Claim form - Service - Claimant seeking order for specific performance

SSL International Plc & another v TTK LIG Ltd & others: Chancery Division (Mr Justice Mann – judgment delivered extempore): 29 June 2011

The claimants were two companies in the same group (the group), and were both involved in the sale and manufacture of condoms.

The group purchased a company with an interest in the first defendant, an Indian company which manufactured condoms at its factory in India.

The first defendant was owned almost exactly equally by the group and a joint venture company governed by Indian law.

The other defendants were officers and shareholders in the first defendant.

The terms of the first defendant’s manufacture and supply of condoms to the claimants incorporated both fully-absorbed manufacturing costs and an additional payment of 15%.

The claimants’ practice was to arrange the month’s supply of goods with the defendant for each month.

The documents involved (the documents) made reference to the claimants’ terms of supply, but did not precisely state what they were.

Part of the relationship between the parties enabled each party to appoint four nominee directors to the board of the joint venture company.

In April 2011, the first defendant proposed a meeting with the claimants to be held in India.

That meeting was ­difficult for representatives of the claimants to attend, so, for that and other reasons, the claimants proposed that two of the existing directors be substituted for two others.

Subsequently, although two directors were removed from the position, they were not replaced with new directors.

The defendants proposed that new agreements should be made between the first defendant and the claimants, to guarantee the amount of condoms to be made by it, and to raise the percentage received by the first defendant from 15 to 50% (the new terms).

The claimants agreed, intending to fully object to the new terms later on.

In May 2011, the defendant ceased to supply the claimants with goods.

The claimants commenced proceedings in India at a specialised shareholding dispute court (the Indian court).

The court ordered that the 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. They sought specific performance of the outstanding contracts with the claimants, damages from the first defendant for breach of contract and tortuous damages against all the defendants for, among other things, 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.

Three issues arose: (i) whether there had been valid service on the first defendant; (ii) whether there was a need to acquire permission to serve out of the jurisdiction; and (iii) whether an action lay against the first defendant under English law.

The claimant contended that under Civil Procedure Rule 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.

The application would be dismissed.

(1) The authorities suggested that where the person on whom service had been effected was ‘a person in a senior position’ and had been properly served, service would be deemed to have taken place properly.

In the circumstances of the present case, 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 it out of the jurisdiction.

(2) On the evidence, the manner in which the contracts had been arranged between the parties 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.

(3) Since the standard terms could not be said to have been 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.

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.

Thomas de la Mare and James Segan (instructed by Jones Day) for the claimants; the defendants did not appear and were not represented.