Service of proceedings out of jurisdiction post-Brexit - significant changes to court rules

Published: 22/3/2021

From 6 April 2021, claimants in English proceedings no longer have to apply for the court’s permission to serve those proceedings out of jurisdiction where the claims fall within an English jurisdiction clause.

This is a pragmatic development as it removes the procedural hurdle of having to make an application to serve out in disputes where the parties have agreed that the English courts should have jurisdiction. Importantly, the new regime will now apply to service on defendants located in any jurisdiction in the world (not limited largely to countries in the EU, EEA or signatories to the 2005 Hague Convention as was the case prior to Brexit) and appears to cover exclusive as well as non-exclusive or asymmetric jurisdiction clauses. Given the increasing competition from other jurisdictions for cross-border disputes work, this is a welcome change that should add to the attractiveness of the English courts in the post-Brexit world.

Pre-Brexit regime

Prior to 1 January 2021, an English court’s permission to serve a claim out of jurisdiction based on a contractually agreed jurisdiction clause was not required if it had jurisdiction under the Recast Brussels Regulation (EU 1215/2012), the 2007 Lugano Convention, the 2005 Hague Convention on Choice of Court Agreements or in a small number of other circumstances. If those provisions did not apply, the claimant had to apply for permission to serve the claim outside of the jurisdiction under CPR 6.36. This included establishing a good arguable case that the claim falls within one of the common law "gateways" for service out, there is a serious issue to be tried on the merits, England is clearly or distinctly the appropriate forum to try the claim and that the English court should exercise its discretion to permit for the claim to be served out. This was often a costly process and was done without notice to the defendant which meant that the claimant had to comply with the duty of full and frank disclosure, including highlighting the weaknesses in its own case (generally not something that a party is eager to do upon commencement of proceedings).

The current position until 6 April 2021

From 1 January 2021, and until 6 April 2021, given that the UK is no longer party to the Recast Brussels Regulation or the 2007 Lugano Convention, a party to a jurisdiction clause in favour of the English Courts needs to apply for permission to serve a claim out of the jurisdiction unless that claim falls within the 2005 Hague Convention (or in limited other circumstances). However, the 2005 Hague Convention’s remit is relatively narrow geographically and covers exclusive jurisdiction clauses only. In particular, it does not cover non-exclusive or asymmetric jurisdiction clauses (where all or one of the parties have a choice in which jurisdiction to bring proceedings respectively) or exclusive jurisdiction clauses entered into before 1 October 2015 (date of entry into force of the 2005 Hague Convention in the UK).

New Regime

Further to proposals by the Lord Chancellor’s Advisory Committee on Private International Law as well as the English Law Society, at its October 2020 meeting the Civil Procedure Rules Committee proposed to make changes to the service out rules where there is a jurisdiction clause in favour of the English Courts (with exact wording to be finalised). Those changes were finalised and implemented via The Civil Procedure (Amendment) Rules 2021 (SI 117/2021) which comes into effect on 6 April 2021.

As a result of those changes, the new wording of CPR 6.33(2B) provides that the claimant may serve the claim form on the defendant outside of the UK (without permission) where, for each claim made against the defendant to be served and included in the claim form, "(a) the court has power to determine that claim under the 2005 Hague Convention and the defendant is a party to an exclusive choice of court agreement conferring jurisdiction on that court within the meaning of Article 3 of the 2005 Hague Convention; or (b) a contract contains a term to the effect that the court shall have jurisdiction to determine that claim".

In light of these changes, a claimant in English proceedings can proceed to serve its claim form on the defendant out of the jurisdiction upon issue without any applications to the English court provided there is a clause in an agreement between the parties specifying that the English courts shall have jurisdiction to determine that claim. Although it is highly likely that an English court would have given permission to serve out in such circumstances prior to this rule change in any case, the removal of the requirement to do so is of clear benefit to claimants in terms of saving costs and the speed with which proceedings can be served on the defendant. At the same time, the defendant still has the ability to challenge jurisdiction upon being served (e.g. to challenge the validity of the jurisdiction agreement). From a policy perspective, it is difficult to see the prejudice of these changes to the defendant in the circumstances where the parties had already agreed jurisdiction.

More notably, assuming that there is a valid jurisdiction agreement covering the claim, the changes also mean that a claimant no longer has to apply for permission to serve out on defendants in jurisdictions outside of the European countries covered by the previous EU linked regimes, e.g. defendants in the Former Soviet Union, the Caribbean and European offshore jurisdictions, Middle East etc. Further, the new rules mean that the claimant can avoid the requirements of full and frank disclosure of service out applications which are generally done on an ex parte basis.

Finally, although this is not expressly stated in the amendments, it appears that the new wording also covers non-exclusive as well as asymmetric jurisdiction clauses in favour of the English courts which is also a welcome development given the preference for such clauses in the financial services sector amongst others.

What about UK’s application to re-join the 2007 Lugano Convention?

At the time of writing, the UK is still waiting for a response from the EU to its application to re-join the 2007 Lugano Convention. If it does re-join, claimants will not need permission for claims based on English jurisdiction clauses provided the defendant is domiciled within a member state (the EU countries, Norway, Switzerland and Iceland). However, the new rules in effect from 6 April 2021 will continue to be relevant as regards defendants located outside of those European jurisdictions.

Conclusion

The changes are a welcome and a costs saving development for parties choosing the English courts as the forum to resolve their disputes. The fact that the new regime appears to apply to non-exclusive jurisdiction clauses and parties across the globe is also a helpful development, which should continue to make the English courts attractive for the resolution of cross-border disputes. It is fair to say that these changes are a positive, if an unexpected, by-product of Brexit.

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