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An application for pre-action disclosure can be served out of the jurisdiction

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Disclosure Other

28-02-2018

ED&F Man Capital Markets LLP v Obex Securities LLC and another [2017] EWHC 2965 (Ch)

Facts of the case

– Obex Securities LLC (“Obex”), acting through an individual (“RK”), introduced two clients to ED&F Man Capital Markets LLP (“ED&F”), a broker. The introductions were made under the terms of a written agreement between Obex and ED&F which contained a jurisdiction clause specifying the courts of England and Wales

– ED&F later accused Obex of fraudulently mispresenting the solvency and worth of one of the clients when making the introduction, and applied ex parte to serve an application for pre-action disclosure in New York. ED&F’s application was granted by Master Teverson

– the test to be applied in considering an application to serve out of the jurisdiction is that:

– there is a serious issue to be tried on the merits of the claim against a foreign defendant, i.e. a substantial question of fact or law or both and a real prospect of success on the claim

– there is a good arguable case that the claim falls within one or more of the gateways provided under paragraph 3.1 of PD6B

– England and Wales is clearly and distinctly the appropriate forum for the trial of the dispute and that in all the circumstances the court ought to exercise its discretion to permit service out of the jurisdiction.1

– the parties agreed that the courts of England and Wales were the proper forum for the resolution of the substantive dispute

The decision

– Catherine Newman QC, sitting as a Deputy Judge, upheld the order of Master Teverson, finding that:

– there was a serious issue to be tried on the merits of the application, and that ED&F had shown a good arguable case for the making of an order for pre-action disclosure in relation to the classes of documents sought by it

– an application for pre-action disclosure was a “claim” for the purposes of Part 6 (Service of Documents) and a free-standing set of proceedings which did not require the issue of a claim form

– pre-action disclosure fell within the gateway at paragraph 20(a) of PD6B paragraph 3.1 (a claim made “under an enactment which allows proceedings to brought and those proceedings are not covered by any of the other grounds referred to in this paragraph”) on the basis of section 33(2) of the Senior Courts Act 1981 (the “SCA”)2

Analysis and practical advice

– the decision contrasts with the position in Charles Hollander QC’s book Documentary Evidence (12th Edition) in which it is stated that there is no power to serve a claim for pre-action disclosure out of the jurisdiction. However, the book cites no authority for that proposition and does not refer to s.33(2) of the SCA

– assuming the decision is upheld, it offers a potentially useful means of obtaining early disclosure in cases where one or more of the potential parties are located overseas. Such disclosure might assist with the bringing of anticipated proceedings, obviate their need or assist with their resolution

– however, when seeking pre-action disclosure, applicants should be mindful of the need to ensure the application is sufficiently focused and well explained to satisfy the “serious issue to be tried” and “good arguable case” tests, taking into account the comments of the Court of Appeal in Black v Sumitomo [2002] 1 WLR 1562 CA, and in particular those of Rix LJ at paragraphs 78 and 79 to the effect that such applications need to be tightly drafted and clearly explained. As to whether draft particulars of claim should be served with such applications, this will typically turn on whether the claim can be properly pleaded at that stage or whether, for example, the disclosure sought is needed for that exercise


 

[1] See VTB Capital Plc v Nutriek International Corp [2012] EWCA Civ 808; [2012] 2 Lloyd’s Rep. 313 at paragraph 99.

[2] Section 33: “(2) On the application … of a person who appears to the High Court to be likely to be a party to subsequent proceedings in that court … the High Court shall … have power to order a person who appears to the court to be likely to be a party to the proceedings and to be likely to have or have had in his possession, custody or power any documents which are relevant to an issue arising or likely to arise out of that claim – (a) to disclose whether those documents are in his possession, custody or power; and (b) to produce such of those documents as are in his possession, custody or power to the applicant …”

 

 

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