International (Product) Liability Claims – Jurisdiction and Service

Over the last number of years there have been significant changes to international markets brought about by Brexit, changes in supply chains, geopolitical factors and more recently, tariffs (the full effects of which are yet to be seen). From a claims perspective this can present a number of practical challenges for insurers, corporates and their advisers, one of which is jurisdiction and service.

Introduction

Over the last number of years there have been significant changes to international markets brought about by Brexit, changes in supply chains, geopolitical factors and more recently, tariffs (the full effects of which are yet to be seen).

For those who deal with liability claims one of the consequences of these market changes is that many claims, and particularly those arising out of alleged product failures and defects, have a cross-border element to them – commonly in the form of the defendant being based outside the jurisdiction.

From a claims perspective this can present a number of practical challenges for insurers, corporates and their advisers, one of which is jurisdiction and service.

Jurisdiction and Service

Jurisdiction is fundamental to any claim and, as those who deal with international claims will know, failing to address jurisdiction early and/or ending up in the 'wrong' jurisdiction can be a significant early blow to a claim or defence. Conversely, identifying potential jurisdiction issues at an early stage can save time and money and can provide significant advantages as the matter progresses. 

At common law in England, it is a prerequisite to the English courts having jurisdiction that the claimant is able to validly serve the defendant with legal process. Where the defendant is within the jurisdiction, validly serving the Claim Form can be as simple as sending it to the defendant by post.

However, where the defendant is outside the jurisdiction (which is often the case in international product liability disputes) the situation is often less straightforward and in many instances the claimant will need to obtain the court’s permission to serve the defendant outside the jurisdiction (this includes, for example, defendants in the European Union). Subject to where and how the defendant is to be served, the claimant may also be required to obtain certified translations of documents for service (which can be a relatively resource intensive step).

Where the court’s permission to serve out is required, the claimant must satisfy the requirements of Civil Procedure Rule (“CPR”) 6.37, namely that:

1. the claim falls within one of the jurisdictional gateways set out at paragraph 3.1 of CPR Practice Direction 6B;
2. the claim has “reasonable prospects of success”; and
3. England is the proper place to bring the claim.

The requirements of CPR 6.37 are intended to act as a filter to ensure that claims which do not have a proper connection to England and Wales are not brought in the jurisdiction. That said, the gateways have been expanded in recent years such that it is now, at least in theory, easier to identify an applicable gateway for most claims.

Notwithstanding that, applications to serve out must still be made where required and proper disclosure and evidence (which can be substantial) must be provided to support arguments on the three issues mentioned above.

The vital importance of taking the appropriate steps and in the proper order is demonstrated by the court’s decision in Wheat v Alphabet Inc/Google LLC [2018] EWHC 550 (Ch) (“Wheat”). In Wheat, the claimant had apparently served proceedings on the defendant outside of the jurisdiction without having sought permission. The claimant attempted to rectify its mistake by applying for permission retrospectively, however, the court refused to ratify the steps the claimant had already taken.

Identifying an applicable gateway can be a straightforward task for a claimant. However, addressing the questions of whether the claim has reasonable prospects of success and whether England is the proper place to bring the claim (frequently referred to as forum (non)conveniens) is often less simplistic.

Those questions often involve substantial evidence and complex legal argument and therefore it is frequently these issues that a defendant who wishes, or may wish, to challenge jurisdiction will focus on.

In this regard it is essential to remember that whilst an application for permission to serve a defendant outside the jurisdiction is a ‘without notice’ application, there is a duty of full and frank disclosure. In view of the court’s decision in MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2003] EWHC 3418 (Comm), the duty may not extend to require the claimant to provide disclosure of possible defences that the proposed defendant might raise. However, the duty of full and frank disclosure does require the claimant to disclose all material facts, including matters which the court might reasonably take into account when deciding an application. Any failure to comply with the duty of full and frank disclosure will leave a claimant exposed to an application set aside any order giving permission.

Once the court has disposed of an application for permission to serve a defendant outside the jurisdiction, it is important to remember that CPR 23.9 states that the applicant must (unless the court orders otherwise), serve a copy of the application, including any evidence filed in support of it, on the party against whom an order was sought. The applicant in Crafts Group LLC v M/S Indeutsch International [2021] EWHC 3505 (IPEC) failed take that step and whilst the claim was allowed to continue on that occasion it is understandable why a defendant who is not served with a copy of the application and supporting evidence might feel aggrieved. If a failure to comply with CPR 23.9 forms part of a wider picture of shortcomings on the applicant’s part, it is possible that the court may reach a different decision.

Finally, as to the practicalities of effecting service of the Claim Form, it is important to remember that where a Claim Form is to be served outside the jurisdiction it must actually be served on the defendant within six months from the date of issue (CPR 7.5(2)). In this regard the courts have shown that they will not readily provide extensions for service where a claimant has not taken all reasonable steps and acted promptly. It is important therefore for both sides to be aware of the time it may take the foreign process section and the respective designated central authorities in other jurisdictions to progress service.

Conclusion

Jurisdiction is often the first fundamental issue to be addressed in litigation and where it is becoming increasingly common for (product) liability claims to have a cross-border element, it is important for those who deal with those claims to address the issue at an early stage.

Whether approaching a claim from the perspective of an insurer seeking to exercise rights of subrogation or defending a claim relating to an alleged product failure/defect, time and costs can be saved and advantages obtained by identifying the relevant issues and the requisite practical steps at an early stage.

If you have any questions about jurisdiction and service or international product liability claims more generally, please contact Clyde & Co's Product Liability, Safety and Recall Team led by Partners, Peter Barnes and Charlotte Kelly