Irrevocable appointment of agent for service within a jurisdiction: a standard clause that may make a big difference
In an ideal world, where parties agree that the English courts will have jurisdiction to hear any disputes arising out of a contract, that agreement should also contain a clause providing for service of proceedings on a designated agent in England where any party does not have a registered address located in England. Pursuant to Civil Procedure Rule 6.11 (Service of the claim form by a contractually agreed method), service can then be effected on that designated agent without having to serve proceedings out of the jurisdiction - which can incur significant delays.
Two recent cases illustrate how useful a "process agent" provision can be.
Piraeus Bank v Grand Anemi Limited (and others) [2018] EWHC 974 (Comm)
The claim concerned a breach of a loan agreement (and related indemnities) between, among others, Piraeus Bank (B) and Grand Anemi (G) under which over €80m was due. The agreement contained a provision irrevocably appointing a London service agent to act as G's agent to receive and accept any documents in relation to English proceedings. Accordingly B served proceedings on G's London agent. However, the agent then resigned two weeks later.
The Court held that the service was valid despite the agent's resignation, as the appointment of the agent was irrevocable.
This case highlights the importance of ensuring that any appointment is expressly stated to be "irrevocable". The reason being that, in cases where the agent has resigned or the relevant defendant has withdrawn the agent's authority, service may still be effected upon that agent unless the parties expressly agree that service can be effected via a different means.
Punjab National Bank (International) Limited v Boris Shipping Limited (and others) [2019] EWHC 1280 (QB)
The claim concerned a breach of an overdraft facilities agreement between Punjab National Bank (B) and two offshore companies and their guarantors (each based in India) (collectively D). The guarantees contained an irrevocable appointment of an agent for service for process within the jurisdiction.
B chose not to effect service on the agent within the jurisdiction but instead decided to effect service on all Ds via the Hague Convention. Approximately a year later, service had still not been effected on all Ds. B sought summary judgment against the Ds. However, given the delay in serving proceedings via the Hague Convention, B obtained an order for service via an alternative means under CPR 6.15 (Service of the claim form by an alternative method or at an alternative place).
At the summary judgment hearing the Court found that the order for alternative service should not have been made where a contracting state has indicated that it is opposed to service otherwise than through a designated authority (i.e. it objects to service by post or other approved means). It will only be in exceptional circumstances that the English Courts override this. It was concluded that there were no such exceptional circumstances in this case and therefore the order for summary judgment was not granted.
This case highlights that including an irrevocable appointment of an agent for service for process within a jurisdiction can avoid having to rely on the somewhat lengthy and potentially expensive service of process under the Hague Convention. In this case, B had such a clause in the guarantees but chose not to use this method. B could have avoided these complications if it had relied on the irrevocable appointment.
Sometimes process agent clauses of the kind discussed above can be of real benefit to lenders, particularly when documenting loans and other finance contracts which adopt English law and jurisdiction provisions but where the borrower or guarantor is located overseas. Such clauses should provide for the appointment to be irrevocable, to avoid problems should the agent subsequently resign. As the Punjab National Bank case demonstrates, lenders should consider taking advantage of such agents if problems emerge.
Matthew Padian, Laura Barrett
Matthew Padian
Managing Associate
Laura Barrett
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