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Getting through the new contract gateways in CPR 6.33(2B): Pantheon International Advisors v Co-Diagnostics
In a rare judgment on this complex topic, the court has clarified the operation of the post-Brexit gateways for service out of the jurisdiction without permission under CPR 6.33(2B). In Pantheon International Advisors Ltd v Co-Diagnostics, Inc1, the parties had negotiated a contract with an English law and jurisdiction clause but never signed it. The court gave guidance on the applicable test to establish that the contract containing the jurisdiction clause existed, and that the claims fell within it. It also clarified that a quantum meruit claim will not fall within CPR 6.33(2B)(b) (the 'claim in contract' gateway) but would probably fall within CPR 6.33(2B)(c), (the claim 'in respect of a contract' gateway). Finally, the court confirmed that where a claim includes multiple causes of action, some but not all fitting within a contractual jurisdiction clause gateway, the court will consider the requirement for permission of each cause of action in isolation. The need for permission in respect of one cause of action will have no impact on any cause of action not requiring permission, and vice versa.
What are the practical implications of this case?
This case highlights the importance of selecting the correct gateways for service out of the jurisdiction where the claim relates to a contract with an English jurisdiction clause. It also provides useful guidance on the level of evidence required to establish that a contract with a relevant jurisdiction clause exists, and that the claims advanced fall within it. In particular:
- There is relatively little case law on the application of CPR 6.33(2B), which removes the requirement for the court's permission to serve outside the jurisdiction where the claim falls within an English jurisdiction clause. However, the parties accepted that cases decided under the now obsolete gateway under Practice Direction 6B paragraph 3.1(6)(d) (when the court's permission could still be required in such cases) remained relevant. In a challenge to jurisdiction in these circumstances, the 'burden of persuasion' therefore appears to be on the claimant to establish a good arguable case that the contract containing the jurisdiction clause exists, that the clause is valid and binding, and that the claim falls within it.
- Guidance on what is a 'good arguable case' for the purposes of CPR 6.33(2B) can be found in the Supreme Court decisions in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80 and Goldman Sachs International v Novo Banco SA [2018] UKSC 34) and the Court of Appeal decision in Kaefer Aislamientos v AMS Drilling Mexico [2019] EWCA Civ 10, even though these cases pre-date the introduction of these gateways.
- In summary, it is a 3 limb test: i) the claimant must supply a 'plausible evidential basis' that it has the better argument that the relevant gateway applies; ii) while the court will not conduct a mini-trial, if there is a disputed issue of fact, it must take a view on the material available if it can reliably do so; and iii) if the court cannot form a conclusion on the evidence, it must combine the good arguable case test with the plausible evidence test.
- Where a claimant cannot rely on a signed contract, it is crucial to provide sufficient evidence to meet this 'burden of persuasion'.
- A quantum meruit claim is a claim outside of a contract, which arises when work is done 'in anticipation of a contract that does not eventuate'. Such a claim does not fall within the scope of CPR 6.33(2B)(b), which only applies where 'a contract contains a term to the effect that the court shall have jurisdiction to determine that claim'.
- A quantum meruit or unjust enrichment claim may, however, fall within the scope of CPR 6.33(2B)(c), which rule was introduced after service of the proceedings in this case and which applies to a claim 'in respect of a contract falling within sub-paragraph (b)'.
- It is crucial to rely on the appropriate gateways and to apply for permission (if necessary) for any cause of action being advanced.
- If there is any doubt about whether claims fall within relevant gateways and limitation is in issue, consider whether or not to seek the court's permission to serve out of the jurisdiction and / or to seek it retrospectively in the event of a challenge to jurisdiction.
What was the background?
Pantheon International Advisors (Pantheon), an English company, alleged that it was owed unpaid fees under an unsigned written contract with Co-Diagnostics Inc, a corporation based in Utah, USA. The unsigned contract contained an English choice of law clause and an exclusive jurisdiction agreement in favour of the English courts. It also contained a mandatory multi-tiered dispute resolution procedure requiring certain steps to be taken before proceedings could be issued.
Pantheon also asserted that it had a quantum meruit claim for the unpaid fees, although at the hearing this claim was conceded and the court's analysis on this point was therefore obiter.
Co-Diagnostics Inc challenged the jurisdiction of the English courts on the grounds that there was no binding agreement between the parties and therefore no jurisdiction clause giving the English courts jurisdiction. In the alternative, it claimed that the proceedings should be stayed to give effect to the multi-tiered dispute resolution procedure.
Although not formally advanced by way of a written application, the claimant made submissions in its skeleton argument and at the hearing that, in the alternative, it should be granted retrospective permission to serve its contract claim out of the jurisdiction.
What did the court decide?
The court concluded on the basis of the documents that Pantheon had a good arguable case supported by plausible evidence that a contract between the parties existed, and that it contained an exclusive jurisdiction clause in favour of the English courts.
It held that the claim in contract fell within the scope of CPR 6.33(2B)(b) but that the quantum meruit claim (had it not been conceded) would not have fallen within that gateway. Instead, it observed (obiter), that such a claim would likely fall within CPR 6.33(2B)(c).
Although no formal application had been made to this effect, the court also exercised its discretion pursuant to CPR 3.10 to grant retrospective permission to serve the contract claim out of the jurisdiction, in the event that the analysis in relation to CPR 6.33(2B)(b) was not upheld, it being a relatively new rule with not prior judicial interpretation. It was relevant to the exercise of the court's discretion that there was no complaint of failed service within the prescribed time limits and there was no real prejudice to the defendant apart from delay.
The court held that the presence of one claim requiring permission (which was not obtained) did not invalidate service for the other claim, which fell within the gateway under CPR 6.33(2B)(b).
Finally, the court also granted a stay of proceedings to enable the dispute resolution process set out in the contract to be followed.
A version of this article was first published by Lexis®PSL on 10 August 2023.
1 [2023] EWHC 1984 (KB)