The Good Arguable Case Test Following Brownlie and Kaefer

BRICK COURT CHAMBERS

COMMERCIAL CONFERENCE

The Good Arguable Case Test following 

Brownlie

 and 

Kaefer

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THE GOOD ARGUABLE CASE TEST FOLLOWING 

BROWNLIE

 AND

KAEFER

•

Canada Trust Co v Stolzenberg (No 2) 

1998 1 WLR 547

•

“Good arguable case” = “much the better of the argument”

•

Brownlie v Four Seasons Holdings Inc 

[2017] UKSC 80, per Lord Sumption

(obiter)

•

“Good arguable case” ≠ “much” the better of the argument, which wrongly

suggests “a superior standard of conviction that is both uncertain and

unwarranted”

•

“Good arguable case” = “serviceable test, provided that it is correctly

understood”

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THE GOOD ARGUABLE CASE TEST FOLLOWING 

BROWNLIE

 AND

KAEFER

•

Brownlie v Four Seasons Holdings Inc 

[2017] UKSC 80, per Lord Sumption  at [7] (obiter)

•

What is meant by the good arguable case test is

•

Limb 1 -  that the claimant must supply a plausible evidential basis for the application

of a relevant jurisdictional gateway

•

Limb 2 - that if there is an issue of fact about it, or some other reason for doubting

whether it applies, the court must take a view on the material available if it can

reliably do so; but

•

Limb 3 - the nature of the issue and the limitations of the material available at the

interlocutory stage may be that no reliable assessment can be made, in which case

there is a good arguable case for the application of the gateway if there is a

plausible (albeit contested) evidential basis for it.

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THE GOOD ARGUABLE CASE TEST FOLLOWING 

BROWNLIE

 AND

KAEFER

•

Brownlie v Four Seasons Holdings Inc 

[2017] UKSC 80, Baroness Hale at [33]

•

Test = “good arguable case”, glosses should be avoided

•

Lord Sumption’s explication does not gloss the test

•

Goldman Sachs International v Novo Banco SA 

[2018] UKSC 34, Lord

Sumption

•

in 

Brownlie 

this Court reformulated the good arguable case test such = 3

limbs

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THE GOOD ARGUABLE CASE TEST FOLLOWING 

BROWNLIE

 AND

KAEFER

•

Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV 

[2019] EWCA

Civ 10

•

Green LJ – a test “intended to be straightforward has become befuddled by

glosses, glosses upon glosses, explications and reformulations”

•

Nigel Davis LJ – in “something of a fog as to the difference between an

explication and a gloss “

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THE GOOD ARGUABLE CASE TEST FOLLOWING 

BROWNLIE

 AND

KAEFER

•

Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV 

[2019] EWCA

Civ 10, per Green LJ sought “to make sense of the new reformulated test”

•

“A plausible evidential basis” in Limb 1 = evidential basis showing that the

claimant has the better of the argument

•

Limb 2 = instruction to the court to overcome evidential difficulties and

arrive at a conclusion if it reliably can, applying judicial common sense and

pragmatism, not least because the exercise is intended to be one

conducted with due dispatch and without oral evidence

•

Limb 3 arises where court finds itself simply unable to form a decided

conclusion and not able to say who has the better argument. Solution =

introducing a flexible test combining good arguable case and plausibility of

evidence not necessarily conditional upon relative merits

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…. AND COD WARS

•

Alexander Tugushev v Vitaly Orlov 

[2019] EWHC 645 (Comm), Carr J at [60]

•

Important not to overcomplicate what should be a straightforward test to be

applied sensibly to the particular facts and issues arising in each individual

case

•

Whatever perorations there may be along the way, the ultimate test remains

one of “good arguable case”

•

= “having the better of the argument”, which confers “ a desirable degree of

flexibility in the evaluation of the court”

•

Test to be understood by reference to the new, reformulated three limb test

identified in 

Brownlie

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…. AND COD WARS

•

Alexander Tugushev v Vitaly Orlov 

[2019] EWHC 645 (Comm), Carr J at [60]

•

One of key issues was whether T had a good arguable case that O resident

in the jurisdiction, when O had served extensive sworn evidence from

multiple deponents that he lived in Murmansk and his property in London

was an investment property/private hotel

•

Not necessary for T to put forward positive evidence in order to succeed

•

T had to show good arguable case which could at least partly be done

through inference

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…. AND COD WARS

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BRICK COURT CHAMBERS

COMMERCIAL CONFERENCE

Dealing with establishing/challenging jurisdiction

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REFLEXIVE APPLICATION

Under the Brussels and Lugano regimes

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REFLEXIVE APPLICATION

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LUGANO CONVENTION

Privatbank v Kolomoisky

 [2019] EWCA Civ 1708,

§ 

151– 189.

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BRUSSELS REGULATION RECAST

Articles 33 and 34 Brussels Regulation Recast

Gulf International v Aldwood

 [2019] EWHC 1666 (QB)

BRICK COURT CHAMBERS

COMMERCIAL CONFERENCE

Jurisdiction after Brexit

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BRICK COURT CHAMBERS

COMMERCIAL CONFERENCE

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ANTI-SUIT INJUNCTIONS IN SUPPORT OF

LONDON ARBITRATION

Clauses providing for Court Jurisdiction and Arbitration

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JASBIR DHILLON QC

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PERKINS ENGINES V. GHADDAR [2018] 2 LLOYD’S REP.

197: THE FACTS

•

Perkins was subsidiary of Caterpillar, one of world’s leading suppliers of gas and diesel

engines.

•

Ghaddar was distributor of  Perkin’s engines in Lebanon.

•

Relationship governed by written Distributor Agreement concluded in 1990.

•

In 2017 Ghaddar admitted to selling engines supplied under Distributor Agreement into

Syria, which was arguably contrary to US sanctions.

•

In March 2018 Perkins terminated the Distributor Agreement on ground that sales by

Ghaddar into Syria amounted to breach of the Distributor Agreement.

•

In April 2018 Ghaddar commenced Lebanese proceedings against Perkins seeking

damages for unlawful termination of the agreement under Lebanese law.

•

In May 2018 Perkins issued a Notice of Arbitration to Ghaddar and thereafter issued an

Arbitration Claim in the Commercial Court seeking an interim anti-suit injunction

restraining the Lebanese proceedings.

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PERKINS ENGINES V. GHADDAR [2018] 2 LLOYD’S REP.

197: THE DISPUTE RESOLUTION CLAUSE

•

Clause 23.6 of the Distributor Agreement provided:

“

This Agreement shall be deemed to be an agreement made in England and shall be

read and construed and take effect in all respects in accordance with the Laws of

England and 

the Parties hereby submit to the jurisdiction of the English Courts.

To the extent there is no reciprocal enforcement procedures between the United

Kingdom and the country in which the Distributor is located the Parties agree to submit

any dispute arising between them that cannot amicably be settled to arbitration

. The

arbitration shall be held in London, England ...”

(Emphasis added)

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PERKINS ENGINES V. GHADDAR [2018] 2 LLOYD’S REP.

197: THE ISSUES

•

Meaning of Arbitration Clause “

no reciprocal enforcement procedures between the UK

and [Lebanon

]”:

Perkins I: There must be a bilateral or multilateral treaty providing for enforcement of

court judgments between UK and Lebanon which prescribes the mutual enforcement

procedures which both countries will use to enforce each other’s judgments.

Perkins II: The actual dispute which has arisen between the parties must be subject to

reciprocal enforcement procedures between UK and Lebanon.

Ghaddar: There must be domestic laws of UK and Lebanon which are substantially or

functionally equivalent and permit enforcement of court judgments in UK and

Lebanon.

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PERKINS ENGINES V. GHADDAR [2018] 2 LLOYD’S REP.

197: LEGAL PRINCIPLES

•

Court has jurisdiction to grant interim anti-suit injunction to restrain a breach of an

English arbitration agreement under s. 37 of Senior Courts Act 1981: 

Ust-

Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant

LLP

 [2013] 1 W.L.R. 1889, at [48] (Lord Mance).

•

English law arbitration agreement will be construed in accordance with:

(1) General principles of contractual interpretation by reference to authoritative

summaries by the Supreme Court in 

Arnold v. Britton 

[2015] A.C. 1619 and 

Wood v.

Capita Insurance

 [2017] A.C. 1173; and

(2) Principles of contractual interpretation applicable to a dispute resolution clause  in a

commercial contract stated by the House of Lords in 

Fiona Trust v. Privalov 

[2008] 1

Lloyd’s Rep. 254.

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PERKINS ENGINES V. GHADDAR [2018] 2 LLOYD’S REP.

197: BRYAN J.’S JUDGMENT

•

Perkins’s primary meaning is correct: Unless there is a bilateral or multilateral treaty

providing for enforcement of court judgments between UK and Lebanon, the parties

must arbitrate any dispute because:

(1) Ordinary and natural meaning of words used;

(2)  Clause refers to “UK” not England;

(3) Meaning supported by business common sense and reasonableness.

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PERKINS ENGINES V. GHADDAR [2018] 2 LLOYD’S REP.

197: BRYAN J.’S JUDGMENT

•

Perkin’s Alternative Meaning Correct: Clause requires that actual dispute which has

arisen between the parties is subject to the reciprocal enforcement procedures between

the UK and Lebanon.

•

There are no reciprocal enforcement procedures between the UK and Lebanon for the

actual dispute.

•

If the English jurisdiction clause applied, does it preclude pursuit of the Lebanese

Proceedings if the jurisdiction of the English Court has been invoked notwithstanding

that it does not state it is “

exclusive

”: 

BNP Paribas v Anchorage Capital

 [2013] EWHC

3073 (Comm) and 

Global Maritime Investments v OW Supply & Trading

 [2015]

EWHC 2690 (Comm); cf 

Deutsche Bank v. Highland Crusader

 [2010] 1 W.L.R.

1023.

ASPECTS OF ANTI-SUIT INJUNCTIONS

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Richard Lord QC

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“STRONG  REASON”/  DISCRETION ?

•

Anti-Suit Injunctions (ASIs) tend to focus on two sets of

issues, at least in the case of contractual or “quasi contractual”

ones

•

The first is the existence of an exclusive  English Jurisdiction

Clause (“EJC”) or London arbitration clause

•

The second (on which this talk focuses) is what has happened

or may happen in the actual/threatened foreign proceedings to

which (or technically to the parties to which) ASIs are by their

nature directed

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CONTEXT

What occurs overseas is often said to be relevant under three

principal and related headings being

•

Delay

•

Submission to jurisdiction

•

Comity

Whilst these can all be regarded as essentially discretionary

features, much law has developed round them.

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THE DILEMMA

•

What should a party do in relation to the foreign proceedings

do?

•

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•

Delay

•

Submission to jurisdiction

•

Comity

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ANGELIC GRACE

 [1995] 1 LLOYD’S REP. 87

•

[p.96] “

In my judgment, where an injunction is sought to restrain a

party from proceeding in a foreign Court in breach of an arbitration

agreement governed by English law, the English Court need feel no

diffidence in granting the injunction, provided that it is sought

promptly and before the foreign proceedings are too far

advanced…… The jurisdiction is, of course, discretionary and is not

exercised as a matter of course, but good reason needs to be shown

why it should not be exercised in any given case.”

•

Note that in that case the injunction was granted after rejected of a

submission that an applicant 

ought to 

challenge the foreign court’s

jurisdiction before seeking an ASI. Now not only is an applicant not

bound to do so, but doing so may be fraught with peril from the

English ASI perspective.

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DELAY

•

I failed in 

The Kishore

 [2016] 1 Lloyd’s Rep. 427 to persuade Paul

Walker J. that the concept of delay and degree of advancement of

foreign proceedings were related. Thus although other factors played

a part, the delay whilst my clients challenged jurisdiction in China

was fatal.

•

Since then the emphasis on delay as a factor in its own right has

grown (see 

Ecobank

 [2016] 1 WLR 2231, 

ADM Asia-Pacific Trading

PTE Ltd v PT Budi Semesta Satria

 [2016] EWHC 1427,  

The

Magellan Spirit

  [2016] 2 Lloyd's Rep. 1 ) although it remains a

discretionary factor

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SUBMISSION TO THE JURISDICTION

•

This contains traps for the unwary. The test is usually couched

as to whether there was “truly voluntary” submission: see eg

Raphael

 2

nd

 Edn  §8.22. 

The question is to be judged by

reference to English law: 

Pan Ocean

 [39-40], 

Ecobank v

Tanoh

 [2015] EWCA 1309 [57-59].  However, an international

context requires a broader approach: 

Rubin v Eurofinance

[2013] 1 A.C. 236 [159-161].

•

There is an important distinction between invoking jurisdiction

to determine jurisdiction and invoking jurisdiction to determine

the merits: 

Williams & Glyn’s Bank plc v Astro Dinamico Cia

Naviera SA 

[1984] 1 WLR 438, 443.

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SUBMISSION – THE TEST

The question of submission is one of fact, the question

being

“a step in the proceedings only amounts to a submission when

the defendant has “taken some step which is only necessary or

only useful if the objection [to the jurisdiction] has been actually

waived” Williams & Glyn’s Bank plc v Astro Dinamico Cia Naviera

SA [1984] 1 WLR 438 at 444. 

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SUBMISSION

However

•

An application for a stay in the foreign court may itself be a

submission although may not be or may not be of any

significant weight: see the discussion in 

Pan Ocean v China-

Base

 [2019] EWHC 982 (Comm) [39-57]

•

If a jurisdiction challenge fails and then a party has the choice

of walking away and facing a default judgment or contesting

the merits, the latter course still counts as “voluntary”

submission: 

Atlantic Emperor

 [1992] 1 Lloyd’s Rep. 624,

Ecobank

 [57-67]

Again a question of discretion: 

Pan Ocean

 [47]

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COMITY

•

Ecobank

 [132] “

Comity has a warm ring. …We are not

concerned with judicial amour proper but with the operations

of systems of law.”

•

The problem is most acute when the foreign court has

jurisdiction by its own  procedural and/or conflict of law rules.

Nonetheless the English law takes the view, which is logical if

open to the criticism of being slightly Anglocentric, that if by

English procedural and conflict law rules there is an EJC or

London arbitration clause that will be protected by an ASI: 

OT

Africa Line

 [2005] 2 Lloyd’s Rep. 170, 

Akai

 [1998] 1 Lloyd’s

Rep. 90, 

Yusuf Cepnioglu

 [2016] 1 Lloyd’s Rep. 641 The

foreign court might take the same view and issue its own ASI.

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FINALLY - IS SOMETHING “GUANG RONG” HERE ?

•

The facts of 

The Guang Rong

 [2019] EWHC 2284 are

complex. It involved allegations of a fraudulent scheme to

avoid Chinese import duty on oil cargoes and an interlocking

web of contracts of the usual type in international trade:

charterparties, sub-charterparties, bills of lading, sale

contracts, letters of credit

•

In legal terms it involved a familiar question of whether an EJC

between A and B prohibits B taking action elsewhere against

C as well as B. This is a question of construction, and

received an orthodox answer [27-32].

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THE NOVEL BIT

•

Here however C, who was not party to the EJC was also held

entitled to an injunction to prevent proceeding by B against C

in tort, on the grounds that this was a circumvention of the

EJC by a “procedural manoeuvre” and “manipulation” and

thus vexatious/oppressive [33-35].

•

It is suggested that the Courts ought to be very careful about

extension of the vexatious/oppressive approach in this way,

except in the most extreme cases, which this did not appear to

be. It may devalue the ASI currency if foreign courts are

deprived of jurisdiction to adjudicate themselves on the validity

of such claims which are not brought in breach of an EJC.

STATE IMMUNITY

IN COMMERCIAL ARBITRATION

Recent Developments

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EFFECTS OF STATE IMMUNITY

Where a state party is involved, state immunity can be relevant at numerous

stages of the arbitral process:

•

Jurisdiction

•

Registration of Award

•

Enforcement

•

Peremptory Orders

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HISTORICAL OVERVIEW

•

Traditional approach: absolute immunity at common law

•

1972: European Convention on State Immunity

•

1978: State Immunity Act

•

2004: UN Convention on Jurisdictional Immunities of States & their Property

•

Signed by UK in 2005 but not yet ratified.

•

Customary International law: Germany v Italy, ICJ Rep 2012

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EUROPEAN CONVENTION ON STATE IMMUNITY

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1.

Where a Contracting State has agreed in writing to submit to arbitration a

dispute which has arisen or may arise out of a civil or commercial matter,

that State may not claim immunity from the jurisdiction of a court of

another Contracting State on the territory or according to the law of which

the arbitration has taken or will take place in respect of any proceedings

relating to:

(a) 

the validity or interpretation of the arbitration agreement;

(b) 

the arbitration procedure;

(c) 

the setting aside of the award, unless the arbitration agreement

otherwises provides.

2.

Paragraph 1 shall not apply to an arbitration agreement between States.

Implemented in UK by the…

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STATE IMMUNITY ACT 1978 

– 

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(2) This section has effect subject to any contrary provision in the

arbitration agreement and does not apply to any arbitration agreement

between States.

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STATE IMMUNITY ACT 1978 – (2)

•

Exceptions to bar on enforcement:

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—

…(b) the process is for enforcing an arbitration award.

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JURISDICTION TO ENFORCE: 

TATNEFT 

V

 UKRAINE

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•

UNCITRAL arbitration by Russian company against Ukraine under BIT

•

Tribunal held Ukraine breached “Fair and Equitable Treatment” standard

•

Awarded US$

•

Tatneft obtained 

ex parte

 enforcement order under s101(2) Arbitration Act 1996

•

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•

Common ground that

•

Ukraine entitled to immunity unless s9 SIA applied

•

Enforcement proceedings 

“relate to the arbitration” 

for purpose of s9:

Svenska Petroleum v Lithuania (No 2)

 [2007] QB 886

•

But Ukraine said never agreed to arbitrate the dispute…

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TATNEFT 

V

 UKRAINE (CONTINUED)

•

Ukraine’s argument: “FET” standard not found in BIT hence award not within jurisdiction of Tribunal

•

Tatneft:

•

Ukraine waived jurisdiction point by not taking it before Tribunal i.e. same approach as challenges to

award under s67 & 73 Arbitration Act

•

Challenge to FET standard is challenge to merits, not jurisdiction

•

Butcher J at [35-37]

•

Ukraine 

not

 precluded from challenging jurisdiction on points which were not taken before Tribunal

•

No analogy with s 67 Arbitration Act because under S1 SIA, a state is immune unless there is an

exception provided for in the Act

•

Court has to give effect to immunity, even at enforcement stage, unless satisfied that State agreed to

submit dispute to arbitration

•

Waiver would require 

“conduct which clearly indicated that the state was foregoing reliance on a

particular point not just for the purposes of the arbitration but for wider purposes including any

subsequent issues as to state immunity”

•

But went on to find that Tribunal’s finding on FET standard went only to merits and not jurisdiction…

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SERVICE OF ENFORCEMENT ORDER: 

GENERAL DYNAMICS

•

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6

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•

62.18(1): Application to be made without notice in arbitration claim form

•

62.18(2): Court 

“may”

 specify parties on whom claim form to be served

•

62.18(7): Order giving permission to enforce 

“

must” be served.

•

62.18(8): If defendant out of jurisdiction, may be served without permission

“as if the order were an arbitration claim form”.

•

Section 12 SIA(1): 

“Any writ or other document required to be served for

instituting proceedings against a State shall be served by being transmitted

through the Foreign and Commonwealth Office”

•

Question: Does an order for enforcement need to be served on a foreign state

through the FCO?

•

No: 

General Dynamics  UK Ltd 

v

 Libya 

[2019] EWCA Civ 110

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GENERAL DYNAMICS 

V

 LIBYA (CONTINUED)

•

ICC Award against Libya for £21 million

•

Teare J granted 

ex parte

 order to enforce, but dispensed with service & only

required order to be “brought to attention” of Libyan government

•

Males J set aside order: service via FCO under s 12 SIA was mandatory

•

Court of Appeal (Sir Terence Etherton, Longmore & Flaux LJJ)

•

S12 SIA not applicable to order giving permission to enforce because it is not

the “document instituting proceedings”

•

Court has power to dispense with service of Order against a state

•

But should only exercise that power in 

“exceptional circumstances”

•

Held test satisfied in circumstances of case & allowed appeal.

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FURTHER READING…

•

Reliance industries v India 

[2018] EWHC 822 (Comm)

•

Pearl Petroleum v Kurdistan 

[2015] EWHC 3361 (Comm)

ALTERNATIVE SERVICE

UNDER THE HAGUE CONVENTION

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RELEVANT CPR PROVISIONS

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SOURCE OF THE POWER

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6.37— Application for permission to serve the claim form out of the jurisdiction

…

(5) Where the court gives permission to serve a claim form out of the jurisdiction—

…

(b) it may—

(i) give directions about the method of service; and

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FULL AND FRANK DISCLOSURE

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At [97], Bryan J cited previous authority for the proposition that, in the context of an

application for permission to serve out of the jurisdiction:

… The focus of the inquiry is on whether the court should assume jurisdiction over a

dispute. The court needs to be satisfied that there is a dispute properly to be heard (i.e.

that there is a serious issue to be tried); that there is a good arguable case that the court

has jurisdiction to hear it; and that England is clearly the appropriate forum. Beyond that,

the court is not concerned with the merits of the case.

…

If [the applicant] was aware of matters which might reasonably have caused the judge to

have any doubt whether he should grant permission to serve out of the jurisdiction, those

would have been relevant matters and therefore ought to have been disclosed…

•

Appendix 9 of the Commercial Court Guide, paragraph 2(c) at page 117.

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THE NEED FOR EXCEPTIONAL CIRCUMSTANCES

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The weight of high court authority treats this test as applying in all cases of

alternative service under the Hague Convention, and not only in cases in which

the foreign country has objected to the method of service in question.

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If any change to the approach of the court to

applications for … alternative service is to be made in Hague Convention

cases, that is a matter for the Supreme Court, rather than this court

”.

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WHAT CONSTITUTES AN EXCEPTIONAL REASON?

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Service by alternative means may be justified by facts specific to the

defendant, as where there are grounds for believing that he has or will

seek to avoid personal service where that is the only method permitted by

the foreign law, or by facts relating to the proceedings, as where an

injunction has been obtained without notice, or where an urgent

application on notice for injunctive relief is required to be made after the

issue of proceedings.

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In reaching a conclusion as to whether or not alternative service should be

ordered, the court takes into account all the relevant circumstances.

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DELAY

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without more, constitute such “exceptional circumstances”. I say “without

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prejudice, or be of such exceptional length as to be incompatible with the

due administration of justice.

•

On the facts, 8 – 10 months was treated as insufficient.

Urgent injunctive relief obtained without notice

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Delay was such that it could be assumed that something had gone wrong

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claim form documents to the defendant’s business address using a local courier service.

Order granted under CPR r 6.15(2) that this was good service.

Delay in context of joinder to existing proceedings:

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(i)

that method of service is guaranteed to give adequate notice to the

defendant;

(ii)

the delay that would otherwise occur (approximately 8 months) would be

very substantial; and

(iii)

the claim forms part of a wider dispute which is already subject to English

arbitration. While the arbitration was a proposed rather than existing

arbitration, it was very closely related to seven arbitrations which had

already been commended and in which the English solicitors in question

were acting for the defendant.

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APPEALS

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