The High Court has held that a defendant submitted to the jurisdiction of the English court by applying for an extension of time for service of a defence, in circumstances where it had indicated an intention to defend the proceedings in an acknowledgement of service and had not reserved its rights to challenge jurisdiction: Aelf MSN 242, LLC (a Puerto Rico limited liability company) v De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways  EWHC 3482 (Comm).
Recent cases have tended to find that there has been no submission, even where defendants have taken part in some way in proceedings (see for example our posts here and here), but this case is a reminder that the court may decide there has been a submission if an unequivocal step has been taken which cannot be interpreted as consistent with a challenge to the jurisdiction, particularly where there has been no reservation of rights.
The decision underlines the importance of reserving the right to challenge jurisdiction and taking no steps in the proceedings whenever a challenge is being considered, whether that challenge will be on the basis that the court has no jurisdiction under conflict of laws rules (or should not exercise any jurisdiction it has) or, as in this case, on the basis that proceedings have not been served correctly.
The claimant, an aircraft leasing company, brought proceedings against the defendant, a Surinam airline, alleging failure to pay sums due under a settlement agreement. The agreement contained an exclusive English jurisdiction clause.
Proceedings were issued in April 2021 and permission given to serve the defendant in Surinam. Service was purportedly effected by a bailiff in early June 2021. On Friday 25 June, the last day for acknowledging service, the defendant attempted to file an acknowledgement of service at court by email. It was informed by the court that it was no longer acceptable to file documents via email and that they should be filed through the court’s online CE-File system.
On Monday 28 June, the defendant filed an acknowledgement of service, ticking the box saying the defendant intended to defend the claim. It did not tick the box indicating an intention to contest jurisdiction. That acknowledgement was in fact defective as it did not include a physical address for service within the UK but the defendant was not aware of that until sometime later (22 July).
After filing that acknowledgement, the defendant instructed English solicitors who came on the record on 8 July and, with time for service of the defence about to expire, issued an application seeking an extension of time in which to file a defence until 30 July. On 23 July, they issued a further application challenging the court’s jurisdiction, alleging that the defendant had not been validly served with the proceedings. This was on the basis that the claim came within section 12(1) of the State Immunity Act 1978 and therefore should have been served through the Foreign, Commonwealth and Development Office to the Ministry of Foreign Affairs, not by bailiff.
On 26 July, having become aware of the possible defect in the 28 June acknowledgement, the defendant’s solicitors filed a further acknowledgement of service providing an address for service within the UK and stating that the defendant intended to contest jurisdiction and on 27 July they issued an application for relief from sanctions and an extension of time for filing an acknowledgement of service to 26 July.
The claimant argued in response that the defendant had submitted to the jurisdiction and was therefore precluded from challenging service.
The High Court, Peter Macdonald Eggers QC sitting as a Deputy High Court Judge, granted relief from sanctions and an extension of time to file the acknowledgement, but held that the defendant had submitted to the jurisdiction. That submission also amounted to an appearance in the proceedings for the purposes of the State Immunity Act 1978.
Relief from sanctions and extension of time to file acknowledgement of service
In order to challenge the court’s jurisdiction, a defendant must have filed an acknowledgement of service within the time permitted under the rules. As that had not happened, an extension of time for filing the acknowledgement was required and that engaged the rules on obtaining relief from sanctions (the Denton principles, considered here). Those principles require the court to assess the seriousness and significance of the breach of the CPR, consider why the breach occurred and then evaluate all the circumstances of the case.
Applying those principles, the defendant’s failure to comply with the rules when filing its earlier acknowledgements was neither serious nor significant. The defendant had sought to comply with the rules but was defeated either by the lack of advice from English solicitors or forgivable errors which did not have a substantial impact. Having regard to all the circumstances of the case, the defendant was granted an extension of time for the filing of its acknowledgment of service to 26 July 2021 and relief from sanctions.
Submission to the jurisdiction
The issue was whether there had been a common law submission to the jurisdiction or waiver of the right to challenge by the defendant. The court set out the relevant principles from the case law. There will be such a waiver if the defendant voluntarily submits by taking a step in the proceedings which cannot be explained except on the basis that the defendant accepts that the court has jurisdiction. The defendant’s conduct must be unequivocal; if the conduct can be explained because it was necessary or useful for some other purpose there will be no submission.
Examples of conduct which might amount to submission include applying for an extension of time in which to serve a defence, advancing a defence on the merits or threatening to strike out the claim. However, where the conduct is accompanied by a clear statement that it is without prejudice to the defendant’s right to challenge the court’s jurisdiction, that is likely to be sufficient to forestall a submission to the jurisdiction. Similarly, there is unlikely to be a submission where the defendant has indicated an intention to dispute jurisdiction in the acknowledgement of service. The mere indication of an intention to defend the claim in the acknowledgement of service is of itself not sufficient to amount to submission.
The timing of the relevant conduct is also important, if it took place before an application contesting jurisdiction was intimated or issued then it is more likely to be an unequivocal submission to the jurisdiction. If it took place after, then it is unlikely, perhaps very unlikely, to constitute a submission. The assessment of the defendant’s conduct must be undertaken objectively, sometimes said to be from the perspective of the disinterested bystander.
The court held, applying those principles, that the defendant had submitted to the jurisdiction by reason of its application and request for an extension of time for service of its defence and in light of its indication in its acknowledgement of service of 28 June that it intended to defend the claim rather than to contest jurisdiction. There had also been no indication that the defendant intended to contest jurisdiction before 23 July 2021 and no indication of a reservation of rights to do so. The court would have reached the same conclusion if the indication in the acknowledgement of service was not taken into account.
The court reached this conclusion for a number of reasons:
- Firstly, the court had traditionally considered an application for an extension of time in which to serve a defence to be inconsistent with an intention to contest jurisdiction, at least where there has been no prior indication of an intention to challenge the jurisdiction.
- Secondly, there is no obligation to serve a defence before the hearing of a jurisdiction challenge. The service of a defence is an answer to the claim on the merits and it followed that an application to extend time to do so is a step in the proceedings. An application for an extension of time may not be inconsistent if the intention is to postpone the obligation to serve the defence until after the jurisdiction hearing, but that was not the position in this case, where an extension of just three weeks had been sought.
- Thirdly, there was no explanation for the extension of time which was consistent with an intention to contest jurisdiction. The only explanation offered by the defendant was that it was a protective measure to safeguard the defendant’s position and in particular to avoid a default judgment being granted. However if an application to contest jurisdiction had been made, there would have been no need to serve a defence and therefore no risk of judgment in default.
- Fourthly, there was no hint of an attempt by the defendant to reserve its rights or to make the application without prejudice to any intention to contest jurisdiction.
State Immunity Act 1978
The court also held that the defendant’s submission to the jurisdiction of the court by way of common law waiver amounted to an appearance in proceedings within the meaning of section 12(3) of the State Immunity Act 1978. This meant that no point could be taken by the defendant on the way service had been effected.