[2025] EWHC 2107 (Comm)

CPR r 6.11 provides for service of the claim form via a contractually agreed method. The Facility Agreement provides for a contractually agreed method of service: clause 40.2.1(a) provides that the First and Second Defendants (being an “Obligor” as defined) appointed Areval as agent for service of process in relation to any proceedings before the English courts in connection with any “Finance Document” (including the Facility Agreement). Clause 40.2.2 provided that if Areval was unable to act as an agent for the service of process for any reason, the Borrower was obliged to appoint another agent within five days, failing which the Claimant may appoint another agent for this purpose.

Areval was dissolved on 13th June 2023 (Mr Khatoun’s first witness statement, para. 106) and was therefore unable to act as agent for service of process as of this date. The Borrower was required to appoint a replacement agent within five days, but did not do so (Mr Khatoun’s first witness statement, para. 106). Therefore, pursuant to clause 40.2.2, on 29th July 2024, the Claimant appointed Law Debenture as agent (within the jurisdiction) for the service of process on the First and Second Defendants. As of this date, the Claimant was contractually entitled to serve the claim form on Law Debenture (within the jurisdiction) in its capacity as agent for the First and Second Defendants.

On 7th August 2024, the Claimant effected service of the claim form on the First and Second Defendants via Law Debenture.

The First and Second Defendants argue that it would be unfair and unreasonable for the Court to deem service on Law Debenture to have been effective because the First and Second Defendants did not know about the appointment until around 4th September 2024 of the replacement agent and did not consent to it. These points may be relevant to delay for the purposes of CPR rule 13.3(1), but they are irrelevant to the issue of valid service under CPR rule 13.2. The acknowledged purpose of contractual provisions appointing an agent for service, and setting a procedure for appointing a replacement, is to provide a “speedy and certain means of service”; and the Court will construe such clauses in line with that purpose and avoid a construction which allows the party to be served to deprive the clause of its intended benefit (Banco San Juan Internacional Inc v Petroleos de Venezuela SA [2020] EWHC 2145 (Comm), para. 11). Where service is effected in accordance with the contractually prescribed method, the First and Second Defendants are precluded from contending that good and sufficient service has not taken place (Bank of New York Mellon, London Branch v Essar Steel India Ltd [2018] EWHC 3177 (Ch), para. 16)). That is so, even if they did not know of, or consent to, the appointment (DVB Bank SE v Isim Amin Ltd [2014] EWHC 2156 (Comm), para. 5-6).

The Claimant was under no contractual obligation to inform the First and Second Defendants of the appointment of Law Debenture or to obtain their consent to that appointment. Indeed, pursuant to clause 40.2 of the Facility Agreement, the First and Second Defendants consented to the Claimant appointing an agent on their behalf in the circumstances stipulated in the Facility Agreement. The First and Second Defendants have not identified any breach of contract in relation to the appointment of Law Debenture. Even if the Claimant had been under an obligation to inform the First and Second Defendants (which is not accepted), that obligation was plainly satisfied by the emails and letters dated 31st July 2024 and 7th August 2024. It would not be unjust or unreasonable for an agent to be appointed in these circumstances. Further, the Claimant cannot have been required to ensure that the First and Second Defendants received notification, because clause 3.13 of the Facility Agreement provides for deemed receipt where notice is required. In any event, the First and Second Defendants’ evidence that they only became aware of Law Debenture’s appointment on around 4th September 2024 is unsatisfactory.

The First and Second Defendants argue that the Claimant cannot rely on CPR rule 6.11 (and therefore had to rely on CPR rules 6.12 and 6.33(2B)(b)) because the First and Second Defendants are not party to the Facility Agreement. This argument confuses the issue of service and that of the merits of the First and Second Defendants’ defence. To invalidate service on the ground that the First and Second Defendants are not a party to the Facility Agreement, the First and Second Defendants would need to prove they were not party to the agreement. It is not enough to show that there is a real prospect of success of proving this at trial. That is the test which applies to an application under CPR rule 13.3(1); it does not apply to an application under CPR rule 13.2. The First and Second Defendants have not established that they were not party to the Facility Agreement.

The First and Second Defendants argue that clause 40.2 of the Facility Agreement is unreasonable and unenforceable under the Consumer Rights Act 2015 or other associated legislation governing unfair contract terms. This is a last minute attempt to keep an application under CPR rule 13.2 alive. This further argument should be rejected, because the First and Second Defendants appear to be relying on section 62(1) of the Consumer Rights Act 2015 which provides that an unfair term of a consumer contract is not binding on the consumer and, by section 62(4), a term is unfair if “contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”. In making this assessment, the Court must take into account the nature of the subject matter of the contract, all the circumstances existing when the term was agreed, and the other terms of the contract (or a contract on which it depends) (section 62(5)). As explained in Chitty on Contracts (35th ed., 2025), at para. 41-310, “the starting point is the criterion of “significant imbalance”, but this is then qualified by the need to ensure the evaluation of all interests involved (under the requirement of good faith)”. Schedule 2 of the Consumer Rights Act 2015 provides a list of terms which may be regarded as unfair. Clause 40.2 is not an unfair term. It does not fall within the scope of any of the terms at Schedule 2. As the First and Second Defendants accept, clauses appointing agents for service are commonly enforced (Banco San Juan Internacional Inc v Petróleos de Venezuela SA [2020] EWHC 2145 (Comm); Bank of New York Mellon, London Branch v Essar Steel India Ltd [2018] EWHC 3177 (Ch), para. 16; DVB Bank SE v Isim Amin Ltd [2014] EWHC 2156 (Comm), para. 5-6). The Court has recognised that these are standard clauses, which provide a straightforward method of service and preclude a party from disputing valid service where service is effected pursuant to a method agreed by that party. Clause 40.2 of the Facility Agreement fulfils this function, as it appointed Areval as the First and Second Defendants’ agent for service and provides that if Areval is unable to perform that role, the Borrower or then the Claimant are to appoint a replacement. Without this provision, the Claimant would have had to serve the claim form on the First and Second Defendants out of the jurisdiction, which is a far less speedy and certain method of service. If clause 40.2 did not permit the appointment of a replacement agent, it would be useless in the event that Areval could not perform its role (as in fact happened). It is not unfair for clause 40.2 to set down a process which ensures that service can be effected in a straightforward manner within the jurisdiction even if the original agent is unable to perform its role and the Borrower refuses to appoint a replacement, and which ensures that the party to be served cannot frustrate that purpose. The issue of the First and Second Defendants’ awareness or lack of awareness of the appointment is a matter to be considered under CPR rule 13.3(1). Notably the First and Second Defendants do not say that they were unaware of Areval’s dissolution or the Borrower’s failure to appoint a replacement agent.

The Facility Agreement has substantially complied with the requirements of article 60H of the 2001 Order and CONC App, para. 1.4.6 and 1.4.7. There is no requirement that compliance should meet a stricter standard (Davis v Burton (1883) 11 QBD 537; Campbell v Tyrrell [2022] EWHC 423 (Ch); [2022] GCCR 20019; TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd [2021] EWCA Civ 688, [2021] Bus LR 1407, para. 39-40).

Even if the Facility Agreement and the personal guarantees therein are unenforceable pursuant to section 105(7) of the Consumer Credit Act 1974 and the Guarantee Regulations, the Claimant’s reliance on clause 40.2.1(a) of the Facility Agreement, and CPR rule 6.11, is not an act of enforcement (McGuffick v Royal Bank of Scotland [2009] EWHC 2386 (Comm); [2010] 1 All ER 634, para. 67-81). Furthermore, as with jurisdiction and arbitration agreements, clause 40.1 is severable from the remainder of the Facility Agreement and so if the loan agreement and the personal guarantees are unenforceable, that does not affect clause 40.1, given that its purpose is to facilitate the speedy resolution of disputes in the English Courts by ensuring that defendants (especially those resident out of the jurisdiction) cannot create delay and obstruction at the initial stage of service (DVB Bank SE v Isim Amin Ltd [2014] EWHC 2156 (Comm), para. 5; Banco San Juan Internacional Inc v Petroleos de Venezuela SA [2020] EWHC 2145 (Comm), para. 11; Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd [2018] EWHC 974 (Comm), para. 25-30).

In any event, the Claimant would be entitled to apply for and obtain an order to enforce the Facility Agreement pursuant to section 28A of the Financial Services and Markets Act 2000.