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Cite as: [2012] EWHC 1798 (Ch)

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		Neutral Citation Number: [2012] EWHC 1798 (Ch)
		Case No: HC07C03194

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

29/06/2012

B e f o r e :

SIR WILLIAM BLACKBURNE
____________________

Between:

	Mrs DAAD SHARAB	Claimant
	- and -
	HIS ROYAL HIGHNESS PRINCE AL-WALEED BIN TALAL BIN ABDUL-AZIZ AL-SAUD	Defendant

____________________

Clive Freedman QC and Alexander Robson (instructed by TLT Solicitors LLP) for the claimant
Christopher Pymont QC (instructed by Hogan Lovells International LLP) for the defendant
Hearing dates: 30 May and 1 June 2012
____________________

HTML VERSION OF JUDGMENT
____________________

Sir William Blackburne :

Introduction

There are four applications before me. They arise in proceedings which began in November 2007 and have yet to come to trial. I shall first explain what the case is about, after which I shall summarise the procedural background. This will set the scene for the four applications.

The claimant Daad Sharab, whom I shall refer to simply as the claimant, is of Jordanian nationality, lives in Jordan but has a flat in London. She was born in Saudi Arabia where she lived for 18 years before moving to Jordan. She has a daughter, now aged 18, who lives and has been educated in Jordan. The claimant spends three months or so each year in her London flat and has done so since 1988 with the exception of the years 1995 to 1998 when she was again in Saudi Arabia. She was represented before me by Clive Freedman QC and Alexander Robson.

The claimant runs a family-owned consultancy business called Trans Arab World for Commercial Mediation of which she is the chairman. In that role she acts as a consultant intermediary, providing commercial introductions between parties. She runs it with her father who acts as its general manager. She has a 65% interest in it and her father the remaining 35%. It is based in Amman and has a substantial turnover. A major part of its business is (or was) effecting introductions for clients in Libya. She used frequently to visit that country.

The defendant Prince Al-Waleed, whom I shall refer to as the defendant, is a member of the Saudi royal family. He is a man of very considerable wealth. He is chairman of Kingdom Holdings Company which he established. It manages and holds investments. Among the assets owned by him are (or were at the material time) two aircraft, an Airbus A340 and a Boeing 767. He was represented before me by Christopher Pymont QC.

These proceedings concern the claim of the claimant to the commission to which she says she became entitled as a result of services she performed for the defendant in relation to the sale by him of the Airbus to the Libyan Arab Foreign Investment Company. Negotiations for the sale took place over many months between 2003 and 2005. The price ultimately achieved was $120 million. For a period there was a proposal for an investment of around $20 million by the Libyan Agricultural Investment Company in what was called Project Toushca which was an agricultural venture in Egypt being undertaken by a subsidiary of Kingdom Holding Company. In the end nothing came of this. The then President of Libya, Colonel Gaddafi, was closely involved in the Airbus transaction as, given its specifications, the aircraft was intended for his use.

The claimant contends that she undertook her role as broker between the defendant and the Libyans pursuant to an oral agreement reached at a meeting between her and Mr Fouad Alaeddin, acting as the defendant's agent, in a London restaurant on 25 August 2001. At that stage it had not been decided which of the two aircraft would be sold. There was also discussion at the meeting of persuading the Libyans to invest $20 million in Project Toushca. She contends that the sole purpose of Mr Alaeddin's visit to London was to discuss the deal and agree the terms on which she was to act. She contends that Mr Alaeddin told her that the defendant would pay her $2 million if she could sell one of the aircraft to Libya and a further $1 million if she could secure the desired investment in Project Toushca. In paragraph 51 of her first witness statement she states that she considered this to be a firm offer which she accepted verbally. She says she did so acting in a personal capacity.

She goes on to allege that this agreement was later varied at a meeting with the defendant in Libya in April 2003. By that time the Airbus had been identified as the aircraft to be sold. On that occasion, she alleges, it was agreed that if she succeeded in selling the Airbus for anything in excess of $110 million she could keep the excess. She alleges that the agreement as so varied was confirmed with Mr Alaeddin at a meeting in Tripoli (in Libya) in July 2003. By then, the claimant alleges, she had persuaded Colonel Gaddafi to purchase the Airbus for $120 million and to commit $20 million to Project Toushca. She alleges that in the presence of Mr Alaeddin she stated over the telephone to the defendant that she would only conclude the deal with Colonel Gaddafi for the sale of the Airbus for $120 million if her agreed commission was $10 million (being the excess over $110 million). She says that he agreed to this. She further contends that in September 2005 the defendant telephoned her in London to thank her for her efforts and success and to confirm that he would pay her the $10 million commission. In the meantime there had been difficulties in obtaining payment from the Libyans of the full purchase price in that only $70 million had been paid. The claimant alleges that she was able to negotiate a settlement with the Libyan authorities whereby the sale to them of the Airbus would be completed and the remaining $50 million paid but that they would be released from the proposed investment in Project Toushca. She alleges that a few days later the defendant again rang her and confirmed that she would be paid the $10 million once the outstanding $50 million was paid. She goes on to allege that after further delays and further efforts on her part the outstanding $50 million was eventually paid over and ownership of the Airbus transferred by the defendant to the Libyan authorities. She claims that thereupon she became entitled to the $10 million which, however, the defendant refused and, despite many requests, continues to refuse to pay.

The defendant, while admitting that the claimant negotiated with the Libyan authorities and Colonel Gaddafi, contends that his arrangement with her, agreed at a meeting with him on board his yacht in Cannes in early August 2001, was that depending on what her contribution was to a completed sale of one of his aircraft to Colonel Gaddafi and to raising money for Project Toushca he would decide at his own discretion what she should be paid. He says that in accordance with his practice in relation to previous dealings between himself and the claimant these were matters he would assess at the end of the transaction. He denies that Mr Alaeddin (whom he describes as someone he has known professionally for over 20 years, a family friend of the claimant and, like her, a Jordanian) had any authority to bind him, denies that he was even aware of any arrangement for Mr Alaeddin to travel to London later that month to meet the claimant and denies that any agreement of the kind alleged was reached at the London restaurant. He denies therefore that he became contractually bound, then or subsequently, to pay the claimant any commission, let alone the fixed amounts that she claims. He accepts that the claimant and Mr Alaeddin each played a role in the eventual sale of the Airbus but contends that their effectiveness in achieving this was limited and that (as he puts it in his witness statement of 1 September 2010) "the two crucial steps in forcing a resolution of the issues" holding up the sale (which he then describes) were taken by himself.

I am not concerned with the merits of the dispute but with the extent to which, in the light of what has happened procedurally, it is open to the claimant, without more, to pursue against the defendant what has been described for short as the quantum meruit claim and, if in the events that happened she has no such current right to do so, whether she should be given permission to bring such a claim against him in this jurisdiction. This stems from the fact that, so far as material, the defendant has at all times been and remains outside the jurisdiction.

The procedural steps taken to bring the claims before this court

I shall now relate what the steps have been to bring the claimant's claims before this court and how therefore the current differences between the parties have arisen which have given rise to the applications before me.

The claim form, to which particulars of claim were attached, was issued on 27 November 2007. It seeks $10 million by way of commission for the claimant's services in relation to the sale. In the alternative it claims that amount "upon a quantum meruit basis" or, in the further alternative, as damages for breach of contract. Interest is also claimed. (I will come later to how this is pleaded in the particulars of claim.)

Mindful of the need to get the court's permission to serve her claim form on the defendant out of the jurisdiction, the claimant applied to the court for the requisite permission. The matter came before Lindsay J on 21 December 2007. Before the court were the claim form with the attached particulars of claim, the claimant's first witness statement dated 24 September 2007, a witness statement dated 23 November 2007 of Neil Meakin, the partner in the claimant's solicitors who had conduct of the matter, and the skeleton argument of Mr Ken Craig, counsel who had settled the particulars of claim and who represented the claimant at this stage (and who continued to do so until quite recently when he took up a judicial appointment). There was no formal application (as perhaps there should have been) but nothing turns on this. Both the statement of Mr Meakin and the skeleton argument of Mr Craig stated that the claim came within CPR 6.20(5)(a), (b) and (c) and also 6.20(6).

Those are references to the so-called "gateways" through at least one of which the particular claim must pass if permission is to be given for its service out of the jurisdiction. They appear in a group of provisions headed "claims in relation to contracts" which have since been replaced by paragraphs (6)(a), (b) and (c) and (7) of paragraph 3.1 of Practice Direction 6B. Adopting the references applicable when the matter was before Lindsay J those gateways were as follows:

"(5) A claim is made in respect of a contract where the contract –

(a) was made within the jurisdiction;

(b) was made by or through an agent trading or residing within the jurisdiction;

(c) is governed by English law;

...

(6) A claim is made in respect of a breach of contract committed within the jurisdiction."

It is pertinent at this point to refer to another of the gateways. It is contained in a group of gateways headed "Claims about trusts etc" set out in CPR 6.20(11) to (15) (and now to be found in paragraphs (12) to (16) of paragraph 3.1 of Practice Direction 6B). That gateway (using its current numbering) provides, so far as material, that:

"(16) A claim is made for restitution where the defendant's alleged liability arises out of acts committed within the jurisdiction."

The application to Lindsay J was almost entirely focused on the agreement which the claimant alleged that she had made with Mr Alaeddin at the London restaurant on 25 August 2001. According to a note made of the without notice hearing before him Lindsay J expressed "doubts over whether the agreement was governed by English law" – a reference to gateway (5)(c) – "but he believed sufficient had been proven under the first two gateways" – a reference to gateways (5)(a) and (b) – "and he was satisfied that there was a good arguable claim, accordingly he granted the Order allowing service out of the jurisdiction." It would therefore seem that Lindsay J was not satisfied that a sufficient case had been demonstrated that the claim came within gateway (6) – breach of a contract committed within the jurisdiction – which was the only other gateway identified in the witness statement of Mr Meakin and in Mr Craig's skeleton argument, let alone that it satisfied any other.

On the apparent basis that the claims in the proceedings were all made "in respect of a contract" – the governing requirement of the various contractual gateways relied upon – Lindsay J's order (incorrectly dated 20 December) gave permission for service of the claim form and particulars of claim on the defendant in Saudi Arabia.

Following service on him in accordance with that order, the defendant took steps through his solicitors (then known as Hogan & Hartson) to challenge jurisdiction. The challenge was both on the merits – disputing the making of any agreement through Mr Alaeddin – and on the applicability of the gateways relied upon in Mr Meakin's witness statement of 23 November 2007. The challenge was made through Mr Baker of Hogan & Hartson. Mr Baker's evidence set out why none of the four gateways relied on in Mr Meakin's witness statement was made out. He also challenged Mr Meakin's assertion – which Lindsay J had evidently accepted – that England and Wales was the appropriate forum for the trial of the claim.

I pause to draw attention to what seems to me to be a procedural lacuna. This was the absence of any indication to the defendant when the proceedings were served on him that the only gateways which had found favour with Lindsay J were paragraphs 5(a) and (b). It does seem to me desirable that, as with any other without notice application, the successful applicant should be required to serve on the respondent against whom he has obtained without notice relief a note of what was said by the judge hearing the application and that, to that end, he should be required to ensure that a full note is taken of the hearing. I understand that, although the defendant's challenge to Lindsay J's order went to the Court of Appeal, it was not until much later that he or his advisers had any awareness that Lindsay J considered that the claim satisfied only gateways 5(a) and (b). Before Mr John Powell QC (sitting as a deputy judge of this Division) – to whom the defendant's challenge came on for hearing in July 2008 – the defendant argued that none of the four gateways which the claimant had relied on in Mr Meakin's evidence was made out. In the event, the claimant opposed the defendant's application and repeated the submissions – covering all four gateways – relied upon in front of Lindsay J so that, in effect and without saying so, the claimant was supporting that judge's order on grounds additional to those which had found favour with him. I consider nevertheless that the defendant should have been made aware, in the manner that I have described, of what occurred at the without notice hearing.

The defendant's challenge was unsuccessful. Like Lindsay J, the deputy judge found that the case came within gateway (5)(a) and not within gateway (5)(c) but, seemingly unaware of the view Lindsay J had taken of this alternative, did not consider that it fell within gateway (5)(b). He found, instead, that it did come within gateway (6) (contract breach committed within the jurisdiction). The defendant's challenge to England and Wales as the appropriate forum for the claim to be heard also failed.

The defendant took the matter to appeal. Before the Court of Appeal (Arden, Richards and Rimer LJJ) the defendant challenged the deputy judge's finding of a good arguable case that the claim fell within gateways (5)(a) and (6) or, if those challenges failed, to his finding that the appropriate forum was England and Wales. He succeeded on his challenge to gateway (6) but failed on the rest of his challenge. See [2009] EWCA Civ 353.

In the result, Lindsay J's order, allowing the claim form and particulars of claim to be served on the defendant out of the jurisdiction, stood and the defendant failed in his challenge to this court's assumption of jurisdiction to hear the claim.

The Court of Appeal handed down its decision of 30 April 2009. The defendant petitioned the House of Lords for leave to appeal that decision. On 27 July 2009 the petition was refused. In the meantime, on 10 June 2009, the defendant served his defence.

The pleadings

This brings me to the pleadings.

By her claim form the claimant seeks, as I have mentioned, $10 million, inter alia, upon a quantum meruit basis. In her particulars of claim, after pleading the agreement reached with the defendant through Mr Alaeddin at the restaurant meeting on 24 August 2001, the claim pleads:

"15. Alternatively, by acting in the way set out above" – ie by the making of the agreement with Mr Alaeddin at the restaurant "the Defendant, through Mr Alaeddin, invited the Claimant to sell one of his aircraft to Colonel Gaddafi and to obtain the investment of Libya in project Toushca, for reward, specifying the reasonable value of the service he asked her to perform on his behalf."

A like plea appears in paragraph 22. It appears as an alternative to the pleading in paragraph 19 of a variation to the 25 August 2001 agreement whereby the claimant would be entitled to any balance over $110 million if she could negotiate a sale of the Airbus for more than that amount. Paragraph 22 pleads that:

"Alternatively, the Defendant, in so saying" – ie that she would be entitled to any excess if she sold the Airbus for a price exceeding $110 million – "specified the increase in the reasonable value of the services he had asked the Claimant to perform on his behalf."

Like pleas appear in paragraphs 27, 62 and 65 of the particulars of claim.

In paragraph 77, the claimant pleads that in the events set out earlier in the pleading she became entitled to receive the $10 million. In paragraphs 78 to 80 she pleads that, in failing to pay the sum of $10 million, the defendant was in breach of his agreement with her.

Paragraph 81 pleads as follows:

"Alternatively, the Claimant has rendered services to the Defendant at his request as set out above and claims a reasonable sum for those services on a quantum meruit basis. The Claimant avers that in all the circumstances a reasonable sum is US $10,000,000."

It is this claim – which I shall refer to simply as the "quantum meruit claim" - which lies at the heart of the present dispute. The manner in which it is pleaded first surfaced as an issue in the defence served on 10 June 2009. In paragraph 54 of the defence the following appears:

"Paragraph 81 is denied. Further, the Claimant has not obtained, and could not obtain, permission to serve on the Defendant out of the jurisdiction any claim in restitution. If that is the nature of the claim made by paragraph 81 (and paragraphs 15, 22, 27, 62 and 65 and paragraph (3) of the prayer), such claim is unsustainable."

The claimant sought further information about that plea by means of the following request:

"Given that permission has been granted to the Claimant to serve these proceedings on the Defendant out of the jurisdiction, please state whether or not it is the Defendant's case that this permission is limited to the service of a part of these proceedings only, and if so, state precisely to what part of these proceedings this permission is so limited and when this was so ordered, identifying each document relied upon, or alternatively stating the basis upon which the Defendant so asserts."

The answer, served on 17 February 2010, was in these terms:

"The Claimant has obtained permission to serve out of the jurisdiction in respect of a claim in contract. She cannot treat that as permission in respect of a claim in restitution or justify the permission on any ground except the contract alleged. See the cases cited in Dicey, Morris & Collins, Conflicts of Laws 14^th ed, esp. at para 11-154. The contract, for these purposes, was said to be the oral contract allegedly entered into on 21[sic] August 2001 at the Ayoush restaurant (as later allegedly varied outside this jurisdiction) and not any other contract."

The claimant's response to paragraph 54 of the defence and to the further information supplied in answer to the request was pleaded in paragraphs 2 to 5 of her reply served on 21 April 2010. It neatly sets out the claimant's contentions on the issue. The reply pleaded that:

"2. As to paragraph 54 of the Defence, the Claimant was given permission to serve the entire proceedings on the Defendant out of the jurisdiction, without limitation. The Defendant thereafter applied for an order that the Claim be struck out on the ground that the court did not have jurisdiction to hear the Claim. This application was dismissed by the judge and the defendant's appeal against the judge's decision was dismissed by the Court of Appeal, which upheld this decision without limitation. The Claimant's application for leave to petition the House of Lords was also dismissed.

3. In the premises, in so far as it is intended to be submitted on behalf of the Defendant that the Claimant does not have permission or is otherwise not entitled to argue her entire case as pleaded, this is specifically denied.

4. Further, at all material times, when making his application to the judge that the Claim be struck out and when appealing against the judge's decision to the Court of Appeal, the Defendant knew precisely what the Claimant's pleaded case was and could have made submissions to the court that even if the Defendant's application did not succeed entirely, some parts of the Claimant's pleaded case should still be struck out, but chose not to do so.

5. It is averred that in the premises the Claimant [sic] is estopped from raising such an argument now."

In a nutshell, therefore, an issue has arisen as to the precise scope of the order made by Lindsay J giving permission to serve the proceedings out of the jurisdiction. Was that order unlimited, as the claimant contends, or was it confined to claims made "in respect of a contract" as the defendant claims? That issue has in turn given rise to two questions: (1) is it possible to go behind the wording of Lindsay J's order which, on its face, gave permission for the whole of the claim form and particulars of claim to be served on the defendant out of the jurisdiction, and (2) is it open to the court to amend or clarify Lindsay J's order if the true view of the matter is that, in the events that happened, Lindsay J's order could only properly have given permission for the claim "in respect of a contract" to be served out of the jurisdiction and that insofar as the quantum meruit claim is not "in respect of a contract" no permission has or should have been given for it to be served out of the jurisdiction? The claimant has a fall-back position which is to apply for permission to serve the quantum meruit claim out of the jurisdiction if, on a proper analysis of the claim form and particulars of claim, the quantum meruit claim is not in respect of a contract and is not a claim for which permission to serve out was given or, if on a proper understanding of the order it was given, is a claim for which permission should not have been given.

These issues are reflected in three of the four applications before the court. But I must first set out a little more of the background.

The claimant's detention in Libya

The trial of this action was initially fixed to take place in November 2010. But in late January 2010, while on a visit to Libya, the claimant was detained without explanation. This continued, still without explanation, until late August 2011. She was kept in a compound in Tripoli. Contact with the outside world was difficult and spasmodic. Eventually, she was permitted to see her father and two other members of her family. When, in March 2011, the NATO bombing campaign of Libya began, she was not allowed any further contact with the outside world and was moved to a prison. In late August 2011, the Libyan revolutionaries gained access to the prison where she was held and with their assistance she was able to escape to Tunisia and thence, with the help, it seems, of the defendant, was able to return to Jordan. All of this is set out in greater detail in the claimant's second witness statement dated 11 May 2012. In it she explains how, following her escape, it took her several months to recover from her ordeal.

The claimant's application to re-list the case for trial

In the meantime, given her detention in Libya, steps were taken to vacate the initial trial listing. By November 2011, however, the claimant, at liberty since late August 2011, felt able to have the action re-listed for trial. This ran into a measure of opposition from the defendant who first wanted an explanation on several points. I see no need to go into those matters. The upshot is that, by reinstating for further hearing the application in her name dated 20 August 2010 pursuant to which the original trial date of November 2010 had been vacated (at a time when she was detained in Libya), the claimant applies for directions for the matter to be relisted for trial. This is the first of the four applications which are before me.

In the light of the claimant's explanation of events in her very recent (second) witness statement her wish to have the matter re-listed is not seriously challenged. It was agreed between counsel, however, that I should await giving any particular directions until I had dealt with the other three applications since the nature of the directions was likely to be affected by the outcome of those other applications.

The defendant's applications to determine the scope of Lindsay J's order

I come then to those other applications. The first in time is by the defendant and is dated 9 March 2012 ("the March application"). It seeks an order that "in the event that the trial of this action is re-listed, the claimant only be allowed to pursue those causes of action for which she has obtained permission to issue and serve on the defendant out of the jurisdiction and not the claim in restitution pleaded in paragraphs 15, 22, 27, 62, 65 and 81 of the particulars of claim...". It then adds: "the claimant has not obtained, and could not obtain, permission to serve on the defendant out of the jurisdiction any claim in restitution".

Closely allied to the March application is the defendant's application dated 24 May 2012 ("the May application") for an order, to the extent necessary or appropriate, varying Lindsay J's order so as to make clear that the permission granted to the claimant to serve out on the defendant "does not extend to the claim in restitution pleaded in paragraphs 15, 22, 27, 62, 65 and 81 of the Particulars of Claim and paragraph (3) of the prayer." The order is sought pursuant to the court's power under CPR 3.1(7). That rule states simply that "A power of the court under these Rules to make an order includes a power to vary or revoke the order."

The grounds of the May application are conveniently stated on the application form:

"...The Claimant did not seek permission to serve a claim… in restitution pursuant to the appropriate jurisdictional gateway under CPR PD6B 3.1 and therefore did not obtain, and could not [have] obtained, and cannot now contend that it had obtained, permission to serve out the jurisdiction the claim in restitution pleaded at paragraphs 15, 22, 27, 62, 65 and 81 of the Particulars of Claim and paragraph (3) of the Prayer. The Defendant contends that this is the correct construction of the Order as it stands but the Defendant seeks the order sought to make the proper construction clear on the face of the Order."

Mr Freedman's short answer to the March application and also, ignoring for the moment his arguments on the extent of the court's power under CPR 3.1(7), the May application is that the claimant obtained permission from Lindsay J to serve on the defendant the whole of her claim as set out in the particulars of claim, including those paragraphs identified in the defendant's applications. He emphasised that, as appears from the terms of the order made by Lindsay J, the permission was unqualified; and it was unsuccessfully challenged both before the deputy judge and the Court of Appeal. Moreover, he pointed out, the defendant never sought to argue, either before the deputy judge or before the Court of Appeal, that even if his challenge did not succeed in its entirety, some parts – namely those identified in his two applications – should be struck out as being beyond what Lindsay J intended (assuming, which was not admitted, that that was the case). But he failed to do so. On the contrary, the defendant adopted what Mr Freedman described as an "all or nothing approach". He submitted that the defendant is bound by that and that it is not open to this court to revisit the order. It would be prejudicial to the claimant were the defendant permitted to do so.

Attractively though this was put, I do not consider that the matter is quite as simple as Mr Freedman's argument would have me accept. It is necessary, I think, to understand (1) the court's function when giving permission to serve out of the jurisdiction and (2) the nature of what the claimant was alleging in the paragraphs to which the defendant objects.

On the first point, the general principles governing service out the jurisdiction are well established. As stated by Lord Collins of Mapesbury in AK Investment CJSC v Kyrgyz Mobile Tel Ltd [2011] UKPC 7, 1 CLC 205, they are as follows:

"71. On an application for permission to serve a foreign defendant ...out of the jurisdiction, the claimant ... has to satisfy three requirements: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e.g. Carvil America Inc v Camperdown UK Ltd [2005] EWCA Civ 645, [2005] 2 Lloyd's Rep 457, at [24]. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context 'good arguable case' connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555-7 per Waller LJ, affd [2002] 1 AC 1; Bols Distilleries BV v Superior Yacht Services [2006] UKPC 45, [2007] 1 WLR 12, [26]-[28]. Third, the claimant must satisfy the court that in all the circumstances [England] is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction."

It is the second of those requirements which is in play in the current dispute. The gateway, if established to the required standard, is a gateway to the claim or cause of action to which it relates, and to no other. The matter was put thus by Lord Bingham of Cornhill in Donohue v Armco Inc & ors [2001] UKHL 64; [2002] 1 AER 749 at [21]:

"...Since Holland v Leslie [1894] 2 QB 450 the view has prevailed that the court should refuse to allow an amendment of proceedings which would introduce a new cause of action against a foreign defendant in respect of which the court would have refused leave for service out the jurisdiction... This view seems to me to accord with principle. The jurisdiction of the English court is territorial. A party resident abroad may be subjected to the jurisdiction of the court to the extent (and only to the extent) that statute or rules under statute permit. It would emasculate that salutary rule if such a party, properly served with notice of a claim falling within RSC ORD 11, r1 or CPR 6.20, were then to be exposed to claims falling outside the relevant rule."

The reference to CPR 6.20 is now to be found in Practice Direction 6B. The strictness of this is reinforced by the terms of CPR 6.37(1)(a) requiring the application for permission to serve out (in a case such as this) to state the gateway relied on.

In my view it is therefore necessary to examine carefully the causes of action set out in a claimant's particulars of claim to see which of them comes within the gateway which the court has sanctioned. Any that do not are not maintainable against the foreign defendant unless the claimant can satisfy the court to the required standard that a gateway exists through which that further claim can pass. It is not sufficient simply to look at the order which the court has made giving permission for service out to see whether its terms are capable of extending to the claim in question. The defendant is entitled to expect the court to examine the claimant's statement of case to see what the causes of action are which are contained in it which the court has found to have passed through the gateway(s) which the claimant specifically identified and relied on and confine the proceedings against that defendant to those causes of action alone. The concern is not simply to prevent the foreign defendant from having to answer a claim in what to him is a foreign country which otherwise has no jurisdiction over him. It goes wider. It is to ensure that the exercise of sovereignty by this court within the foreign country where service is to be effected – an exercise which involves an interference with the sovereignty of that foreign country – is kept strictly within the bounds set by the statute and the rules made under it which sanction such interference. In my judgment it is therefore open to this court to examine whether the quantum meruit claim falls within the scope of the only gateway which the Court of Appeal found to have been established, namely "a claim ...in respect of a contract where the contract (a) was made within the jurisdiction ..."

This brings me to the nature of what the claimant is alleging in the paragraphs to which the defendant objects. That a question should arise at this stage of the proceedings over whether the quantum meruit claim is within that gateway stems, I have little doubt, from the brevity with which it is pleaded, the debate that has gathered pace in recent years over the jurisprudential nature of a claim to a quantum meruit and the fact that the action has come to life again following the claimant's long period of detention in Libya. The problem arises from the following key passage of the particulars of claim. It is taken from a section sub-headed "the Agreement to Broker the Sale of a Plane/Obtain Investment in Project Toushca."

"13. By an oral agreement made on or about 25 August 2001 between the Claimant and Mr Alaeddin acting on behalf of the Defendant, at Ayoush Restaurant, James Street, London W1, ("the Agreement") the parties agreed:

(i) The Claimant would try to broker the sale of one of the Defendant's aircraft, either an Airbus ("the Airbus") or a Boeing ("the Boeing"), to a Libyan entity for the use of Colonel Gaddafi, for which, if successful, she would receive US $2,000,000 from the Defendant.

(ii) The Claimant would try to secure Libya's investment in project Toushca, for which, if successful, she would receive US $1,000,000."

Paragraph 14 pleads the circumstances in which the agreement was made.

"15. Alternatively, by acting in the way set out above, the Defendant, through Mr Alaeddin, invited the Claimant to sell one of his aircraft to Colonel Gaddafi and to obtain the investment of Libya in project Toushca, for reward, specifying the reasonable value of the services he had asked her to perform on his behalf."

The problem is this: is the claim in paragraph 15 founded on the existence of a contract, valid in law, under which the claimant is to render certain circumstances in return for a commission where, however, the amount of the commission was not finally agreed (in contrast to paragraphs 13 and 14 where the amount was alleged to have been agreed)? The court has long been used to dealing with such cases: see, for example, Way v Latilla [1937] 3 AER 759. Or is it a claim founded on the conduct of the claimant in rendering services to the defendant at his request in circumstances where it cannot be said that a contract, valid in law, for the provision of those services for a reward came into being? In short, is it in the now accepted terminology a claim in unjust enrichment for restitution to the claimant of the value of her services?

As long ago as 1981 in this developing area of law, Robert Goff J (as he then was) stated in British Steel Corporation v Cleveland Bridge and Engineering Co Ltd [1984] 1 AER 504 at 509 that:

"...In most cases, where work is done pursuant to a request contained in a letter of intent, it will not matter whether a contract did or did not come into existence, because, if the party who has acted on the request is simply claiming repayment, his claim will usually be based on a quantum meruit, and it will make no difference whether that claim in contractual or quasi-contractual. Of course, a quantum meruit claim (like the old actions for money had and received and for money paid) straddles the boundaries of what we now call contract and restitution, so the mere framing of a claim as a quantum meruit claim, or a claim for a reasonable sum, does not assist in classifying the claim as contractual or quasi-contractual. But where, as here, one party is seeking to claim damages for breach of contract, the question of whether any contract came into existence is of crucial importance."

As that passage states, in most cases it will not matter whether the claim to a quantum meruit is or is not contractual but occasionally (as in that case) the distinction can be of crucial importance. It is Mr Pymont's submission on behalf of the defendant that the distinction in this case is likewise of crucial importance.

I am satisfied from what I have been shown, although the claimant's legal team did not wholly accept this, that the defendant's legal team understood the quantum meruit claim pleaded in paragraph 15 (and the other paragraphs identified in the defendant's applications, culminating in the sweep-up plea in paragraph 81 – set out above) to be of the former, or contractual, kind.

In this connection, Mr Craig's skeleton argument before Lindsay J submitted, at paragraph 17, that "alternatively, should such discussions [i.e. those which took place between the claimant and Mr Alaeddin at the London restaurant on 25 August 2001] not have amounted to a concluded agreement between the parties, Cl's case is that they nevertheless amounted to a request by D, acting through his agent, to perform services for him for reward, such that a claim to a quantum meruit arises within the jurisdiction. (A quasi-contract would seem to come within the rule – see White Book at 6.21.35, and also Albon v Naza Motor Trading [2007] 1 WLR 2489 at 2499H and following, especially at paragraph 26)." The brief note of the hearing before Lindsay J on 21 December 2007 records Mr Craig submitting that although "he believed there was a clear contract but if not she would be successful on a quantum meruit argument ...". Quite what view Lindsay J took of this point is not recorded and Mr Freedman was unable to assist.

It appears, however, that the self-same point was advanced before the deputy judge. Paragraph 17 of Mr Craig's skeleton argument before Lindsay J was repeated, word for word, in paragraph 18 of his skeleton argument before the deputy judge. This possibility – that there was a claim to a quantum meruit on the footing of an absence of any contract between the parties – was dealt with by the deputy judge. It was dismissed by him as a basis for giving permission to serve out in the following passage from his judgment:

"59. An alternative case advanced for Mrs Sharab was that, even if there was no concluded contract between Mrs Sharab and the Prince, she has a quantum meruit claim for commission against him and that such a claim falls within CPR 6.20(5)(a). Reference was made to CPR 6.20(5)(a) in the White Book and the judgment of Lightman J. in Albon v. Naza Motor Trading [2007] 1 WLR 2489. The White Book note appears in paragraph 6.21.35: "A quasi-contract or other similar obligation comes within the meaning of 'contract' in this rule, and in such a case the word 'made' in this rule should be read as 'arising' ...Rousou's (A Bankrupt) Trustee v Rousou [1955] 2 All E.R. 169 affirming [1955] 1 W.L.R. 545". "

60. That note can no longer be taken as representing modern English law, for the reasons expressed by Lightman J. in Albon: the view that a claim for money had and received or in pursuance of an ineffective contract gives rise to a (quasi) contractual obligation to repay, cannot survive the development of the law of restitution based on the principle of unjust enrichment (ibid. at 2500). Of analogous relevance in the present context is the majority decision of the House of Lords in Kleinwort Benson Ltd v. Glasgow City Council [1997] UKHL 43, [1999] AC 153 to the effect that a restitutionary claim for recovery of money paid under a void contract is not a claim "relating to a contract" within the meaning of that phrase in Article 5 of the Brussels Convention on Jurisdiction and Judgments of 1968, which is incorporated into UK domestic law by the Civil Jurisdiction and Judgments Act 1982.

61. On the facts in Albon, it was held that the claim did fall within CPR 6.20(5)(a) and (c), because although the basis of the claim was restitution and not contract, the claim was related to or connected with an existing contract and that sufficed to make it a claim "in respect of" a contract. On the present facts, the alternative quantum meruit claim is advanced on the alternative hypothesis that there was no contract concluded between Mrs Sharab and the Prince. There is no contract to which that claim can be said to have been "in respect of". The same would apply even if the alternative claim had been advanced specifically on a restitutionary basis. A claim for restitution is a type of claim for which permission may be granted for service out of the jurisdiction: CPR 6.20(15). Mrs Sharab does not rely on that provision.

In Albon v Naza Motor Trading [2007] 1 WLR 2489; [2007] EWHC 9 (Ch) the claimant was claiming the repayment of overpayments made in performance of a contract. The defendant company challenged the grant to the claimant of permission to serve the claim on it out of the jurisdiction. Permission had been given under CPR 6.20(5). In his judgment, Lightman J said this:

"25. The first question raised is whether Mr Albon showed a good arguable case that his claim in respect of the UK Agreement fell within CPR r6.20(5). For this purpose it is necessary first to decide the (as yet) unresolved issue whether for the purposes of CPR r6.20(5) a claim "in respect of a contract" must be a contractual claim. If the claim must arise under a contract, I do not think that Mr Albon's claim (as pleaded) satisfies this requirement. It is not pleaded or alleged that there was any term of the UK Agreement requiring repayment of any overpayments (nor is this pleaded or conceded by the defendants). The right to repayment is pleaded as arising by reason of the fact that overpayment was made under a mistake of fact that the moneys were due and owing and accordingly the claim is made in restitution. Whilst the philosophy held sway for many years that a claim for money had and received or in pursuance of an ineffective contract gave rise to a (quasi) contractual obligation to repay (see e.g. Sinclair v. Brougham [1919] AC 398) and this view was carried over to and reflected in the construction and application of RSC Ord 11, the predecessor of CPR 6.20 (see e.g. Bowling v. Cox [1926] AC 751) and this is echoed in the 2006 White Book (see Civil Procedure 2006, vol 1, para 6.21.34), with the coming of age of the law of restitution based on the principle of unjust enrichment, that philosophy has now been consigned to history: see e.g. West Deutsche Landesbank Girozentrale v. Islington London Borough Council [1996] AC 669 at 710, 718 and 738 and Kleinwort Benson Ltd v. Glasgow City Council [1999] 1 AC 153, 167. It is to be noted that there is a separate and distinct gateway for claims in restitution (see CPR r6.20(15)) and permission was neither sought nor granted for service out of the jurisdiction of a claim under that gateway.

26. But in my judgment claims under the gateway in rule 6.20(5) are not confined to claims arising under a contract. It extends to claims made "in respect of a contract" and the formula "in respect of" (tested by reference to English law) is wider than "under a contract": see e.g. Tatam v. Reeve [1893] 1 QB 44. The provision in the CPR is in this regard deliberately wider than the provision in its predecessor RSC Order 11. In this regard, unlike Mr Nathan (counsel for the defendants) I do not think that any assistance is obtained from the decision in Kleinwort Benson v. Glasgow City Council [1999] 1 AC 153, 162, 167. In that case the House of Lords was concerned with sections 16 and 17 of the Civil Jurisdiction and Judgments Act 1982 which (subject to certain modifications) incorporated the Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (1968) into the law of the United Kingdom. One modification effected to Title 11 of the Convention was to the following effect:

'5. A person domiciled in a part of the United Kingdom may, in another part of the United Kingdom, be sued: (1) in matters relating to a contract, in the courts for the place of performance of the obligation in question …'

In the context of the formula of words there used, and in particular the reference to the place of performance of the obligation in question, there is postulated the existence of a contract giving rise to an obligation of performance in the country whose courts are to have jurisdiction.

27. Accordingly the formula of words in CPR 6.20(5) "in respect of a contract" does not require that the claim arises under a contract: it requires only that the claim relates to or is connected with the contract. That is the clear and unambiguous meaning of the words used. No reference is necessary for this purpose to authority and none were cited beyond Tatam v. Reeve [1893] 1QB 44. If such reference were needed, I would find support in a passage which I found after I had reserved judgment in the judgment of Mann CJ in Trustees Executors and Agency Co Ltd v Reilly [1941] VLR 110 at 111:

'The words 'in respect of' are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer.' "

It is clear from that authority which seems, with respect, to be entirely correct that, as the deputy judge recognised in the current case, a necessary requirement for the establishment of any of the paragraph (5) gateways is the existence of a contract, however widely the words "in respect of" in the expression "a claim ...made in respect of a contract... appearing in paragraph (5) are to be understood. The same is true of the expression "a claim... made in respect of a breach of contract" appearing in paragraph (6).

The difficulty is in reconciling the deputy judge's clear rejection of the claimant's "alternative case" as being "in respect of a contract" (coupled with the claimant's non-reliance on the restitutionary gateway) with the fact that the deputy judge dismissed the defendant's challenge (confined, as it was, to the establishment of gateways (5) and (6)) and, by so doing, allowed the claim against the defendant, as set out in the particulars of claim, to proceed in its entirety. I incline to the view, notwithstanding paragraph 18 of Mr Craig's skeleton argument (where the pleaded quantum meruit claim was advanced on the footing that there was no concluded agreement between the parties), that the deputy judge, in common it seems with the defendant's legal team, understood the quantum meruit claim to be of the contractual kind (as in Way v Latilla, above cited). The point did not arise before the Court of Appeal. In this regard it is to be noted that Richards LJ (with whom Arden and Rimer LJJ agreed) stated, at [26], that "...if the claim does not get through at least one of those gateways" – ie CPR 6.20(5)(a) or (6) – "the prince's application under CPR Part 11 must succeed." This suggests that if any attention was paid to the quantum meruit claim it must have been on the basis that it was of the contractual kind.

Mr Freedman had another, quite different, argument. He submitted that in the particular circumstances in which it has arisen, the quantum meruit claim was indeed "in respect of a contract" and therefore fell within the scope of the paragraph (5)(a) gateway. This, he said, was because the claim arose in connection with a claim to a contract, namely the contract pleaded in paragraph 13 of the particulars of claim. He therefore argued that Lindsay J and the deputy judge were quite correct to give permission for the entirety of the particulars of claim to be served out on the defendant.

I do not accept the submission. As already discussed, and as the deputy judge accepted at paragraph 61 of his judgment, an essential requirement of a claim if it is to come within the gateway (5) must be that there exists a contract, albeit that the contract has to be established at trial. In obtaining the court's permission to serve out the claimant must establish, even at that stage, that on that point – whether the claim is within the gateway relied on - he has a better (or possibly a much better) argument than the defendant. Once, however, the assumption is made that there was no contract between the claimant and the defendant, which is the assumption upon which, as advanced by the claimant, the quantum meruit claim proceeds, it is no longer possible in my view to contend that that claim arises "in respect of a contract". It is irrelevant that it arises as an alternative to a claim which asserts a contract (and therefore is "in respect of a contract"). It is not permissible to elide the two claims – as Mr Freedman's argument seeks to do – to bring the quantum meruit claim within the purview of the contract gateway.

How then does the matter stand? In my judgment, the permission to serve out the proceedings on the defendant in Saudi Arabia granted by Lindsay J on 21 December 2007, enshrined in his order and confirmed by the unsuccessful challenge before both the deputy judge and the Court of Appeal, is to be understood as confined to those claims which are in respect of a contract. Those claims do not include the quantum meruit claim insofar as it is of the restitutionary (i.e. non-contractual) kind.

Cecil & ors v Bayat & ors

Before leaving this topic I should mention the recent decision of Cecil & ors v Bayat & ors [2010] EWHC 641 (Comm). That case concerned challenges by the defendants, who were based abroad, to the making of orders, inter alia, for extending time for service of those proceedings and for permission to serve them out of the jurisdiction. Hamblen J held that the extensions of time had been correctly granted, that subject to certain exceptions a proper case for service out had been established, and therefore that the orders earlier made for extensions of time and service out had been correctly made. Other issues also arose. I am concerned merely with what was said about a quantum meruit claim made by two of the claimants, Cecil and Bentham.

That claim, like the quantum meruit claim before me, was made as an alternative to a claim in contract. It was made on the basis that the defendants had requested the claimants to provide certain services and that they acquiesced in and accepted those services. The services were provided in relation to what was referred to in the judgment as "the Afghan Project". It was alleged that this gave rise to a claim, as Hamblen J put it (at [113]), "in quantum meruit in restitution or on the basis of implied contract."

In his judgment Hamblen J said this (at [113]-[115]):

"113. The Claimants submitted that the quantum meruit claim arises in circumstances in which the main contractual claim fails. In those circumstances, there was still a request from Bayat to Cecil and Bentham to perform the services in relation to the Afghan Project which they did in fact perform in the expectation that they would be rewarded. That they were compensated to a limited degree in respect of other services which they performed does not affect the position. Even if some very limited payment was received in respect of the services in relation to the Afghan Project, a quantum meruit claim would still lie on the basis that the sums received were not enough and did not represent the value of the services.

114. Although the existing pleading is far from satisfactory, I accept that Cecil and Bentham have a sufficiently arguable case on this issue. I have already accepted that they have a good arguable case that there was an express contract. If, contrary to their primary case, they fail to make out that there was such a contract, I am satisfied that their evidence and the representations and assurances relied upon make out a sufficient case for a quantum meruit claim. The services requested were dealing with "the business, technical and development aspects of the Afghan project". Where services are performed in anticipation of a contract being made claims in quantum meruit commonly arise.

115. The jurisdictional gateways relied upon are:

(1) That the quantum meruit claim is "a claim in respect of" the Cecil and Bentham contract (the latter of which was made within the jurisdiction and/or is governed by English law, as above), 6BPD3.1(6) (a) and (c). On the basis of the Albon decision I accept that this jurisdictional gateway has been sufficiently made out.

(2) That the quantum meruit claim itself falls within the contractual gateway at 6BPD3.1(6)(a) on the basis that this is a quasi contract claim and the request was made in England in September 1998 and the work was carried out in England. I accept that this jurisdictional gateway is sufficiently made out.

(3) That the quantum meruit claim falls within the gateway at 6BPD3.1(16) as the "claim is made for restitution where the defendant's alleged liability arises out of acts committed within the jurisdiction.". In this regard, in line with the construction of the same words in relation to tort, it was submitted that is not necessary that all acts are committed within the jurisdiction. It is enough that "substantial and efficacious acts" have been committed within the jurisdiction, even if substantial and efficacious acts have also been committed outside the jurisdiction. On the facts of this case the alleged liability arises out of, inter alia, the discussions in England on the weekend of 19/20 September 1998, the requests made during those discussions, and work done by Cecil and Bentham in England which has substantially earned them the quantum meruit. These are "substantial and efficacious acts" and they were committed in England. I accept that this jurisdictional gateway is sufficiently made out."

I regret to say that, given the assumption appearing from the first sentence of paragraph 113 that "the main contractual claim fails", I have some difficulty in following Hamblen J's reason for stating that the quantum meruit claim is nonetheless "a claim in respect of a contract", namely the Cecil and Bentham contract (as it is referred to), unless by "fails" is meant not there was no main contract but that for some reason the attempt to enforce that contract does not succeed. I have difficulty also in following paragraph 115(2). "Quasi contract" is an expression which carries much jurisprudential baggage. As a means of equating what is now regarded as a restitutionary claim based on the principle of unjust enrichment with claims in contract, recourse to the notion of a quasi-contract has ceased to be the accepted view. This was made clear not least by Lightman J in Albon to which Hamblen J himself referred (at paragraph 115(1)) and earlier in his judgment (at paragraph 43). The claim to a quantum meruit, if it is not contractual in nature, can succeed only on the basis of the principle of unjust enrichment.

It is quite likely that I have misunderstood what Hamblen J was saying in the passage which I have set out. The most that I can say is that, as I am unable to follow the reasoning which led to his conclusion concerning the application of the contractual gateways to the quantum meruit claim in that case, I am not persuaded that that decision should lead me to reach a different conclusion from what is stated at paragraph 53 above.

I should add that Hamblen J's decision was reversed in the Court of Appeal (see [2011] EWCA Civ 135) but on the question whether Hamblen J had been correct not to set aside orders extending the validity of the claim form (and therefore whether he had been correct in dismissing applications to challenge those extensions) and whether he had been correct not to set aside an earlier order providing for service of the claim by alternative methods. The correctness of his decision on the availability of the contractual gateways for the pursuit of Cecil and Benton's quantum meruit claim was not in issue. As Mr Pymont explained, however, there would have been no point in the defendants seeking to raise it as Hamblen J had held that, in any event, those claimants had established the availability of a separate gateway, namely the restitutionary gateway provided by paragraph (16) of paragraph 3.1 of Practice Direction 6B. See paragraph 115(3) of his judgment.

The claimant's application to amend

The restitutionary gateway, as it happens, is the subject of the third of the applications before me which is the claimant's application dated 23 May 2012 to amend her particulars of claim and rely on this gateway. The gateway applies where "a claim is made for restitution where the defendant's alleged liability arises out of acts committed within the jurisdiction". This application is opposed insofar as it seeks to rely on this further gateway.

So far as material, the proposed amendments are two in number. The first is to add the following sentence to paragraph 15:

"Further or in the alternative, if, which is denied and contrary to and without prejudice to the primary case set out above, there was no express agreement as to price in the agreement of 25 August 2001, and to the extent that this is not already pleaded, there was an implied term of the agreement of 25 August 2001 that the Defendant would pay a reasonable sum for the services."

The second amendment is to add words to the end of paragraph 80 so that, combined with the amendment (which I have underlined), that paragraph would read as follows:

"The Defendant has failed to pay the sum of US $10,000,000 or any sum to the Claimant, whether pursuant to the Agreement or at all, or has failed to do so in breach thereof, as a result of which the Claimant has suffered loss and damage in the same amount or in such other sum as the court shall determine to have been the reasonable sum for the services."