Recourse to National Courts – problems with service

Issues arise either before or during (or indeed after) an arbitral reference that require the intervention of the Courts of the seat exercising their supervisory jurisdiction.  The Courts of most countries and certainly the UK are swift and supportive in their role: the Courts are willing to grant injunctions in appropriate cases and generally assist the reference.

Things can however stall when it comes to serving the Court documents.  Unlike a Request for Arbitration sent by courier from the institution administering the reference, Court documents require formal service as it is an interference with sovereignty.  Ordinarily, service is a exercise of the power of the Court.  In a case involving service out of the jurisdiction (which will often arise in international arbitration), it is an exercise of sovereignty within a foreign state by requiring the defendant to the Court proceedings to contest matters in what is to him, a foreign state.

In recent months the English Courts have addressed this issue with surprising frequency.  The issue the Courts have grappled with arises from the very considerable delays that arise with service in countries such as Russia (which can be a year or so).   Firstly, in February 2011, the Court of Appeal alerted the profession and the  judiciary to a potential weapon of deeming service to have occurred or providing alternative means of service (Cecil v Bayat).  This was followed swiftly by a series of judgments using this new toy in the toolbox: (Bacon v Automattic – May 2011; JSC BTA Bank v Ablyazov and BNP Parisbas v Open Joint Stock – both November 2011).  All of those judgments permitted alternative service.  Following immediately on the Court of Appeal in Abela v Baadarani (December 2011) refused alternative service on the facts emphasising the exceptional nature of the remedy.  In that case the claimant had to win on alternative service otherwise the claim was struck out – and it failed to persuade the Court.

This perhaps shows the Courts trying to craft a remedy to do justice in support of arbitration.  We are sure not to have heard the last of this!

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