Service of English proceedings outside the jurisdiction: Interesting developments (and a useful reminder as well)

Claimants seeking to serve English proceedings on defendants outside the jurisdiction often face an uphill battle. There are limited circumstances in which English proceedings may be served outside the jurisdiction without the permission of the Court, and applications for permission to serve out of the jurisdiction require compliance with the rules on applications without notice, including the requirement to give full and frank disclosure.
 
However, there are avenues which a claimant may be able to avail itself to serve proceedings on a foreign-domiciled or resident defendant quickly and at minimal expense. We examine a few such avenues below, including some recent developments which should make it easier for proceedings to be served out of the jurisdiction and could reflect a shifting approach by the English courts to make service out of the jurisdiction less cumbersome.
 
Service via the blockchain
 
In June 2022, the High Court in D'Aloia v Persons Unknown & Ors[1] permitted a claimant to serve proceedings for the first time via a non-fungible token (NFT) on the blockchain. This followed the misappropriation of the claimant's cryptocurrency by persons unknown operating a sham online brokerage platform. Believing the platform to be genuine, the claimant transferred approximately £2 million worth of cryptocurrency into two digital wallets held by persons unknown.
 
The Court concluded that the causes of action advanced by the claimant gave rise to serious issues to be tried. Following earlier authority,[2] the Court held that England was the most appropriate jurisdiction to hear the matter noting that the lex situs of a crypto asset is the place where the person who owns it is domiciled (in this case England). The Court also agreed that certain "gateways" contained in Practice Direction 6B applied so as to warrant permission being granted for service out.
 
The Court therefore permitted service to be effected by way of an "airdrop" of an NFT into the digital wallets of the persons unknown into which the claimant's assets were first transferred. This is the first occasion on which an English court has permitted service of proceedings in this way, although it has previously been permitted in the US. Whilst this may be more palatable to a Court in a case involving crypto assets, it illustrates the English Courts' increased willingness to adapt the existing law to achieve practical solutions for claimants facing service out issues. In other cases this has included service by WhatsApp, Facebook and Twitter.
 
It should be noted that the Court in D'Aloia also ordered service by email, and the Court indicated that it would have been unwilling to order service by NFT alone. However, it remains to be seen whether this will be permitted in future where no email address is available.
 
Recent updates to the Civil Procedure Rules
 
The circumstances in which English proceedings may be served outside the jurisdiction without permission are set out in Part 6 of the Civil Procedure Rules (CPR). Where permission is required this is governed by CPR 6.36 and Practice Direction 6B paragraph 3.1, which lists the specific type of claims (or "gateways" as they are commonly known) for which permission may be given.
 
However, in April 2021 CPR Part 6 was amended to introduce a new rule permitting the service of a claim form outside the jurisdiction without requiring the court's permission where the contract between the parties contains an English jurisdiction clause. This considerably extends the circumstances in which parties can serve English court proceedings out of the jurisdiction without permission.
 
More recently, in a move that will undoubtedly be welcomed by contentious trust lawyers in particular, Practice Direction 6B has been amended to expand the existing gateways to incorporate several additional claims relating to trusts linked to England and Wales and also certain other claims relating to breach of fiduciary duty, breach of contract, contempt applications and third-party information orders. These changes take effect from 1 October 2022.
 
Section 1140 Companies Act 2006
 
Section 1140 prescribes the way in which documents can be served on directors, secretaries, and others. Specifically, it provides that "a document may be served on a person to whom this section applies by leaving it at, or sending it by post to, the person's registered address."
 
Importantly, it also provides that "[t]his section applies whatever the purpose of the document in question. It is not restricted to service for purposes arising out of or in connection with the appointment or position mentioned in subsection (2) or in connection with the company concerned."
 
This is a key provision for those seeking a way to serve English court proceedings out of the jurisdiction. The High Court in Brouwer v Anstey[3]held that this section permitted service of all documents (including claim forms) relating to proceedings against that individual at the address they have registered at Companies House. In support of that decision, the Court relied on the earlier decision of Key Homes Bradford v Patel[4]where it was held that s.1140 was not restricted to service of documents concerning the directorship or the company, nor to those directors resident in England.[5]
 
This has been followed in subsequent cases[6] including where the High Court held that a defendant, resident and domiciled in Bangladesh, was validly served pursuant to s.1140 at the registered address of a UK company of which he was a director, even though he was not present, domiciled or resident in England.
 
It is worth noting that these are all first instance decisions and the Court of Appeal is yet to determine the scope of the section. However, in the meantime, these recent cases serve as a useful reminder that claimants should be sure to check whether a potential defendant has an address registered at Companies House.
 
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Simon Jerrum is a Partner in the fraud and insolvency team at HFW. Simon specialises in commercial and insolvency litigation, often involving allegations of fraud or wrongdoing. He has particular expertise in complex contentious insolvency matters, often involving concurrent proceedings in a number of jurisdictions and the recovery of assets based overseas. He has substantial experience of disputes before the English courts, in addition to litigation and arbitration in key venues around the world.
 
Tom Serafin is an Associate in the fraud and insolvency team at HFW. He has a particular focus on matters involving fraud and misconduct, and has a keen interest in the tracing and recovery of crypto assets.