BUYER SHALL PAY THE PRICE BY TT IN US DOLLARS NET CASH, WITHOUT ANY WITHOLDING, OFFSET COUNTERCLAIM OR DEDUCTION WHATSOEVER INTO THE SELLER'S NOMINATED BANK ACCOUNT WITH FULL VALUE LATEST------------------- (TO BE SPECIFIED IN THE SEPARATE ADDENDUMS) AGAINST PRESENTATION BY THE SELLER OF THE FULL SET OF SHIPPING DOCUMENTS (TO BE SPECIFIED IN THE SEPARATE ADDENDUMS). IF PAYMENT FALLS DUE ON A SATURDAY OR NEW YORK BANK HOLIDAY OTHER THAN A MONDAY THE PAYMENT DATE SHALL BE THE FIRST PRECEDING NEW YORK BANKING DAY. IF PAYMENT FALLS DUE ON A SUNDAY OR A MONDAY NEW YOUR BANK HOLIDAY. THE PAYMENT DATE SHALL BE THE FIRST FOLLOWING NEW YORK BANKING DAY.

PAYMENT SHALL BE SECURED BY AN IRREVOCABLE DOCUMENTARY LETTER OF CREDIT ISSUED BY THE FIRST CLASS EUROPEAN BANK (L/C TO BE OPENED LATEST 3 (THREE) CALENDAR DAYS BEFORE FIRST DAY OF ESTIMATED LOADING PERIOD.

69. The argument that SCU-Finanz has a defence based on a failure by Integral to open a Letter of Credit pursuant to clause 7 is without merit. It is arguable that in a contract for international sale of goods the buyer's obligation to open a letter of credit may be a condition precedent, the failure to perform which excuses the seller from delivery (Trans Trust SPRL v Danubian Trading Co Ltd [1952] 2 QB 297). But that cannot assist SCU-Finanz in this case unless the time had come at which Integral could and should have opened a letter of credit. There is no evidence to support such an argument. On the contrary, although I was provided with very little evidence about what had happened under the contract this issue was specifically addressed by Mr Parish in terms which were not controverted by any evidence in response. He says at para 63 of his second witness statement that at the end of October 2011 Integral's employees had a number of telephone conversations with Mr Constantin Antipin, an employee of SCU-Finanz who had responsibility on its behalf for the transaction; that they urged Mr Antipin to proceed with the transaction, but they all had the feeling that Mr Antipin was not interested in going ahead. It proved impossible to agree with Mr Antipin or any other of SCU-Finanz's employees the exact delivery dates, payment dates, lists of shipping documents or any other formalities required to open a letter of credit. None of the addenda mentioned in the Supply Contract were ever signed.
70. On the basis of this evidence the time for Integral to open any letter of credit had not arisen. It was impossible for Integral to open a letter of credit pursuant to clause 7 without agreement on the quantity of supply to be nominated by SCU-Finanz (clause 4), agreement on the product (clause 3), agreement on the delivery period (clause 5), establishment of the refinery price (clause 6) and establishment of the date for payment and the documents against which payment was to be made (clause 7).

Quantum

71. The claim is articulated in the Particulars of Claim as follows:

"3. The effect of clause 4 and clause 5 of the Supply Contract was that the Defendant Seller was obliged to:

(a) deliver reasonable (alternatively more than zero) quantities of the Products (if not agreed) to the FOB ports of loading each month within the time period referred to in clause 5 thereof, such that the Defendant would supply an entire amount of the products of up to 400,000 Metric Tons per year; and

(b) place those quantities at the disposal of the Claimant Buyer, which was willing and able to take delivery of the quantities of the Product in their entirety.

…………..

5. Wrongfully and in breach of the Supply Contract and/or clauses 4 and 5 thereof, the Defendant failed to provide any of the Products at all at the ports or places of loading at any time during the period between 1 November 2011 and 31 October 2012. Therefore there was a total non-performance of the Supply Contract by the Defendant.

6. By reason of the Defendant's breach of contract as aforesaid, the Claimant has suffered loss and damage.

Particulars of Loss

(a)The Claimant agreed to sell the Products to a third party receiver.

(b) The Claimant undertook an obligation to sell 50,000MT of gasoil to a third party receiver, which would have resulted in the Claimant making profit of not less than US$23/MT. In consequence of the Defendant's failure to supply any cargo at all, the Claimant was unable to meet the aforementioned contractual commitments to its third-party receiver.

(c) The Claimant reserves the right to plead further losses and damages suffered in consequence of the Defendants total failure to perform the Supply Contract.

7. In the circumstance, the Claimant claims not less than US$1,150,00.00 (sic) in lost profits and damages arising from the Defendant's failure to meet its obligations under the Sale Contract.

72. The prima facie measure of damages in the case of a seller failing to supply a commodity is the difference between the contract price and the market price where there is an available market: s51(3)Sale of Goods Act 1979. The price of an onsale may provide evidence of the value of the goods: The Arpad [1934] P 189.
73. The way the claim is pleaded raises obvious questions as to whether the amount in which judgment was entered represents the recoverable level of damages. There is first the fact that the amount is calculated by reference to a resale of gasoil, which is only one of the products which might be supplied under the contract. Next there is the probability that there was an available market for these common products such that a claim for loss of profit on a resale is not the proper measure. The claim is not pleaded as one in which the resale price is said to reflect market price. Thirdly there is the difficulty that if the loss of profit on the resale is to be recovered in the absence of an available market it would be on the basis of the second limb of the rule in Hadley v Baxendale and would probably be excluded by Clause 13 of the Supply Contract which provides:

"13. LIMITATION OF LIABILITY

NEITHER THE SELLER NOR THE BUYER SHALL BE LIABLE, WHETHER IN CONTRACT, TORT OR OTHERWISE, FOR ANY INDIRECT, CONSEQUENTIAL OR SPECIAL LOSSES, DAMAGE OR EXPENSES OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OF THIS CONTRACT."

74. Mr Cogley QC was able to submit that because only the third of these points had been addressed in the evidence served on behalf of SCU-Finanz, there was no evidence that there was an available market, or that if there was, I should not assume that the resale price was different from the market price. Attractively though these arguments were put, they seemed to me to have an air of unreality. Moreover the argument that there was a contractual obligation to supply a minimum quantity of each product and therefore at least 50,000 mt of gasoil was in my view open to serious question. If this were the only defence advanced, it would affect only quantum, not liability, but might result in Integral having little or no recoverable loss. It would justify setting aside the judgment and substituting judgment for damages to be assessed, if it be appropriate to exercise the discretion to grant relief under CPR 13.3 at all, which is the final point for consideration to which I turn.

Discretion

75. Mr Cogley QC puts at the forefront of his argument on discretion the delay in making the application between 13 September 2013, when SCU-Finanz became aware of the default judgment, and 30 December 2013 when the application to set aside was issued. In my view the relevant period ends on 6 December 2013 when SCU-Finanz's solicitors wrote setting out the grounds on which the application would be made and inviting consent. HFW's substantive response came on 18 December 2013. There was no undue delay between then and 24 December 2013, when the application was served and filed, although it was not stamped in the Commercial Court Office as issued until 30 December 2013.
76. In Standard Bank Plc v Agrinvest International Inc. [2010] EWCA Civ 1400, Moore-Bick LJ said at paragraph 23:

"The CPR were intended to introduce a new era in civil litigation in which both the parties and the courts were expected to pay more attention to promoting efficiency and avoiding delay. The overriding objective expressly recognised for the first time the importance of ensuring that cases are dealt with expeditiously and fairly and it is that context that one finds for the first time in rule 13.3(2) an explicit requirement for the court to have regard on an application of this kind to whether the application was made promptly. No other factor is specifically identified for consideration, which suggests promptness now carries much greater weight than before. It is not a condition that must be satisfied before the court can grant relief, because other factors may carry sufficient weight to persuade the court that relief should be granted, even though the application was not made promptly. The strength of the defence may well be one. However, promptness will always be a factor of considerable significance, as the judge recognised in paragraph 27 of his judgment, and if there has been a marked failure to make the application promptly, the court may well be justified in refusing relief, notwithstanding the possibility that the defendant might succeed at trial."

77. A further step in the stricter approach taken by the Courts to delay was marked by the decision in Mitchell v News Group Newspapers [2013] EWCA Civ 1537.
78. Mr Collins QC submitted that the period of some 12 weeks between 13 September 2013 and 6 December 2013 did not involve undue delay given the need to digest the judgment, appoint English lawyers, give and receive instructions and prepare the application. I disagree. A party who has entered into a contract providing for English High Court jurisdiction can not justify any significant delay in appointing English solicitors. The process of digesting the judgment, taking instructions and preparing the grounds of application could not properly justify a delay measured in months. The application was not made promptly by some considerable margin, and SCU-Finanz is open to criticism for what is a substantial delay. No explanation or justification for this delay was advanced by way of evidence.
79. Set against this there are a number of factors which weigh in favour of setting aside the judgment. I regard the most significant as these:

(1) SCU-Finanz has a defence with a real prospect of success to the whole of the claim. Indeed on the present evidence the defence is not merely sufficiently arguable but on my findings is bound to succeed, turning as it does on the determination of the appropriate conflicts rule and unchallenged provisions of Swiss law. There are in any event good reasons for thinking that the proper quantum of the claim is not as much as the amount of the judgment, and may indeed be nothing at all. This is therefore a case in which on the evidence presently before the Court there is not merely an arguable defence, but a defence which will defeat the claim. SCU-Finanz will suffer real and substantial prejudice if it is subjected to a judgment of over US$ 1 million for which it is not liable.

(2) In order to obtain judgment in default, Integral was required by CPR 6.17(2) and the relevant practice form to file a certificate of service stating that the Particulars of Claim had been served in accordance with the rules. Mr Parish signed a certificate containing that statement. It was not true. Whilst I do not consider that there was any conscious impropriety on his part, it was a culpable error. There had been recent correspondence focusing on when the time for service of the Particulars of Claim expired, and he ought to have been aware of the failure to comply with the rules in that respect. The appropriate course would have been to seek an extension of time promptly before serving the document, but in any event not to have certified that which was untrue in obtaining a default judgment. The failure to appreciate that service by e-mail was not permitted is also culpable, compounded by his erroneous evidence to the Court in his second witness statement that the email address was taken from the acknowledgement of service. It is in my view highly relevant to the exercise of discretion under CPR13.3 that the judgment was obtained in breach of the rules, albeit that the breach does not attract the automatic consequence of the judgment being set aside pursuant to CPR 13.2. If the Claimant had complied with the rules, it would not and could not have obtained the judgment.

(3) The delay by SCU-Finanz in not making its application promptly falls to be considered in the light of the overriding objective of expeditious resolution of claims, and therefore engages an inquiry into how expeditiously the Claimant has pursued its claim. There was considerable delay in serving the Particulars of Claim, which is not explained, and which involved a breach of the rules for which the appropriate course, in the absence of agreed extension, would have been to seek relief from the Court, rather than to ignore it and enter judgment to which the Claimant was not entitled. There was also a period of two months after the judgment was obtained before Integral did anything to draw it to SCU-Finanz's attention.

80. Weighing these factors, I conclude that the balance of justice is in favour of setting aside the judgment.