Saab and Another v Saudi American Bank
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CLARKE,LORD JUSTICE ROBERT WALKER,LORD JUSTICE BELDAM |
| Judgment Date | 02 July 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0702-11 |
| Docket Number | QBCMI 1998/0693/3 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 July 1999 |
[1999] EWCA Civ J0702-11
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE TUCKEY)
Royal Courts of Justice
Strand
London WC2
Lord Justice Beldam
Lord Justice Robert Walker
Lord Justice Clarke
QBCMI 1998/0693/3
MR L COLLINS QC (Instructed by Messrs Herbert Smith, London EC2A 2HS) appeared on behalf of the Appellant
MR P GOLDSMITH QC with MR A SUTCLIFFE (Instructed by Messrs Lovell White Durrant, London EC1A 2DY) appeared on behalf of the Respondent
Friday, 2 July 1999
Introduction
This is an appeal by the defendant, SAMBA, against an order of Tuckey J dated the 7th May 1998 in which he ordered or declared that service of the writ had been validly effected on SAMBA under section 694A of the Companies Act 1985 and in which he refused SAMBA's application to stay the proceedings on the ground that Saudi Arabia is clearly or distinctly the more appropriate forum for the trial of the action. The order was made on the 7th May, but there were two hearings before the judge. The first was in February, when he decided that the service was valid and the second was in April when he refused the stay. SAMBA challenges both decisions on this appeal. The judge gave leave to appeal in terms which are wide enough to cover both decisions, although it seems clear that he would not have given leave on the forum conveniens point if he had not given leave on the service point.
Background
I take the background largely from the judgment. The plaintiffs are two brothers called Saab ("the Saabs"). They are Lebanese business men who carry on business in Cyprus. SAMBA is a Saudi bank with its head office in Riyadh. The Saabs engaged SAMBA to place shares in a Lebanese company which was to undertake a large development in Lebanon. It was to comprise or include a complex of 761 villas, 1020 apartments and a five star hotel about 17km south of Beirut in an area which had seen some of the bitterest fighting during the Lebanese Civil War. The placement agreement dated 16th September 1994 required the parties to work together to place the shares in all countries in the world except the United States. SAMBA was to be given periods of marketing exclusivity during which it was to use its best efforts to place the shares. SAMBA was to submit to the Saabs a list of clients with whom it would pursue the placement. Ideally, the list was to contain a mixture of nationals from Saudi Arabia, the Gulf, Lebanon and Europe. The agreement was governed by Saudi law. SAMBA would only be liable to the Saabs if a court of competent jurisdiction decided that the claim arose out of SAMBA's wilful default or gross negligence.
The writ claims damages for breach of the placement agreement, negligence and misrepresentation. The points of claim allege that in negotiations which led to the signing of the agreement in London, SAMBA represented that they had the ability and resources to market the shares on a global basis and that their branch would be actively involved in doing so. In essence, the Saabs contend that these representations were false and/or that SAMBA was in breach of the placement agreement because it failed to use its best efforts to market the shares. They say that that failure amounted to wilful default and/or gross negligence. The Saabs' total claim is for about US$112 million in respect of alleged loss of profit if the placement had been effective (including US$17.5 million which would have been earned on placement) and/or for about US$8.8 million in respect of alleged wasted expenditure. I shall return to both the claim and the facts in more detail below.
Service
The Saabs served or purported to serve the writ on SAMBA's London branch. They did so under section 694A of the Companies Act 1985. Section 694A(2) provides so far as material:
Any process or notice required to be served on a company to which this section applies in respect of the carrying on of the business of a branch registered by it under paragraph 1 of Schedule 21A is sufficiently served if …
The remainder of the sub-section is concerned with the mechanics of service about which there is no dispute. There is also no dispute that the section applies to SAMBA because it is a limited company which (a) is incorporated outside the United Kingdom and Gibraltar and (b) has a branch in Great Britain: see sections 690A(1) and 694A(1). It is common ground that process may be served on such a company at the branch "in respect of the carrying on of the business" of the branch. SAMBA issued a summons seeking to set aside the service on the ground that this action is not process "in respect of the carrying on of the business" of the London branch. The judge held that it was and refused to set aside the service.
The Appeal
The first question on this appeal is whether he was right so to hold. The second question is whether, if so, the judge was also right to refuse a stay on the ground of forum non conveniens. He held that SAMBA had failed to show that Saudi Arabia is clearly or distinctly the more appropriate forum for the trial of the action. The question is whether he was wrong so to hold. If he was, a further question arises or may arise, namely whether substantial justice would be done in Saudi Arabia. That question is raised by way of respondent's notice.
When the hearing of this appeal began it appeared to raise a third question which was said to arise if the judge was wrong to hold that SAMBA was validly served on the London branch under section 694A. It was whether leave to serve the writ out of the jurisdiction should be given under RSC Order 11 rule 1(1)(d) and (f) on the ground that the agreement was made in England and the alleged tort resulted from an act committed in England. It is common ground that the court has jurisdiction to give leave on both those grounds because the agreement was indeed signed in London and because the alleged misrepresentations were made and relied upon in London. The question was whether this is a proper case for service out of the jurisdiction under Order 11 rule 4(2).
However, it is now agreed that that question does not arise on this appeal whatever the answer to the first question because Mr Lawrence Collins QC, who has appeared on behalf of SAMBA, very properly drew our attention to CPR 6.2(2), which provides that a company may be served by any method permitted by Part 6 of the CPR as an alternative to the methods of service set out in sections 725, 695 and 694A of the Companies Act 1985. By CPR 6.5(6) a document, which includes a claim form, may be served on a company incorporated outside England and Wales at any place of business of the company within the jurisdiction. It was my impression that that revelation came as a surprise not only to me but also to those advising the Saabs. The importance of the new rule is of course that it appears that the position has now reverted to what it was before section 694A was enacted, namely that process can be served on a foreign company with a place of business in, say, London without the necessity for establishing any link between the process and the business being conducted in London. In these circumstances Mr Peter Goldsmith QC indicated on behalf of the Saabs that if the service of the writ under section 694A was set aside they would not immediately seek leave to serve the writ (or its equivalent) out of the jurisdiction under Order 11 but will wish to consider what if any steps to take in the light of CPR 6.2(2) and 6.5(6). I turn to the two questions identified above.
Were the Saabs entitled to serve the writ on SAMBA's branch in London?
A. The correct approach.
The answer depends upon whether this action is process "in respect of the carrying on of the business of a branch" within the meaning of section 694A(2) of the Companies Act 1985. As Mr Collins put it at the beginning of his skeleton argument, the appeal raises the question what is the nature and extent of the requisite connection between the process and the branch. He submitted that the question is whether in substance the cause of action advanced by the process relates to the carrying on of the business of the branch, disregarding minor or fortuitous aspects of the case. The claims, he submitted, must relate to the business of the branch. In contract claims that requirement will be fulfilled either where the contract was negotiated and executed on behalf of the defendant by branch officers or where the obligation on which the claim is principally based was required to be performed by the branch or was substantially so performed. In tort claims the requirement will be met where the tort was allegedly committed by branch officers.
I am not sure that Mr Collins put his submissions in quite that way before the judge. The judge described Mr Collins' argument and set out his conclusions on it in this way at [1998] 1 WLR 937 at 941:
Mr Collins submits that they [ie the words of the statute] are not wide enough to cover the case where the process is only partly in respect of the business of the branch. Mr Goldsmith submits that they are. Mr Collins' submissions involve saying that the legislation only contemplates service on a branch if the process is only concerned with its activities. Such a construction would undoubtedly be difficult to apply in practice. In an international transaction of the kind involved in the instant case it would almost always be possible to say that there was some overseas involvement which would mean that proper service here could never be achieved.
The words "in respect of the...
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