Effect of failure to renew appointment of a process agent for service of process

A process agent clause is a common type of boiler plate clause in international commercial contracts.  It simplifies service of legal process on a foreign counterparty by agreeing upfront who is authorised to accept service on that party’s behalf.  This can save time and costs where the potential defendant is based outside the jurisdiction.  This case concerns a process agent appointment that lapsed before a dispute arose.

Aquila, an asset finance company, entered a lease agreement with Onur Air, a Turkish airline. The agreement contained a process agent clause which provided that Onur Air had irrevocably appointed a company (CSC) as its agent for service in relation to any proceedings and that if the agent’s appointment ceased to be effective, Onur Air shall, as soon as reasonably practicable, appoint another agent.  Onur Air sent Aquila a copy of a letter which confirmed the appointment of a company (CSC UK Limited) as process agent for one year.  A dispute arose and Aquila issued a claim form in the English courts seeking USD 9 million.

Aquila sent a copy of the claim form by email to Onur Air’s address in Turkey, which Aquila accepted did not constitute effective service.  Aquila then attempted to serve on CSC UK Limited at its address in London, but it was unable to do so because the address was a building site and it transpired that there was no company or entity called ‘CSC’.  Aquila then attempted to serve the claim form on another company (CSC Limited), which was not in existence at the time the contract was agreed but was formerly registered at the same address as CSC UK Limited, at its new address by handing it to an individual on the premises.  The relationship between CSC Limited and CSC UK Limited was unclear.

Onur Air sought to set aside the claim and/or service of the claim, arguing that service was not effective because CSC UK Limited’s appointment had lapsed and that the wrong process agent (CSC Limited) was served.  In response, Aquila sought an order declaring that service was valid, permitting alternative service on CSC Limited under CPR 6.15 or rectifying an error of procedure under CPR 3.10.

Service on a building site would have been possible as the process agent’s irrevocable appointment was still valid

Cockerill QC (sitting as a Deputy High Court Judge) found that the service agent clause appointed a CSC entity to be designated and the confirmation of appointment letter defined that entity as CSC UK Limited.  Aquila’s right to effect service under the contract could not be affected by the fact that Onur Air had appointed CSC for one year and then failed to renew the appointment.  The parties’ agreement could not be revoked by a letter confirming appointment to which Aquila was not a party (DVB Bank SE v Isim Amin Ltd [2014] EWHC 2156 (Comm)).  The contractual position between Aquila and Onur Air was unchanged.  The process agent clause in the contract stated that the process agent was appointed irrevocably and this intention was supported by the need for a back-up process agent, where necessary, in order to allow service in the jurisdiction if the original agent was not able to act.  Unless and until the identified process agent ceased to exist, as between Aquila and Onur Air, the process agent’s appointment remained valid and it was a matter for Onur Air if the agent ceased to act or move offices.  Any looser construction of the words “ceases to be effective” would subvert the meaning of “irrevocable”.  The judge therefore concluded that Aquila could have validly served CSC UK Limited at its original address, even though it was a building site. 

Service on the wrong process agent was good service (or a procedural error capable of remedy)

In order for the judge to make an order permitting alternative service under CPR 6.15, the judge had to be satisfied that there was good reason to make the order.  Applying Popplewell J’s summary of the relevant cases in Societe General v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS [2017] EWHC 667 (Comm) the judge found that Aquila had demonstrated good reason why the claim form had not been served on Onur Air “with all the perfection of form which is technically required”:

• this was “plainly” a case where Onur Air had learned of the existence and content of the claim form.  Onur Air had filed an acknowledgement of service indicating its intention to contest jurisdiction less than two weeks after the claim form was issued;

• while Onur Air had not been “playing technical games overall,” its position on service at an address which was the same address as the nominated process agent was “certainly technical” and Onur Air’s argument about expiry of the process agent’s appointment essentially relied on a breach of its obligation to appoint a new agent under the process agent clause;

• although the judge had found that Aquila could have served and could probably still serve the claim form on CSC UK Limited before it expired, Onur Air’s focus appeared, until recently, to have focused primarily on the expiry of the agent and therefore, earlier service on CSC UK Limited would not have avoided this challenge.  Onur Air also failed to appoint a new agent, despite a request from Aquila that it do so and despite the terms of the agreement; and

• Aquila's attempts at service were prompt, as was its application under CPR 6.15 following Onur Air’s jurisdictional challenge, and Aquila had sought to list the hearing before the claim form expired.

On the facts, the judge found that Aquila had demonstrated good reason for the order and, even though there was still time for Aquila to re-serve the claim form, ordered that service on CSC Limited was good service under CPR 6.15(2) on the basis that to order further steps to be taken to effect service would only increase costs, which “would hardly be in line with the overriding objective.”

In addition, the judge found obiter that, had she not ordered that the service on CSC Limited was good service under CPR 6.15, she would have been inclined to conclude that service on the process agent was a procedural error falling within CPR 3.10 so as to permit an order to be made remedying the error.

This case summary is part of the Allen & Overy Litigation and Dispute Resolution Review, a monthly publication.  If you wish to receive this publication, please contact Amy Edwards, amy.edwards@allenovery.com.