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Commercial Law – Commercial Litigation – Service – Claim Form – Specific Performance – Forum

In the case of SSL International PLC & another v. TTK LIG Ltd & others, the High Court held that the Claimants had validly served proceedings on the first Defendant, which was based in India, but held that with regard to the Claimants’ application for specific performance, an agreement purporting to give the English courts jurisdiction had not been properly brought to the first Defendant’s attention. Therefore, the appropriate forum in the circumstances was India.

Background

• The two Claimants were companies of the same group and were involved in the sale and manufacture of condoms;
• The first Defendant was an Indian company which manufactured and supplied condoms to the Claimants.

Claimant-Defendant Relationship

• The general practice for each month was for the Claimants’ to arrange the month’s supply of goods with the Defendant;
• The terms of the manufacture and supply of condoms incorporated both fully-absorbed manufacturing costs and an additional payment of 15%;
• The documents only made reference to the Claimants’ terms of supply and not what these were;
• An aspect of the relationship was that each party was able to appoint four nominee directors to the board of the joint venture company.

Facts

• In April 2011, the first Defendant proposed a meeting with the Claimants to be held in India;
• It was difficult for the Claimants’ representatives to attend so they proposed that two of the existing directors be substituted for two others;
• The two directors were removed but not substituted;
• At the meeting the Defendants proposed that new agreements be made between the first Defendant and the Claimants, that:-
  • guaranteed the amount of condoms to be made by it, and
  • raised the percentage received by the first Defendant from 15 to 50%.
• The Claimants agreed to the new terms, intending to object to them later on;
• In May 2011, the Defendant stopped supplying the Claimants with goods;
• The Claimants commenced proceedings in India;
• The Indian court ordered that supply of goods to the Claimants by the first Defendant be resumed on the original financial terms;
• The claimants sought further relief from the courts in England:-
  • Specific performance of the outstanding contracts with the Claimants;
  • Damages from the first Defendant for breach of contract and tortious damages against all the defendants for, inter alia, procuring a breach of contract.
• In June 2011, proceedings were served by the claimants in England on one of the nominee directors of the first Defendant's board;
• The Claimants applied for permission to serve the claim out of the jurisdiction, in the event that valid service had not taken place, and sought an order for specific performance requiring the defendants to supply the stock of condoms already made to the Claimants under their contract to supply.

Issues

• Whether there had been valid service on the first Defendant;
• Whether there was a need to acquire permission to serve out of the jurisdiction; and
• Whether there was a cause of action against the first Defendant under English law.

The Claimant contended that under the Court Rules CPR 6.5.3, valid service would be effected by serving the claim on a 'person in a senior position' of the first Defendant. Consideration was given to the Rome Convention 1980.

Held

• There had been valid service on the first Defendant for the purposes of proceedings in the English court. The CPR required the claim to be served on 'a person in a senior position' of the Claimant, which had been done by serving the proceedings on one of the nominee directors of the first Defendant's board. Since there had been valid service of the claim, there was no need for the Claimant to seek permission to serve out of the jurisdiction.
• The manner in which the contracts had been arranged meant that there had been no mechanism for incorporation of standard terms. Since the defendants would not receive the documents, they would not have been able to see the terms of supply at the bottom of the forms, and the contractual terms would not have been brought properly to their attention. Consequently, the clause giving English law jurisdiction in any claim had not been properly incorporated.
• Since the standard terms were not properly incorporated, under the Rome Convention the supply contracts would be governed by the law of the supplier's country, rather than the purchaser's. On the facts, the first Defendant was almost entirely linked to India rather than the UK; the first Defendant was located in India and incorporated there. It would be subject to Indian law and was largely run by Indian directors. Even if service had been possible under the CPR, the appropriate forum for the claim was clearly India.

Conclusion

Although papers had been properly served on the first Defendant under CPR 6.5.3(b), the agreement between the parties purporting to give the English courts jurisdiction in the event of a dispute had not been brought properly to the first Defendant's attention. Furthermore, given the nature of the defendant, the appropriate forum for the hearing of the claim would be India.

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© RT COOPERS, 2011. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.