October 18, 2017

Are You Being Served? Better Follow the Hague Convention

Serving judicial and extrajudicial documents abroad involves a complex patchwork of domestic legislation and international treaties. The recent High Court judgment in Marashen Limited v Kenvett Limited and Dmitry Ivanchenko1 has clarified that a party can only deviate from the Hague Service Convention (the Convention) where there are “exceptional circumstances”.

Background

Marashen Limited brought proceedings to recover amounts it said were due under a loan agreement. Kenvett Limited challenged the jurisdiction of the English court. This was refused and a costs order was made against Kenvett Limited. Consequently, Marashen Limited made an application to the Court requiring Mr Dmitry Ivanchenko, the beneficial owner of Kenvett Limited, to pay Marashan Limited’s costs. Marashan Limited applied for permission to serve the application on Mr Ivanchenko out of the jurisdiction (in Russia); and to effect service of the application by an alternative method (namely within the jurisdiction on Kenvett Limited’s former solicitors).

The Court at first instance allowed Marashen Limited to serve the application by an alternative method (within the jurisdiction on the Kenvett Limited’s former solicitors). However, the master at first instance did not find it necessary to make an order for service of the application out of the jurisdiction.

Alternative Method

On appeal to the High Court, Foxton QC, sitting as a Deputy Judge in the High Court, found that the master at first instance had erred in his application of the law and the order for service by alternative method was overturned. Foxton QC held that the power to permit service by an alternative method only arises if the courts have first given permission to serve out of the jurisdiction, even if the alternative method involves service within the jurisdiction. It is not enough that the court would have been prepared to order service out of the jurisdiction.

“Exceptional Circumstances”

In relation to service out of the jurisdiction, Foxton QC held that for service involving a Convention country, "exceptional circumstances", rather than merely good reason, must be shown before an order for alternative service other than in accordance with the terms of the treaty can be made. He continued to say that mere delay or expense in serving in accordance with the treaty cannot, without more, constitute "exceptional circumstances". In the Marashen case, the claimant argued that service might take up to 12 to 18 months in Russia. Foxton QC was not swayed by this and did not believe this rose “beyond the level of mere delay”.

This is a significant decision in that it clarifies the law on serving out of the jurisdiction in a Convention country. Firstly, when a party is to serve on another domiciled out of the jurisdiction, they must first apply to the court for permission to serve out under the relevant civil procedure rules. Only once this has been granted may that party seek an order for alternative service. However, where the Convention applies, the judge may only grant such an order where “exceptional circumstances” are shown. This case highlights how complicated service can be and the need for legal advice from an early stage.

1 [2017] EWHC 1706 (Ch)

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