Process agents – meaning of an “irrevocable” appointment

21 June 2018

An undertaking to appoint a process agent “irrevocably” describes the nature of the obligations as between the contracting parties, not the manner of the process agent’s appointment. Therefore, if one of the parties subsequently decides to revoke the appointment of the process agent, service on that agent is nonetheless “good service”: Cargill International Trading PTE Ltd v Uttam Galva Steels Ltd [2018] EWHC 974 (Comm), 17 April 2018

A dispute arose between an Indian steel supplier (Uttam – the defendant) and an English company (Cargill – the claimant). Cargill wanted to sue Uttam in England. Although Uttam had agreed in the transactional documents to irrevocably appoint an English process agent, that appointment had been revoked by Uttam and an Indian address had instead been given for the service of process. The question for the English court was whether, given that Uttam had agreed with Cargill to irrevocably appoint an English process agent, that process agent could be served with an English claim form despite no longer being appointed and Cargill knowing this.

The process agent clause – “irrevocably and unconditionally”

The steel supply contract between the parties contained a process agent clause which provided that Uttam undertook to:

“…irrevocably and unconditionally… appoint Law Debenture Corporate Services limited… as its agent for service of process before the courts in England (and agrees that service on such agent shall be deemed due service for the purpose of proceedings in such courts) and covenants that, during the Term of this Agreement, it will maintain an agent in England for such purpose”.

The attempts to serve Uttam

When a dispute arose, Uttam asked Cargill to serve any notices of court proceedings at its New Delhi address. Uttam then terminated Law Debenture’s appointment as its English process agent.

Cargill subsequently attempted to serve an English claim form on Uttam by email and post to Law Debenture. Cargill also emailed the documents to Uttam’s managing director, couriered them to the company’s address in New Delhi, and sent them by email and courier to Uttam’s Indian lawyers.

Uttam disputed that it had been properly served.

The commercial purpose of process agent clauses

Popplewell J noted that the reason process agent clauses feature in contracts is to attempt to avoid disputes about service and delays which can be caused when serving out of the jurisdiction. He noted that service in the Indian courts typically takes around eight months, and can often be considerably longer.

The meaning of “irrevocable”

The court held that the requirement that a process agent is appointed “irrevocably” describes the nature of the obligation as between the contracting parties (ie Cargill and Uttam), not the principal and agent relationship between Uttam and Law Debenture. Uttam had promised Cargill that service on Law Debenture was good service irrespective of whether Law Debenture’s appointment had in fact been revoked. Cargill’s service on Law Debenture was therefore valid.

The construction of “during the Term of this Agreement”

Uttam argued that its obligation to maintain a process agent in England was expressed to continue only “during the Term of this Agreement”. The agreement had expired on 7 April 2016, and therefore, Uttam contended, it was no longer obliged to maintain a process agent in England.

The Judge’s analysis focussed on the meaning of the word “during”. Many disputes would be expected to arise after the term of the contract; if the word was intended to limit the obligation to appoint a process agent (as Uttam contended), then this would seriously undermine the commercial purpose of the process agent clause. Popplewell J therefore held that “during” did not operate as a temporal limitation on the obligation to maintain a process agent, but instead tied the undertaking to maintain a process agent in England to such period as the obligations and rights conferred by the agreement subsist. Popplewell J also considered that the way the word “during” was used elsewhere in the agreement supported his analysis.

Waiver, estoppel and laches

Uttam further submitted that Cargill’s silence for a year after being notified of Law Debenture’s termination as Uttam’s process agent amounted to a waiver of its right to contest the efficacy of the termination, thus Cargill was estopped from relying on service on Law Debenture as valid, or Cargill otherwise prevented from so doing by the operation of laches.

Uttam was unable to establish that it would suffer any inequity if Cargill enforced its legal rights: this was sufficient to dispose of Uttam’s attempt to rely on the equitable doctrines of estoppel and laches. Uttam was similarly unable to establish that Cargill had waived its contractual rights.

Cargill therefore succeeded in obtaining a declaration that its service on Uttam was valid.

Comment

This ruling confirms that, as a matter of English law, by describing the appointment of a process agent as “irrevocable”, service of an English claim form on that process agent is good service, even if the appointing party chooses to revoke the appointment of its process agent. The “irrevocable” nature of the appointment of the process agent describes the obligations as between the contracting parties, not the manner of the process agent’s appointment.

Parties are therefore ill-advised to revoke the appointment of a process agent which is expressed as irrevocable – those who do so risk being unaware of claims being validly served upon them. As Cargill did in this case, claimants may nonetheless wish to ensure that any claims are brought to the attention of the defendant in circumstances where the appointment of the defendant’s process agent may have lapsed or been revoked.

Further information

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.