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19 February 2019
It is appropriate for a court to take into account the relative merits of the parties' arguments in deciding whether a claimant has a 'good arguable case' that a jurisdictional gateway applies, following the Court of Appeal's decision in Kaefar Aislamientos SA de CV v AMS Drilling Mexico SA de CV.(1) Where the court does not have the evidence to decide which party has the better argument, a more flexible approach should be adopted.
The claimant carried out work at an oil drilling rig in the Gulf of Mexico and sought permission to serve four companies out of the jurisdiction for sums which were due under the relevant contract. The claimant argued that the jurisdictional gateway in Article 25 of the Recast Brussels Regulation applied, because the parties were bound by an exclusive jurisdiction clause in favour of the English courts.
However, only two of the defendants (AMS and AMS Mexico) were parties to the contract containing the exclusive jurisdiction clause and they were in financial difficulties. In order to establish that the jurisdictional gateway applied in respect of the other two defendants (AT1 and Ezion), the claimant had to show a good arguable case that they were acting as AMS and AMS Mexico's undisclosed principals in relation to the contract and so were bound by the exclusive jurisdiction clause.
The Court of Appeal decided that it did not have jurisdiction over AT1 and Ezion because on the facts the claimant did not have a good arguable case that they had acted as AMS and AMS Mexico's undisclosed principals and were therefore bound by the exclusive jurisdiction clause.
The court confirmed that the test to be applied when determining whether the claimant has established a good arguable case that a jurisdictional gateway exists is as follows:
It is now clear that a claimant must usually show that it has the better argument that a jurisdictional gateway has been established before it obtains permission to serve out of the jurisdiction. In circumstances where the evidence is thin, it is not all relative and a claimant is required only to demonstrate a plausible evidential basis that the gateway exists. However, the court warned that claimants should not try to engineer a lack of evidence by making extensive document requests from defendants.
For further information on this topic please contact Parham Kouchikali or Emma West at RPC by telephone (+44 20 3060 6000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
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