Asserting or Challenging Jurisdiction

In a judgment which is essential reading for anyone seeking to establish or challenge jurisdiction in the High Court, in Kaefer Aislamientos SA de CV v AMS Mexico SA de CV[1] the Court of Appeal clarified the test that a party asserting English jurisdiction must meet, and how that test will be applied when, as is usually the case when a jurisdiction challenge is launched, the evidence before the Court is incomplete.

Where a party requires the permission of the Court to serve proceedings out of the jurisdiction (or where a party asserts an entitlement to serve out of the jurisdiction without permission under the Recast Brussels Regulation) it first has to satisfy what is colloquially referred to as the “good arguable case” test. In short, a claimant wishing to pursue a foreign domiciled defendant must, among other things, show that they have a good arguable case that the relevant jurisdictional gateway has been satisfied. In Kaefer one of the key issues for the claimant was demonstrating that it had a good arguable case that two of the defendants were undisclosed principals and as such were party to the relevant contract and to the exclusive English jurisdiction clause contained in it.

The First Instance Decision

The claimant sued four defendants, AMS Mexico, AMS, AT1 and Ezion, the latter two parties being alleged to have been undisclosed principals to the primary works contract.

A first instance, the judge took the view that the relevant test had two elements: (1) that the claimant must have a “good arguable case”; and (2) that they must also have “the better of the argument” or a “better or more plausible” argument. Applying that test the judge held that whereas there was a good arguable case that AT1 was an undisclosed principal, AT1 had the better of the argument that it was not. In respect of Ezion, the judge held that the claimant had failed to satisfy both limbs of the test. The claimant appealed.

The Appeal

The Court of Appeal dismissed the appeal. In so doing, the court considered the recent Supreme Court decisions of Brownlie v Four Seasons Holdings Inc[2] and Goldman Sachs International v Novo Banco SA[3]. Having considered those authorities, the Court formulated the relevant test as follows:

1. The claimant must have a “plausible evidential basis” showing that it had the “better argument” that the relevant jurisdictional gateway applied. The adjunct “much” was held not to be relevant.
2. In the event of a factual dispute or evidential difficulty, the Court, applying judicial common sense and pragmatism, nevertheless must seek to arrive at a conclusion if it “reliably” can.
3. If a court finds itself unable to form a decided conclusion on the basis of the evidence before it and cannot therefore say who has the better argument, it will find that there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. This is a flexible test not necessarily conditional upon relative merits. The court acknowledged that there was room for debate as to what this implied for the standard of proof.

The Court found that whereas the judge at first instance did err in parts of his thinking, ultimately he applied a test which was broadly consistent with that expressed in the Supreme Court judgments.

Comment

Debates as to jurisdiction can often be complex, time-consuming and highly academic. Jurisdiction is, however, one of the first key issues that a party will be considering when deciding how and where to pursue litigation. This Court of Appeal judgment, summarising the views laid out by the Supreme Court, therefore brings welcome clarity to the question of how to support or challenge a claim for English jurisdiction.

[1] [2019] EWCA Civ 10

[2] [2018] 1 WLR 192

[3] [2018] UKSC 34