Global Aerospares Ltd v Airest as
| Jurisdiction | England & Wales |
| Judge | Worster |
| Judgment Date | 13 June 2023 |
| Neutral Citation | [2023] EWHC 1430 (Comm) |
| Docket Number | Case No: CC-2022-BHM-000034 |
| Court | King's Bench Division (Commercial Court) |
[2023] EWHC 1430 (Comm)
HHJ Worster
(sitting as a judge of the High Court)
Case No: CC-2022-BHM-000034
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PRPOERTY COURTS IN BIRMINGHAM
CIRCUIT COMMERCIAL COURT (KBD)
Birmingham Civil Justice Centre
The Priory Courts, 33, Bull Street, Birmingham B4 6DS
Laurence Page (instructed by HCB Solicitors) for the Claimant
Neil Berragan (instructed by Brabners) for the Defendant
Hearing date: 17 May 2023
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HHJ Worster
Introduction
The Claimant supplies parts for aircraft, and is a company registered in England and Wales. The Defendant is a company registered in Estonia, and carries on a business repairing aircraft from Tallinn airport. By a Part 8 Claim Form issued on 17 October 2022, the Claimant seeks directions pursuant to section 18 of the Arbitration Act 1996 (“the 1996 Act”). Section 18 is the section which provides for the court to give directions where there is a failure of the procedure for the appointment of the arbitral tribunal. The Claimant's preference is that the arbitration be conducted by the London Court of International Arbitration (“LCIA”) but it would be content for the Court to appoint a named arbitrator. The Defendant contests the Court's jurisdiction to try the claim, and has applied for an order setting aside the Claim Form.
The Claimant's case is that it supplied aircraft parts to the Defendant which it has not paid for. The claim relies on a written Exchange Pool Agreement (“the Agreement”) made in December 2014. The Claimant's case is that the Agreement has been terminated as a consequence of the Defendant's failure to pay what it owed. The claim is put at a sum approaching $400,000. The Agreement has an arbitration clause, but it makes no provision for the appointment of an arbitrator; it simply says this:
11. This Agreement is subject to English jurisdiction. If a dispute cannot be settled by negotiation it shall be settled by arbitration in London.
The Defendant initially denied that it knew anything about the Claimant, but now accepts that the two companies dealt with each other. In its letter of 29 October 2021 responding to the letter of claim, the Defendant accepted that the Agreement was signed in 2014, but said that it was signed by a former employee who did not have authorization to conclude the Agreement. It denies liability, although the precise basis of that denial is not entirely clear. Mr Page submits that the Defendant's approach to this claim is indicative of an attempt to avoid or delay payment of a liability for which it has no genuine defence. Mr Berragan submits that the Defendant does have a defence to this claim, but that in any event, the merits of the underlying dispute are not the issue on this application. I am in no position to reach a concluded view on the underlying merits of the dispute. For the purposes of this application it is sufficient to note that the Defendant accepts that there is a good arguable case that there is a valid arbitration agreement. That is as far as I need to go.
Following the issue of the Claim Form, I made an order on 25 October 2022 in the following terms:
1. The Claimant has permission to serve the Claim Form, Particulars of Claim and any other document in these proceedings issued under the above claim number on the Defendant out of the jurisdiction at Lootsa 8A, C Tower 11 415 Tallinn, Estonia, or Majaka 26, 11412 Tallinn, Estonia or elsewhere in Estonia pursuant to CPR Part 62.5(1)(c)(ii).
2. Further, and pursuant to CPR Part 6.15, the Claimant has permission to serve the Claim Form, Particulars of Claim and any other document in these proceedings issued under the above claim number on the Defendant out of the jurisdiction by serving the same on: (i) Brabners LLP, Solicitors, by first class post to 55, King Street, Manchester, M2 4LQ and (ii) by email to [the email addresses of two identified employees of the Defendant]
The order provided for deemed dates of service when these alternative forms of service were used.
The Claim Form and the witness statement in support were then served on the Defendant, and on 9 December 2022 the Defendant filed an Acknowledgement of Service indicating that it intended to dispute the Court's jurisdiction. On 19 January 2023 the Defendant made this application pursuant to CPR Part 11(1) for an order declaring that the Court has no jurisdiction to try the claim, and for the Claim Form and the order for service to be set aside.
The basis of the application is that:
… the Court does not have jurisdiction to appoint an arbitrator under section 18 of the 1996 Act …
The challenge to the Court's jurisdiction is not a territorial one, but is said to go to the Court's jurisdiction to make the order sought. The Defendant's argument (to which I return in greater detail below) is to the effect that the relevant provisions of section 18 of the 1996 Act are not engaged, so that the Court has no jurisdiction to make the orders sought in the Claim Form. It is submitted on behalf of the Claimant that this analysis confuses the issue of jurisdiction and the merits of the claim, and that the application fails for that reason alone.
The procedural issue
The first issue to consider is whether the Part 11 procedure is apt to deal with matters which go wider than issues of territorial jurisdiction. Mr Berragan submits that it is, and that this is apparent from the terms of Part 11 itself:
(1) A defendant who wishes to –
(a) dispute the court's jurisdiction to try the claim; or
(b) argue that the court should not exercise its jurisdiction
may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.
He relies upon the decision of the Court of Appeal in Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203. The Claimants in that case were farmers in Wiltshire, and the Defendant a well known house builder. There was no issue of territorial jurisdiction, and the case is referred to in the notes to the White Book at paragraph 11.1.3 as authority for the proposition that in r 11(1) the word “jurisdiction” does not denote territorial jurisdiction but is a reference to the court's power or authority to try a claim.
That proposition is drawn from the following passage in the judgment of Dyson LJ at [22] –[23], who gave the leading judgment in Hoddinott:
22. In our judgment, CPR r 11 is engaged in the present context. The definition of “jurisdiction” is not exhaustive. The word “jurisdiction” is used in two different senses in the CPR. One meaning is territorial jurisdiction. This is the sense in which the word is used in the definition in CPR r 2.3, and in the provisions which govern service of the claim form out of the jurisdiction: see CPR r 6.20 et seq.
23. But in CPR r 11(1) the word does not denote territorial jurisdiction. Here it is a reference to the court's power or authority to try a claim. There may be a number of reasons why it is said that a court has no jurisdiction to try a claim (CPR r 11(1)(a)) or that the court should not exercise its jurisdiction to try a claim (CPR r 11(1)(b)). Even if Mr Exall is right in submitting that the court has jurisdiction to try a claim where the claim form has not been served in time, it is undoubtedly open to a defendant to argue that the court should not exercise its jurisdiction to do so in such circumstances. In our judgment, CPR r 11(1)(b) is engaged in such a case. It is no answer to say that service of a claim form out of time does not of itself deprive the court of its jurisdiction, and that it is no more than a breach of a rule of procedure, namely CPR r 7.5(2). It is the breach of this rule which provides the basis for the argument by the defendant that the court should not exercise its jurisdiction to try the claim.
The facts of Hoddinott are of relevance. The validity of the Claim Form in that case expired on 22 September 2006. The Claimants obtained an extension to 22 November 2006. The Defendant then applied to set aside the order for an extension. The Claimants served the Claim Form on 21 November 2006, and the Defendant filed an Acknowledgement of Service indicating an intention to defend the case, but not indicating an intention to contest jurisdiction. The court then set aside the order for the extension of time, holding that Part 11 did not require the Defendant to make an application to challenge the court's jurisdiction in order to apply for the extension of time to be set aside. The Claimants appealed, successfully. The Court of Appeal held that because the Defendant had failed to contest jurisdiction in the Acknowledgement of Service it was to be treated as having accepted that the court could exercise its jurisdiction to try the claim, even though the Claim Form had been served late. The Defendant was to be treated as having abandoned its earlier application to set aside the order for an extension, and consequently the Judge had been wrong to set aside the extension.
The argument in this case is rather different. It is not said that the Court has no jurisdiction to try the case because the Claim Form has not been served in time, or because there is some other problem with the constitution of the claim. The effect of the Defendant's argument is that the Court's power under section 18 of the 1996 Act is not engaged. To my mind, that is a matter which goes to the merits, rather than to the jurisdiction of the court to try the case or to exercise its jurisdiction to try the case.
Section 18 of the 1996 Act provides as follows:...
To continue reading
Request your trial
-
Invalid Service Of Request For Arbitration Not A Failure Of Appointment Procedure, Says English Court
...Aerospares Limited v Airest AS [2023] EWHC 1430 (Comm), the English Commercial Court dismissed a claim for directions under s18 of the Arbitration Act 1996 (Act). Failing to serve a Request for Arbitration under s14(4) of the Act, with the consequence that the process for the appointment of......