Bitumex (HK) Company Ltd v IRPC Public Company Ltd

Hearing date: 23 March 2012

1. 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?

2. 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

3. 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

4. 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 1 ^st 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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

11. 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

12. 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.

13. The power of the Court to...