Solvalub Ltd v Match Investments Ltd

CourtCourt of Appeal
JudgeLe Quesne, Collins and Southwell, JJ.A.:
Judgment Date13 December 1996
Date13 December 1996
Le Quesne, Collins and Southwell, JJ.A.:

J.P. Speck for the appellant;

P.M. Livingstone for the respondent.

Cases cited:

(1) Abbott Indus. Inc. v. Warner, 1985-86 JLR 375.

(2) Boissière v. Brockner & Co. (1889), 6 T.L.R. 85.

(3) Capel (James) (C.I.) Ltd. v. Koppel, 1989 JLR 51.

(4) Dailey Intl. Sales Corp. v. Middle E. Petroleum Equipment Inc., Royal Ct., April 3rd, 1985, unreported, distinguished.

(5) Godman-Irvine (née Carslund) v. Jacomb, Royal Ct. (1954), 248 Ex. 545; (1955), 249 Ex. 405, considered.

(6) Harris v. Taylor, [1915] 2 K.B. 580; [1914-15] All E.R. Rep. 366; (1915), 113 L.T. 221; 84 L.J.K.B. 1839.

(7) Henry v. Geoprosco Intl. Ltd., [1976] Q.B. 726; (1975), 119 Sol. Jo. 423; sub nom. Henry v. Geopresco Intl. Ltd., [1975] 2 All E.R. 702; [1975] 2 Lloyd's Rep. 417.

(8) Johnson Matthey Bankers Ltd. v. Arya Holdings Ltd., 1985-86 JLR 208, applied.

(9) Mercedes-Benz A.G. v. Leiduck, [1996] A.C. 284 ([1995] UKPC 31); [1995] 3 All E.R. 929; [1995] 2 Lloyd's Rep. 417; (1995), 139 Sol. Jo. (L.B.) 195, considered.

(10) Middle E. Engr. Ltd. v. Edwards, 1980 J.J. 265, considered.

(11) Siskina (Cargo Owners) v. Distos Cia. Naviera S.A., [1979] A.C. 210; [1977] 3 All E.R. 803; [1978] 1 C.M.L.R. 190; (1977), 121 Sol. Jo. 744; sub nom. Ibrahim Shanker Co. v. Distos Cia. Naviera S.A., [1978] 1 Lloyd's Rep. 1, not followed.

Additional cases cited by counsel:

Asher v. Cross, Royal Ct., September 23rd, 1994, unreported.

Haiti (Republic) v. Duvalier, [1989] 1 All E.R. 456.

Wright v. Rockway Ltd., 1994 JLR 321.

Legislation construed:

Royal Court Rules 1992 (R. & O. 8509), r.6/7: The relevant terms of this rule are set out at page 372, line 40 - page 373, line 5.

Service of Process (Jersey) Rules 1994 (R. & O. 8715), r.7:

"Service out of the jurisdiction of a summons may be allowed by the court whenever—


(b) an injunction is sought ordering the defendant to do or refrain from doing anything within the jurisdiction (whether or not damages are also claimed in respect of the doing of or failure to do that thing)...."

Conflict of Laws—jurisdiction—objection to jurisdiction—pleadings of party objecting to jurisdiction limited to mere denial of claim—counterclaim, even, e.g. for discovery and injunction, implies acceptance of jurisdiction

Conflict of Laws—parallel foreign proceedings—Mareva injunction in aid of foreign proceedings—Jersey court may grant Mareva injunction in aid of foreign proceedings even if only proceedings in Jersey are for injunction itself

Civil Procedure—service out of jurisdiction—injunction in aid of foreign proceedings—Royal Court to consider amending Rules to allow service out of jurisdiction in aid of foreign proceedings when only issue in Jersey is grant of injunction in support

The appellant obtained a Mareva injunction against the respondent in support of proceedings to recover a debt.

The parties, both non-resident foreign companies, allegedly entered into a contract governed by English law, disputes under which were subject to the exclusive jurisdiction of the English courts. The appellant alleged that the respondent had failed to pay for goods delivered under the contract and brought an action in England to recover the debt. It also obtained an Order of Justice in Jersey which contained a Mareva injunction restraining the respondent from dealing with its assets held in a Jersey bank account.

The respondent's advocate in Jersey only accepted service of the Order of Justice under protest and the respondent initially filed no answer, but instead took out a summons for the appellant's Order of Justice to be struck out, claiming that the Royal Court had no jurisdiction in the matter. On the appellant's subsequent threat to apply for a default judgment, the respondent filed an answer and counterclaim, again protesting the court's jurisdiction but also claiming that the goods had not been received and that it had not entered into the contract at all. It also sought discovery and an injunction in relation to information allegedly in the hands of the appellant, and damages. The Royal Court (Hamon, Deputy Bailiff and Jurats Blampied and Herbert) struck out the appellant's Order of Justice, holding that it had had no power to serve the respondent, since the mere existence of a Mareva injunction did not allow it to assume jurisdiction over a non-resident party, since it conferred no substantive rights and was not therefore a basis for service out of the jurisdiction under r.7(b) of the Service of Process (Jersey) Rules 1994, which permitted service if "an injunction is sought ordering the defendant to do or to refrain from doing anything within the jurisdiction...."

On appeal, the appellant submitted that (a) the respondent had effectively accepted the Royal Court's jurisdiction, since its answer went beyond a mere denial of jurisdiction and liability and included a counterclaim for interlocutory relief and damages; it was not therefore open to the respondent now to claim that the court had no jurisdiction in the matter; (b) it was both desirable and consonant with authority that the Royal Court have the power to issue Mareva injunctions in support of foreign proceedings; and (c) it was clearly within the meaning of r.7 of the 1994 Rules to allow service on a foreign party when only an application for a Mareva injunction was before the Jersey court.

The respondent submitted in reply that (a) it had not accepted the Royal Court's jurisdiction in the matter and it was clear from its behaviour that (i) its pleadings had therefore all been conditional; indeed, it had only entered a defence and counterclaim (which in any case included a denial of jurisdiction); (ii) they had been issued merely as a necessary response to the appellant's threat to seek a default judgment; and (iii) they had been issued to protect its property in Jersey; (b) since there were no proceedings extant in Jersey other than the issue of the Mareva injunction itself, it had rightly denied jurisdiction because neither party was resident in or had any connection with Jersey; and (c) because the Mareva injunction was wholly in support of foreign proceedings, it conferred no rights in Jersey and was not therefore an injunction of the type within the contemplation of r.7 of the 1994 Rules and the Royal Court had rightly held that it had no power to serve the respondent on the basis of that rule, or had any jurisdiction in the matter at all.

Held, allowing the appeal:

(1) It was clear that the respondent had accepted the jurisdiction of the Royal Court, despite its stated protest. Its pleadings had gone far beyond a mere denial of the court's jurisdiction, which would have been sufficient to prevent the giving of a default judgment in favour of the appellant. It was not possible for the respondent to deny jurisdiction regarding the appellant's claim and at the same time to invoke it in respect of its counterclaim, which contained not only a claim that the Mareva injunction should be lifted but also a request for discovery, an injunction against the appellant and even a claim for damages; indeed, this counterclaim went beyond what was required simply to protect its property in Jersey. Furthermore, the circumstances in which a party was allowed to take procedural steps on a conditional basis were limited to appearance and acceptance of service under protest; in the present case, the respondent had gone far beyond this and it therefore had to accept the legal consequences of its actions (page 372, line 15 - page 374, line 31).

(2) There was authority to support the view that the Royal Court had the power to grant a Mareva injunction in aid of foreign proceedings, even if there were no proceedings before the Jersey court other than the seeking of the Mareva itself. Indeed, this was desirable in the interest of comity with the courts of other countries and in the interests of Jersey's reputation as a financial centre. This power should be understood to refer to proceedings in any foreign jurisdiction, not only England (page 369, line 22 - page 370, line 45).

(3) For these reasons, the Mareva injunction had been properly ordered and the appeal would therefore be allowed. It was unnecessary to consider r.7 of the 1994 Rules, since in the present case the respondent's advocate had been served within Jersey and no question of service out of the jurisdiction arose. However, the Royal Court should consider amending the Rules to make clear provision for service out of the jurisdiction in support of foreign proceedings in circumstances in which the only matter at issue in Jersey was the grant of an injunction in support of those proceedings (page 367, lines 25-33; page 374, line 32 - page 375, line 4).

LE QUESNE, J.A.: The appellant says that a contract was made between it and the respondent on December 1st, 1995. The appellant is incorporated in England and the...

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