Jul 2023
The Revised Eastern Caribbean Supreme Court Civil Procedure Rules (the “Revised CPR”) come into force on 31 July 2023, and with them a significant change to the rules which govern service of proceedings on foreign defendants outside the British Virgin Islands and other ECSC Member States’ jurisdictions (“Service Out”). In this article, Associate Charles Goldblatt summarises the amendments to the Service Out provisions and the effect on pursuing claims against foreign parties.
Introduction
Applications for permission to serve out, as well as applications to set aside permissions granted, are likely to be amongst the most frequent applications made in offshore jurisdictions such as the BVI. By its nature, offshore litigation will more often than not include a foreign element which will necessitate the involvement of a foreign party.
Until now, such applications were permitted (and indeed, generally required) to be made ex parte (without notice to the prospective foreign defendant). Whilst not always straightforward to prepare, one could assume that the success rate of such applications is extremely high. It is unsurprising, therefore, that the ECSC has seen an opportunity to lessen the burden on its busy courts by effectively removing the need for an application to be made for Service Out of the jurisdiction in the vast majority of cases.
Under the Revised CPR, a more widely defined BVI court process can now be served out of the jurisdiction without the permission of the Court in accordance with the new provisions of Part 7.
Meaning of “Court Process”
Under the former CPR, there was considerable uncertainty as to what comprised “court process” for the purposes of Service Out. The term was not defined and appeared to be limited to claim forms, statements of claim and affidavits in support of fixed date claims. That limitation (and, it is hoped, any uncertainty as to what can be served under Part 7) has been addressed by an expanded definition in new CPR 7.1, which includes application notices and orders for interim relief granted before a claim has been commenced.
Permission
Three conditions must be satisfied for a claimant to proceed with Service Out without the Court’s permission:
- First, one of the jurisdictional gateways in new CPR 7.3 must apply;
- Second, service must be effected in compliance with CPR 7.9 (mode of service) or pursuant to CPR 7.17, which applies to documents other than court process; and
- Third, the claimant and their legal practitioner must certify that the claim or court process is appropriate to be served without the Court’s permission. The certificate must state, inter alia, that the claimant has a “good arguable case”, which is a proper one for the Court’s jurisdiction.
Permission is still required for cases which do not meet the above criteria, as well as claims which are required to be served by alternative means (alternative service) under new CPR 7.10, and the Court’s discretion to make such an order is now wider. Whilst previously, “normal” service would have to be “impracticable”, the new condition is that “normal” service “cannot reasonably be effected”.
Applications for permission can also be made where a claimant or their legal practitioner may not be entirely comfortable certifying the claim as appropriate for Service Out without the Court’s permission.
Gateways
A number of jurisdictional gateways have been added to the existing roster under new CPR 7.3 which will resolve any ambiguity remaining following a series of recent authorities, including Convoy Collateral Ltd v Broad Idea International Ltd and Cho Kwai Chee [2021] UKPC 24:
- A new insolvency gateway within CPR 7.3(7) to permit Service Out of claims relating to the insolvency of a BVI company;
- Claims for costs orders against a person who is not a party to extant BVI proceedings under CPR 7.3(11); and
- Claims for relief in support of foreign proceedings under CPR 7.3(12).
Challenging Jurisdiction
Unsurprisingly, a foreign defendant’s ability to challenge Service Out remains under the Revised CPR, both under new CPR 7.8 and CPR 9.7. The Court may, upon an application under new CPR 7.8, set aside Service Out if:
- The proceedings do not fall within one of the relevant gateways;
- The Claimant does not have a “good arguable case”; or
- The case is not a proper one for the Court’s jurisdiction.
Under the Revised CPR, there is a two-stage process to setting aside Service Out. First, the Court will determine whether the claimant failed to satisfy the conditions for Service Out described above. Only if the claimant did satisfy those conditions will the Court go on to determine if the defendant has demonstrated that the case is not a proper one for the Court’s jurisdiction.
Conclusion
The changes to the rules governing Service Out are considerable, indeed even seismic. In effect, they entirely reverse the burden of proof and the requirement to apply to the Court from the claimant firmly to the defendant. As such, they may be regarded as innovative, whilst others may describe them as exorbitant. Whereas it used to the be case that only the Court could extend its jurisdiction beyond its own shores, now virtually any BVI legal practitioner may do so, simply by signing a piece of paper. The purists amongst international private law scholars are likely to be severely critical of this liberalisation. There is certainly a risk of abuse, and the concept of requiring a foreign litigant to go to the trouble of bringing an application to establish that the BVI Court does not in fact have jurisdiction over him or her (or, if it does have jurisdiction, that it should not exercise it) disturbs many. Ultimately, however, the changes are designed to further streamline the process of commencing claims involving and against foreign defendants in the BVI. The amendments also resolve considerable uncertainty which had arisen as a result of a number of recent authorities on the subject.
Insolvency practitioners and lawyers will welcome the addition of an insolvency gateway which facilitates the commencement of claims by office holders against foreign directors and shareholders. The elimination of the need for ex parte applications for permission to Serve Out in the vast majority of cases will substantially reduce the burden of such applications and challenges, including on the basis of material non-disclosure, on the busy BVI Courts. It may also reduce delays and costs for claimants without sacrificing any protection for foreign defendants who may be advised to challenge the jurisdiction of the BVI Court.
The Conyers BVI litigation team will continue to provide updates on any judicial consideration of the new provisions.