Service out of the jurisdiction: unlocking the tort gateway

Service out of the jurisdiction: unlocking the tort gateway

Service out of the jurisdiction: unlocking the tort gateway

The question of whether English proceedings can be served out of the jurisdiction against a party who committed a tort (a wrong committed against another) in a foreign country and only consequential damages were suffered in England and Wales was considered by the Supreme Court in FS Cairo (Nile Plaza) LLC v Lady Brownlie [2021] UKSC 45 (“Brownlie II”).

Service out of the jurisdiction

English court proceedings can be served on a defendant within England and Wales, even if its presence there is only temporary. If a party does not have a presence there, it will be necessary to serve proceedings on it outside of the jurisdiction, and the court’s permission to do so will normally be required (unless the proceedings relate to a contract which has an exclusive English jurisdiction clause to which the Hague Convention on Choice of Court Agreements applies).

To obtain the court’s permission, a prospective claimant must demonstrate that:

  1. It has a good arguable case that the claim falls within one of the statutory jurisdictional “gateways” in paragraph 3.1 of Practice Direction 6B;
  2. There is a serious issue to be tried for each cause of action; and
  3. England is the proper place in which to bring the claim.

The purpose of the jurisdictional gateways is to ensure that there is a meaningful connection between the dispute and England and Wales. For a claim in tort, the relevant jurisdictional gateway is contained in Practice Direction 6B paragraph 3.1(9) which states that:

(9) A claim is made in tort where –

(a) damage was sustained, or will be sustained, within the jurisdiction; or
(b) damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.

The question for the Supreme Court was can the tort gateway 3.1(9)(a) be used where only consequential damages are sustained in England and Wales?

Background

Whilst on a driving guided tour in Egypt, Lady Brownlie was seriously injured, her husband, Sir Ian Brownlie, was killed, Sir Ian’s daughter Rebecca was also killed, and Rebecca’s two children were injured.

Lady Brownlie initially issued proceedings against a non-trading holding company based in Canada called FSHI, and relied on the contract and the tort gateways for permission to serve proceedings out of the jurisdiction.

FSHI however neither owned nor operated the hotel, and in 2017 the Supreme Court held that there was no realistic prospect that Lady Brownlie could demonstrate a contract with FSHI, or any liability in negligence of FSHI, meaning neither gateway could be used.

Lady Brownlie was allowed to substitute FS Cairo (Nile Plaza) LLC, an Egyptian company, as defendant, and was allowed to rely on the contract and the tort gateways for permission to serve the claim form out of jurisdiction. FS Cairo appealed against the decision to allow the tort gateway, and the court’s decision that the claims had a reasonable prospect of success.

These appeals went to the Supreme Court, where the argument relating to the tort gateway was around the breadth of Practice Direction 6B paragraph 3.1(9)(a), and whether “damage was sustained… within the jurisdiction”. FS Cairo argued that “damage” applied only to direct or initial damage sustained in England and Wales and could not be extended to further consequences suffered as a result of the initial damage. In the present case, the relevant damage was that suffered immediately following the car accident.

Lady Brownlie argued that this interpretation of the gateway was too narrow. She argued that “damage” was not qualified, and only required that some significant damage was suffered in England and Wales. The interpretation of “damage” should be extended to include damage suffered on a continuing basis. In the present case, damage had been suffered on a continuing basis in the form of pain, suffering and loss of amenity, and had not been suffered only at the point that the cause of action arose (i.e. the accident).

Decision

The Supreme Court dismissed the appeal by 4 to 1. Lord Lloyd-Jones, writing the majority judgment, found that "damage" in the tort gateway should not be limited to damage which was necessary to complete a cause of action in tort, and no special significance should be assigned to a place because it was where the cause of action was completed or an accident occurred. To do so would be unduly restrictive.

"Damage" extended to the physical and financial damage caused by the wrongdoing. This was sufficient to link a tort to the jurisdiction where the damage was suffered. There was no distinction to be made between direct and indirect damage; “damage” simply applied to actionable harm. A claimant could therefore suffer damage in more than one place.

In the present case, the respondent had suffered “damage” within the jurisdiction for the purposes of the tort gateway. The appeal against the decision that the claims had a reasonable prospect of success also failed and so the claims were allowed to proceed.

Comment

This ruling is significant as it widens the scope of what can be considered “damage” suffered “within the jurisdiction”. It is clear that damage can go beyond merely that suffered as an immediate consequence of an accident, and can be extended to damage suffered on a continuing basis in cases where the accident occurred overseas. This is particularly significant for tortious claims involving loss of a non-financial nature, including personal injury and loss of amenity.

Whether this wider definition can be extended to cases of pure economic loss remains to be seen. Lord Lloyd-Jones considered the point, commenting that the mere fact of an economic loss being suffered within England and Wales may not be sufficient to establish jurisdiction. This comment is not binding, however, as the damage suffered by Lady Brownlie was not purely economic. As such, this point is likely to be the subject of future litigation.

The Supreme Court also sounded a note of caution regarding the potential widening of jurisdiction. Lord Lloyd-Jones noted that the jurisdictional gateway only forms one element of the jurisdictional test. England and Wales must still be the appropriate place to bring the claim, independent of the gateway question.

As such, this decision should not be seen as a universal widening of the jurisdiction of the English courts to hear cases where a resident of England and Wales has suffered damage overseas, as a prospective claimant will still be required to persuade the court that England and Wales is the proper place in which to bring the claim and that there is more than a “casual or adventitious” link to England and Wales.

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