ON APPEAL FROM THE HIGH COURT OF JUSTICE
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE STANLEY BURNTON
| SSL INTERNATIONAL PLC
LRC PRODUCTS LIMITED
|- and -
|TTK LIG LIMITED
T R VENKATESH
DR LATHA JAGANNATHAN
H T RAJAN
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
The Respondents did not appear and were not represented
Hearing dates: 9 and 12 August 2011
Crown Copyright ©
Lord Justice Stanley Burnton :
The judgments below
The Claimants' contentions
(1) Does CPR Part 6.5(3)(b) permit service on "a person holding a senior position within [a] company or corporation" if the company or corporation does not carry on business and is not present within the jurisdiction?
(2) If not, did TTK carry on business within the jurisdiction when the proceedings were served?
(3) If the answer to (1) and (2) is in the negative, did TTK waive the defect in service?
(4) If the answer to (1) or (2) or (3) is affirmative, should Peter Smith J have granted, and now should this Court, grant the relief sought by the Claimants?
(1) Did the judge err in rejecting the Claimants' case that the contracts between TTK and SSL were on SSL's standard terms, which included an express choice of English law?
(2) Did the judge err in refusing permission to serve the claim form on the Defendants out of the jurisdiction?
(3) Did the judge err in refusing to grant an interim injunction requiring TTK to deliver up to the Claimants the condoms manufactured by it pursuant to the orders submitted by the Claimants that it had accepted?
(1) Does CPR Part 6.5(3)(b) permit service on "a person holding a senior position within [a] company or corporation" if the company or corporation does not carry on business and is not present within the jurisdiction?
"When a human being is about to be sued, it is necessary that there should be a personal service of the writ upon him. In the case of a corporation that cannot be done, and Order IX., r. 8, provides that service shall be sufficient if it is made upon the head officer or secretary of the corporation. The defendants in this case are a corporation incorporated under the laws of Sweden. It may be that there is some person in this country connected with the defendants in such a way that the writ might properly be served upon him as an officer of the corporation. But that of itself is not sufficient. In order that an officer of a foreign corporation may be served in this country it is necessary that the foreign corporation must be one which can in some sense be said to be locally in this country. I take it that every corporation is prima facie locally situated in the territory of the sovereign power from which it derives its origin; apart from that a corporation has physically no place or attributes of locality, though it may for the purpose of its business occupy a place outside the country of its origin. The question, therefore, is whether the foreign corporation can be said to be "here," to use the expressive phrase employed by Mr. Joseph Walton in arguing La Bourgogne  A. C. 431, and adopted by the Lord Chancellor when giving his opinion in that case. If a foreign corporation can be said to be "here," its officer can be served with a writ. But a foreign corporation may be both "here" and "there," and in this connection Lord St. Leonards in Carron Iron Co. v. Maclaren (1855) 5 H. L. C. 416, 459 spoke of the possibility of a corporation having two domicils, and in other cases judges have spoken of corporations having two residences; both of which expressions have been criticized. The criticisms appear to me to be somewhat captious, for though the expressions "domicil" and "residence" when used with reference to a corporation may not be quite accurate, they are useful metaphors as indicating what is intended, and there is no doubt that a corporation can in a sense be said to be in two places at once though an individual cannot. But a foreign corporation cannot be said to be "here" unless there are facts from which it can be inferred that, like an individual, it is residing here, and in the case of a trading corporation residence means the carrying on of its business. In determining this question the Court ought in my opinion, as Lord Coleridge C.J. said in Grant v. Anderson  1 Q. B. at p. 112, to have regard to the broad principles of international comity which in questions of jurisdiction must always be assumed to underlie the rules of Court or the enactments of Parliament."
Personal service of a document on a body corporate, may in cases in which provision is not otherwise made by any enactment, be effected by serving it … on the … president of the body … or other similar officer …
The writ had been served on the person named in the Panamanian register of companies as the president and director of the company. Having reviewed the authorities on service under that provision, including Okura & Co., Limited v Forsbacka Jernverks Aktiebolag, he concluded:
In my view the authorities to which I have been referred compel me to reject Mr Longmore's submission, and to hold that, unless a foreign company is carrying on business at a place within the jurisdiction, it cannot be served with process within the jurisdiction, either by the method employed in the present case or at all.
… this Panamanian company never did establish a place of business here. Nor did it ever carry on business here. So it could not be served here by a writ for service within the jurisdiction. Not even by service on the president of the company if he was resident here, see The Theodohos.
As a result, service of the writ on the defendant was set aside, even though three of the directors of the company lived in this country.
… Salter J. in the Littauer case and Ashworth J. in the Vogel case clearly attached great weight to a long line of cases where the English court has considered whether it should allow process to issue to foreign companies as being amenable to its jurisdiction. We will call this line "the Okura line of cases," because a leading example is the decision of this court in Okura & Co. Ltd. v. Forsbacka Jernverks Aktiebolag  1 K.B. 715.
The origin of this line requires some brief explanation. After it had been decided in Newby v. Von Oppen & Colt's Patent Firearms Manufacturing Co. (1872) L.R. 7 Q.B. 293 that in appropriate circumstances a foreign corporation was capable of being sued in this country, our courts in a number of cases had to consider (a) whether on the facts the foreign corporate defendant was amenable to the jurisdiction of the English court, and if so (b) whether it had been properly served with the process. Most of these cases were concerned with the old Ord. 9, r. 8 of the Rules of the Supreme Court 1883, which provided:
"In the absence of any statutory provision regulating service of process, every writ of summons issued against a corporation aggregate may be served on the mayor or other head officer, or on the town clerk, clerk, treasurer or secretary of such corporation . . ."
The rule contained no such expressions as "reside" or "carry on business." However, as Ackner L.J. pointed out in South India Shipping Corporation Ltd. v. Export-Import Bank of Korea  1 W.L.R. 585 , 589:
"Those expressions were used as convenient tests, to ascertain whether the corporation had a sufficient 'presence' within the jurisdiction, since 'generally,' courts exercised jurisdiction only over persons who 'are within the territorial limits of their jurisdiction.' Apart from statute 'a court has no power to exercise jurisdiction over anyone beyond its limits,' per Cotton L.J. in In re Busfield (1886) 32 Ch.D. 123 , 131, quoted by Lord Scarman in Bethlehem Steel Corporation v. Universal Gas (unreported), 17 July 1978, House of Lords."
It is clear that (special statutory provision apart) a minimum requirement which must be satisfied if a foreign trading corporation is to be amenable at common law to service within the jurisdiction is that it must carry on business at a place within the jurisdiction: see The Theodohos  2 Lloyd's Rep. 428 , 430, per Brandon J.
46. I have wondered whether the proper analysis is that CPR 6.5(3)(b) allows one to serve a corporate representative in this jurisdiction when that corporation could itself be served here because it was, for example, an overseas company within the various service rules, or some other company which could be validly served here anyway. That, however, does not seem in any way to be part of the reasoning of Lord Goff in Kuwait Airways.
47. In the circumstances, it seems to me that I am bound to find that, odd though it still seems to me, service on the director is valid service on the Indian company for the purposes of effecting service of a claim form in this jurisdiction.
I find it impossible by any process of mere construction to limit the scope of the present Ord. 7, rr 1 and 10 to service only on a defendant "within the jurisdiction," by analogy to R.S.C., Ord 10, r. 1.
19. It seems to me that the principle relied on by Lawrence Collins J in Chellaram v Chellaram (No 2)  3 All ER 17 and by Evans-Lombe J in Fairmays v Palmer  EWHC 96 (Ch) deserves respect and serious consideration, not least because Lawrence Collins J is the senior editor of Dicey, Morris & Collins on Conflict of Laws, 14th ed (2006).
20. The reasons why I have come to the conclusion that this appeal must be dismissed are as follows. First, the words of the relevant provisions of the CPR, in particular rules 6.2 to 6.5 inclusive, do not appear to me to exclude service in accordance with their terms simply because the defendant is out of the jurisdiction. Contrary to the contention put forward by Mr Wolman, I do not consider that rule 6.5(1) calls that proposition into question. It merely excludes service out of the jurisdiction, save in accordance with the provisions of Section III of CPR Pt 6. In this case, if service was validly effected, it was done so within the jurisdiction and appears to have been in accordance with the requirements of rule 6.5. In those circumstances, it seems to me wrong in principle to imply an exception into rules 6.2 to 6.5, unless it is either obvious that such an exception should be implied, or the provisions as to service in CPR Pt 6 simply do not work in some respect unless such an exception is implied. I do not consider that either possibility applies.
21. Secondly, there is the reasoning and decision of this court on a very similar point under the former County Court Rules in Rolph v Zolan  1 WLR 1305, to which May LJ has referred. Consistently with the approach in that case, it seems to me to be inappropriate to imply the common law principle identified in the Chellaram case  3 All ER 17 into rules 6.2 to 6.5. The decision in the Rolph case  1 WLR 1305 is also important here because it answers Mr Wolman_s point that one should not lightly assume that a common law principle has been reversed, as it were sub silentio, by a change in rules of procedure. If the County Court Rules already had the effect determined in the Rolph case, the common law principle had already been reversed, albeit only in the county court. In effect, the effect of our conclusion is that, in the present connection, we are holding that the Civil Procedure Rules followed the County Court Rules, as interpreted in the Rolph case, rather than the Rules of the Supreme Court.
22. Thirdly, rule 6.15(1), which does not fall within Section III of CPR Pt 6 and which provides that where a contractual claim is brought the claim form may be served by a contractually agreed method, suggests that the provisions outside Section III of CPR Pt 6 were intended to be capable of applying even where the defendant was out of the jurisdiction, a proposition supported by the way in which rule 6.15(2) is expressed.
23 Fourthly, nothing in Section III of CPR Pt 6 ("Special Provisions about Service out of the Jurisdiction") appears to me to preclude service on a defendant out of the jurisdiction being effected in accordance with rules 6.2 to 6.5 within the jurisdiction, where it is appropriate. The terms of rule 6.5 appear to be mandatory whereas the provisions of rule 6.20 appear to be expressed permissively. …
35. …. I concur without hesitation in the dismissal of this appeal for the reasons given by May LJ; for the additional reasons given by Neuberger LJ; and particularly because of my disinclination to accept, without express mandate in the new procedural code, that inquiry into the validity of service of the claim form should depend upon where the defendant turns out to have happened to be present on the day of deemed service and, indeed, my concern that the inquiry would thus often degenerate into a difficult assessment of the truth of his assertion in such regard.
(2) Was TTK carrying on business within the jurisdiction?
Phrases referring to residence or presence within the jurisdiction, or equivalent phrases, have been used by way of shorthand reference to the condition (or one of the conditions) which a foreign corporation has to satisfy if it is to be amenable to the jurisdiction of the English court. and indeed they have been used more or less interchangeably by the courts. One typical example is the phraseology used by the Earl of Halsbury L.C. in La Compagnie Générale Transatlantique v. Thomas Law & Co., La Bourgogne  A.C. 431, who said, at p. 433:
"It appears to me that as a consequence of these facts the appellants are resident here in the only sense in which a corporation can be resident - to use the phrase which Mr. Joseph Walton has so constantly referred to, they are 'here;' and, if they are here, they may be served."
Perhaps the most helpful guidance in determining whether a foreign corporation is "here" so as to be amenable to the jurisdiction of our courts is the following passage from the judgment of Buckley L.J. in the Okura case  1 K.B. 715, 718-719:
"The point to be considered is, do the facts show that this corporation is carrying on its business in this country? In determining that question, three matters have to be considered. First, the acts relied on as showing that the corporation is carrying on business in this country must have continued for a sufficiently substantial period of time. That is the case here. Next, it is essential that these acts should have been done at some fixed place of business. If the acts relied on in this case amount to a carrying on of a business, there is no doubt that those acts were done at a fixed place of business. The third essential, and one which it is always more difficult to satisfy, is that the corporation must be 'here' by a person who carries on business for the corporation in this country. It is not enough to show that the corporation has an agent here; he must be an agent who does the corporation's business for the corporation in this country. This involves the still more difficult question, what is meant exactly by the expression 'doing business?'"
The appeal against the order of Mann J
(1) The incorporation of SSL's standard terms in the contracts of sale
The Contract shall be construed in accordance with and governed in all aspects by English law and the Supplier submits to the exclusive jurisdiction of the English Courts.
Other conditions refer to "the Company" as the entity contracting with the Supplier, and "the Company" is defined as "a company within the SSL International group of companies as indicated to the Supplier and its successors and assigns". Whether TTK is within this definition was not explored before us, but the definition shows that these conditions were intended to operate as between Group companies and non-Group companies. However, I do not think it necessary to decide whether these standard terms were apt to apply to an intra-group contract.
56. The starting point for any given supply in any month is something which is called a "Category Planning Template" (or "CPT"). What effectively happens is that, on a month by month basis, the English company sends a spreadsheet to the Indian company specifying its requirements for that month, with a number of columns. Some of those columns contain the requirements of the English company and other columns are left for the Indian company to fill in. One of the most crucial columns is a column in which the Indian company indicates whether it will be supplying the relevant products within that month and, if so, by what date, or whether if it is going to be supplying at a later date, or there is to be a re-negotiation.
57. In due course, any further negotiations will take place as to the finer points of any matters left outstanding in that spreadsheet but, eventually, the English companies indicate an acceptance of the state of affairs specified by the Indian company by telling the Indian company the purchase order which applies on a jurisdiction by jurisdiction basis to the various products (and there will be many of them) specified in the spreadsheet.
58. In terms of offer and acceptance, the analysis seems to me reasonably clearly to be that the first English spreadsheet amounts to an offer, or perhaps an invitation to tender. The Indian response, when it fills in the various empty columns in the spreadsheet, amounts to a counter-offer, or conceivably the first offer, and that the communication of the purchase order number by the English companies is, so far as it corresponds to matters within the Indian spreadsheet, an acceptance which forms a contract. Whether there is one contract or a series of contracts each month does not matter for these purposes.
59. The result is a contract, or contracts, arising every month for the supply of condoms for delivery, by and large, in the following month, sometimes in the month after that. The final step, therefore, in the formation of the contract is, therefore, the purchase order, or the communication of purchase order number.
60. This is an odd procedure. The purchase order, on the evidence that I have seen, is not actually sent to India. The Indian company, therefore, never sees the purchase order and, on all the evidence that I have, has never seen a purchase order in all the years for which this procedure has been operating, but it knows that it is to supply because it has got the purchase order number and is told to which goods it relates. The purchase order itself, which is a one or two sheet document, stays in England and is not communicated, despite the fact it seems to be addressed to the Indian company.
61. That purchase order has a reference to the claimant's standard terms of supply on the bottom of it. However, not being a document which is ever communicated to the other side it is not a manner in which the defendant can ever have been alerted to the existence of the terms or invited to subscribe to them.
62. The reference on the bottom of these untransmitted purchase orders is the only relevant reference to the supply conditions. I am told there is a reference to them on the website but I do not see how that can be the basis of an acceptance of their incorporation by the Indian company.
66. The first is a blanket assertion that the terms were in fact the basis of dealings between the parties. [Mr de la Mare] points to averments by his deponent, whose witness statements and affidavits he relies on in this case (Mr. Shuttleworth of the Reckitt Group) to the effect that previous senior employees, including directors, have stated that the dealings with the Indian company were always on the basis of the claimant's standard supply terms.
67. Those averments in the witness statements and affidavits are, in my view, no more than assertions of a conclusion. They do not provide any evidential foundation whatsoever for the incorporation of those terms into the supply contracts. I give, by way of example, what is said by Mr. Shuttleworth at paragraph 50 of his first affidavit:
"As for the terms on which such business was placed, Mr. Shaun Davis (a JV Company director between 2007 and 2010 with responsibility for the group supply chain) [confirmed to me] that there is a long history of all orders for products being made on SSL standard terms & conditions from time to time ..."
68. That is a mere assertion and no particulars are given. Accordingly, that is no evidential basis for a finding that the terms and conditions were incorporated into the dealings between the English companies, on the one hand, and the Indian company on the other. They do not even raise a good arguable case, a good prima facie case, or any sort of case, for injunctive or other purposes.
72. It seems to me that there is no basis for attributing a belief held by somebody whose primary function was on one side of a joint venture to the Joint Venture Company merely because he happened to be a director of that company. I cannot see any sensible basis on which that sort of belief should be attributed to the Joint Venture Company. For all I know, there may be Indian directors of the Joint Venture Company who would hold another view. One would not necessarily attribute that view to the company either. The mere belief of a nominee director about such matters is not something which, it appears to me, should even arguably be attributed to the company. Rather more than that is required. Accordingly, the attribution argument fails.
1. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:
(a) in writing or evidenced in writing; or
(b) in a form which accords with practices which the parties have established between themselves; or
(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.
23 Pursuant to Article 17 of the Brussels Convention an agreement conferring jurisdiction must be either in writing or evidenced in writing or, in international trade or commerce, in a form which accords with usage in that area and of which the parties are or ought to be aware.
24 As the Court held in Case 24/76 Estasis Salotti v Ruewa  ECR 1831, paragraph 7, the purpose of the formal requirements imposed by Article 17 is to ensure that the consensus between the parties is in fact established.
25 It must nevertheless be emphasized that the situation of shareholders as regards the statutes of a company - which are the expression of the existence of a community of interests between the shareholders in the pursuit of a common objective - is different from that, referred to in the abovementioned judgment, of a party to a contract of sale as regards general conditions of sale.
26 First of all, in the legal systems of all the Contracting States the statutes of a company are in writing. Moreover, in the company law of all the Contracting States it is acknowledged that the statutes of companies play a particular role in so far as they constitute the basic instrument governing the relations between a shareholder and the company.
27 Furthermore, irrespective of how shares are acquired, every person who becomes a shareholder of a company knows, or ought to know, that he is bound by the company' s statutes and by the amendments made to them by the company's organs in accordance with the provisions of the applicable national law and the statutes.
28 Consequently, when the company's statutes contain a clause conferring jurisdiction, every shareholder is deemed to be aware of that clause and actually to consent to the assignment of jurisdiction for which it provides if the statutes are lodged in a place to which the shareholder may have access, such as the seat of the company, or are contained in a public register."
I particularly emphasise paragraphs 24 and 25. In the present case, there is no evidence of any consensus incorporating the SSL terms and conditions.
(2) and (3) Did Mann J err in refusing in refusing injunctive relief and permission to serve out?
90. The underlying joint venture is, so far as law is specified, subject to Indian law. The Joint Venture Company is an Indian company. It operates entirely in India. Its centre is in entirely in India. Its property is in India. On the Indian side of the joint venture, all the participants are in India and there is no proved connection with this jurisdiction. The supply contract is, on the present state of the evidence, subject to Indian law. Critically, any order that this court makes would have to be enforced in India. The goods which are subject to it are in India and the order would require them to be supplied out of India, but not necessarily to this jurisdiction. A lot of the goods, indeed most of the goods, would need to go to other jurisdictions.
91. The last two points, and particularly the whereabouts and enforcement of any order I make are, in my judgment, crucial. This court will not make pointless orders or orders that are in vain. I am asked to make an order requiring an Indian company to supply. It is to be a mandatory order. Such orders are apt to require more policing than prohibitory orders and the need for care before they are made has been referred to in more than one judgment in the past. If I were to make the order sought, I would be requiring an Indian company with, at present, a majority of Indian directors, none of whom have any real presence in this jurisdiction, to do serious and detailed acts of supply and provision of information. It is not apparent to me how that could be enforced if it were broken. Since the company has no presence here, none of the traditional methods of enforcement would work. Assuming that directors who failed to procure compliance with a mandatory injunction can be guilty of contempt, which is quite a large assumption and quite how that works was not the subject of submissions by Mr. De la Mare, they are not here to have proceedings taken against them. It is not plain to me that Indian directors with no real connection with this jurisdiction should be at risk of such steps anyway, at least in the circumstances of this case.
92. In short, the order I am invited to make is one with no apparent means of enforcement because its main subject has no presence here and no real connection with this jurisdiction. Those who might be secondarily liable are in the same position.
Mr Thomas [of the Claimants] has told me that if [TTK] offers no cooperation on the ground then [Reckitt Benckiser] personnel would essentially have to do the job normally done by [TTK] personnel, which is to go round the factories collecting the goods from wherever they may be stored on the site and arranging them into shipment batches before they can be loaded into containers. This would require [Reckitt Benckiser] to find and engage sufficient numbers of suitably qualified personnel ….
Lady Justice Arden
Lord Justice Mummery