In a 1916 case decided in the House of Lords (John Russell and Company Ltd v. Cayzer Irvine and Company Ltd (John Russell)), the plaintiff sought damages after its goods were placed in the care of first one and then (without the plaintiff’s consent) another Scottish-domiciled shipping company, resulting in the goods being lost at the bottom of the ocean near Calcutta, when the ship carrying them was sunk by a German cruiser. The plaintiff sued both companies. The first Scottish defendant voluntarily consented to service of the claim on it and agreed to be sued in England, apparently thinking it convenient. The second defendant was less amenable and refused to submit to the English court’s jurisdiction.
Then, as now, permission to serve proceedings out of the jurisdiction (and bind a party to the English court’s jurisdiction) may be given if certain “gateways” can be opened. When John Russell was decided, under RSC O.11 r.1(g), the court could permit service out of the jurisdiction where:
“any person out of the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction.”
The House of Lords found for the second defendant, deciding that a volunteer was not party to “an action properly brought against some other person duly served within the jurisdiction” because they had not been served as permitted by law but by their own consent. It was an important consideration for the Law Lords that the volunteer’s actions could result in binding a third party who would otherwise not have been subject to its jurisdiction. This is referred to as the John Russell principle.
These days, subject to certain other constraints set out in CPR 6.36 and 6.37, the modern CPR may allow service out under “Gateway 3” of Practice Direction 6B where:
“A claim is made against a person (the defendant) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –
there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.”
(PD 6B paragraph 3.1(3), Gateway 3.)
The original defendant in such situations is referred to as the “anchor defendant“. In recent years, the extent to which the English court is willing to accept jurisdiction over foreign parties with a limited or tenuous connection in this way to the country has been tested by creative claimant lawyers. Often, they have sought to bring their client’s claims before the English courts by arguing that certain English-domiciled global conglomerates are tortiously liable for the wrongful actions of their foreign-domiciled, operating subsidiaries. If a claimant is able successfully to anchor the claim to the parent entity in the English court, they can then (if the other conditions in CPR 6.36 and 6.37 are met) seek to bring the foreign-domiciled operating subsidiary through Gateway 3 as a necessary and proper party to the claim against its parent (see, for example, Okpabi v Royal Dutch Shell and Vedanta Resources Plc v Lungowe).
In ID v LU and another, the claimant sought to bring a claim in England against two Ukrainian nationals, neither of whom were resident nor had assets in the UK. The first defendant voluntarily submitted to the jurisdiction following service of the claim form. Counsel for the second defendant asserted that the first defendant had acted in collusion with the claimant in so doing.
Permission to serve out was given at first instance under Gateway 3. The second defendant appealed, arguing that the John Russell principle still prohibited the use of the gateway in such circumstances, and that there was no functional difference between “…a person (‘the defendant’) on whom the claim form has been or will be served” (the language used in PD 6B) and “… properly brought against some other person duly served within the jurisdiction” (the old RSC language).
Judge Pelling QC analysed the language of the CPR and determined that there was no substantive change; the John Russell principle is still good law. He also noted (with some disfavour at paragraph 38) that in The Benarty (No 1), the Court of Appeal had confined the application of the John Russell principle to circumstances “where at the time when the writ was issued there was no one on whom the Writ could be served and only at a later stage did one of the defendants accept service in the jurisdiction” and that he remained bound by this decision, although the rationale for this narrowing of the John Russell principle was, in his view, less than obvious (paragraph 38, judgment).
This case serves as useful confirmation that the English courts will not accept a foreign defendant who has voluntarily submitted to the jurisdiction as an anchor defendant for the purposes of Gateway 3.
Judge Pelling QC’s comments on the appropriate context for the construction of Gateway 3 are instructive in the context of the run of cases on jurisdiction in recent years. A restrictive approach was said to be necessary because “the anomalous and potentially exorbitant jurisdiction conferred by Gateway 3” is capable of “operating unfairly” against the interests of defendants with no other connection to the jurisdiction. He also noted that, even if he erred as to the ongoing application of John Russell, he would in any case have regarded “the fact that the only basis on which the Court could obtain jurisdiction is by the voluntary submission of another defendant as a powerful reason why permission to serve out should be set aside on forum conveniens grounds” under CPR 6.37(3).
