CA Indosuez (Switzerland) SA v Afriquia Gaz SA and another

11 November 2022. ROBIN KNOWLES J handed down the following judgment.

1 Gulf Petroleum FZC, the First Part 20 defendant (“GP”) had trade finance facilities with CA Indosuez (Switzerland) SA (the claimant: “CAIS”) and with UBS Switzerland AG (the Second Part 20 defendant: “UBS”).

2 Afriquia Gaz SA and Maghreb Gaz SA, the defendants and Part 20 claimants (“AG” and “MG”), purchased a cargo of butane from GP. GP assigned to CAIS the debt represented by the purchase price. GP issued its invoices to AG and MG on 23 July 2020 and CAIS sent notices of assignment on 27 and 28 July 2020.

3 However on 19 August 2020 AG and MG paid, by SWIFT, the sums due to GP’s account with UBS. The funds were received into one of GP’s accounts with UBS and then transferred to what appears to have been its loan or overdraft account.

4 GP instructed UBS to transfer the sums received to CAIS. UBS refused. It claimed to have been entitled to set off those sums against GP’s liabilities to it.

5 By Rule 20.1 of the Civil Procedure Rules, the purpose of Part 20 of the CPR is “to enable counterclaims and other additional claims to be managed in the most convenient and effective manner”. CAIS commenced this claim against AG and MG for the purchase price, a claim in debt. AG and MG denied liability but added (Part 20) claims against GP and UBS for the sums received, and in unjust enrichment and for liability as constructive trustee. Following the exchange of expert reports on Swiss law, AG and MG have accepted that their claim against UBS based on an alleged constructive trust must fail, and that the claim in unjust enrichment will only arise in certain circumstances.

6 GP is incorporated in the UAE. The sale contract with AG and MG contained an exclusive jurisdiction agreement in favour of the High Court in London. The Part 20 Claim Form was issued with the following indorsement:

“[AG and MG] are permitted to serve the [Part 20] Claim on [GP] pursuant to CPR r 6.33(2)(b)(v) and article 25 of the Judgments Regulation because [GP] is a party to an agreement … conferring exclusive jurisdiction within article 25 of the Judgments Regulation. [AG and MG] are permitted to serve the [Part 20] Claim on [UBS] out of the jurisdiction pursuant to CPR r 6.33(1)(b)(i) and article 6(3) of the Lugano Convention.”

7 The Part 20 Claim Form against GP and UBS was issued on 30 December 2020, before the end of the Brexit transition period. UBS declined to instruct solicitors to accept service in England. AG and MG meanwhile on 20 January 2021 obtained an order from Cockerill J extending the validity of the Part 20 Claim Form. The Part 20 Claim Form was served or purportedly served on UBS, out of the jurisdiction, on 9 March 2021.

8 The court’s permission for service out of the jurisdiction on UBS was not sought. Mr James M Turner KC informed the court that those representing AG and MG considered at the time that no permission would be needed, on the basis that jurisdiction under the Lugano Convention, which existed at the date of issue of the Claim Form, was preserved.

9 Mr Turner KC added the contention that even if permission to serve out was required and had been sought, it would inevitably have been granted, as questions of appropriate forum (considered in an application for permission to serve out) were not relevant in the context of the Lugano Convention. If it is necessary for it do so, AG and MG go on to seek an order under CPR r 3.10.

10 UBS acknowledged service on 26 March 2021, indicating an intention to contest jurisdiction. An application to set aside service was issued and served by UBS on 21 April 2021. AG and MG responded on 7 May 2021 with their application under CPR r 3.10. On 5 July 2021 UBS brought an application challenging the court’s jurisdiction and also bringing what it described as a “contingent strike-out application”.

11 AG and MG raised the point that the application of 5 July 2021 was out of time for challenging jurisdiction. This was said to give rise to a question of relief from sanctions (see generally Denton v TH White [2014] EWCA Civ 906; [2014] 1 WLR 3926, para 24), but nothing turns on the episode in this particular case in my view. In particular, seen in the context both of UBS’s earlier application to set aside service and AG and MG’s mistake in referring to article 6(3) and the fact that there was no consequence for the efficient conduct of the proceedings, the delay was neither serious nor significant and it is just to deal with the application of 5 July 2021 without regard to the delay.

12 On 8 July 2021, for reasons then given, I ordered the main claim (CAIS’s claim against AG and MG) to proceed ahead of the Part 20 claims. AG and MG have now settled the main claim with CAIS, but on terms which do not reduce the level of their (Part 20) claim against UBS.

13 GP is not defending the claim against it, but no default judgment has been sought. There is evidence before the court to the effect that an application for default judgment is not likely to be made because it will make enforcing a judgment more difficult. As was pointed out in argument, that does not mean that summary judgment would not be sought.

14 At this hearing UBS asks the court to set aside service of the Part 20 Claim Form on it, challenges the court’s jurisdiction, and asks the court to strike out the Part 20 claim against it.

15 UBS is...