Jurisdictional Considerations Within The UK
This is a well trodden path but one that nonetheless is not particularly straightforward and continues to pose problems for many clients.
The general rule regarding jurisdiction is that litigation should be brought in the country in which the defendant is domiciled. There are various exceptions to this rule, most commonly when the underpinning contract contains a jurisdictional clause agreeing that the courts of a particular country will have jurisdiction.
But what happens when the contract does not account for jurisdiction? The legal position on jurisdiction between the UK and other EU Member States is governed by the Brussels Regulation. However when considering jurisdiction between different countries within the UK, the principles of the Regulation are brought into UK domestic law and applied to internal UK jurisdiction by the Civil Jurisdiction and Judgments Act 1982 (“CJJA”).
Section 16 CJJA refers the question of determining jurisdiction within the UK to Schedule 4 CJJA. Paragraph 3(a) of Schedule 4 provides that in matters relating to a contract, a person domiciled in a part of the UK may be sued in another part of the UK, in the court of the place of performance of the obligation in question.
The defendant in proceedings can be sued in their place of domicile but the claimant is not obliged to do so. The position illustrates the general importance of pinning down assumptions into express contractual obligations. Indeed, jurisdictional clauses can put beyond doubt the parties’ intention as to which courts should have jurisdiction rather than leaving it to be disputed under the general legal rules of jurisdiction.
Jurisdictional issues can turn a relatively straightforward action in to a complex and costly piece of litigation, and it is imperative therefore that sufficient consideration is given to each case before issuing and also when in reciept of pleadings.
We recently had an English client who had issued proceedings against defendants pursuant to contracts of ‘Guarantee and Indemnity’. Pursuant to these contracts, the defendants agreed to guarantee the liabilities of a limited company pursuant to a contract of hire.
Proceedings against the defendants were issued and deemed served outside the jurisdiction in Scotland. The defendants filed an acknowledgement of service and subsequently filed defences purporting to contest the jurisdiction of the Court. The Court listed the matter for a hearing to determine the jurisdictional point.
Pursuant to CPR 11.1(1), a defendant who wishes to dispute the jurisdiction of the Court may apply to the Court for an order declaring that it has no jurisdiction. In accordance with rule 11.1(2) the defendant must first file an acknowledgement of service. Thereafter, any application under rule 11.1(1) must be made within 14 days of filing the acknowledgment of service and must be supported by evidence (rule 11.1(4)). Pursuant to rule 11.1(5), if the defendant files an acknowledgment of service and does not make an application with 14 days of doing so, he is “to be treated as having accepted that the Court has jurisdiction to try the claim.”
In our client’s claim, upon receipt of pleadings, the defendants had failed to make such an application within 14 days, or indeed at all. Following our instruction, we managed to successfully argue that for these reasons, the defendants must be treated as having accepted the jurisdiction of the English Courts. Our submissions were succesful and summary judgment was awarded in favour of our client.
The case stands as an example of the need to consider the correct jurisdiction before issuing a claim and the importance of being aware of/understanding the relevant rules.