[2025] EWHC 2107 (Comm)

Was notification of the appointment of Law Debenture sufficient?

Clause 40.1 provides that the disputes between the parties will be submitted to the exclusive jurisdiction of the English Court.

Clause 40.2 then provides that each Obligor (other than an English company) appoints (irrevocably) Areval as its agent for service of process in respect of proceedings before the English Court (which has consensually been endowed with exclusive jurisdiction) and agrees that any failure by Areval to notify the Borrower of the service of process will not invalidate such proceedings.

Pausing there, it will therefore be noted that the term “Obligor” in the Facility Agreement embraces both the Borrower and each guarantor, including the First and Second Defendants. Accordingly, the First and Second Defendants have appointed Areval irrevocably as their service of process agent. Moreover, there is a provision that the Obligors agree that the failure of Areval to inform the Borrower of the service of process cannot be relied on as a reason to undermine the process served. No reference is made to the failure of the service of process agent to notify the Obligors who are not the Borrower, such as the First and Second Defendant. However, this is because the Borrower is appointed as the Obligors’ Agent pursuant to clause 3 of the Facility Agreement. Further, there is no provision that requires process to be effectively served only if the service of process agent informs the First and Second Defendants of such service.

The commercial purpose of such provisions was described by Popplewell J in Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd [2018] EWHC 974 (Comm), para. 25-29, as follows:

“25.

It is convenient to start in this case with the commercial purpose of section 22.2(b). Provisions for the irrevocable appointment of English agents for service are common in international agreements providing for English jurisdiction. Their purpose is to provide a clear and certain method by which proceedings in England can be progressed, and to avoid: (i) the delay which may be involved in formal methods of service abroad; (ii) disputes about permissible methods of service; (iii) disputes about whether service has occurred in accordance with permissible methods of service; and (iv) the possibility of a defendant seeking to use service as an issue to delay or frustrate the efficient and effective pursuit of the claim in the agreed jurisdiction …

27.

A service of suit clause often provides for the appointment of the service agent to be irrevocable. This is because the purpose of the clause would be frustrated if the party were able to revoke the agency the moment a dispute arose.

28.

In this context, irrevocable is used in a different sense from that which arises in the law of agency, as between agent and principal. An agent derives his authority from the principal, and save in very limited circumstances, such authority can always be revoked by the principal, even where, as between them, the authority is expressed to be irrevocable (see Bailey and another v Angove’s Pty Limited [2016] WLR 3179). However, the service agent is not usually party to the agreement which contains a service of suit clause. The concept of irrevocability, when used in such a clause, is intended to connote irrevocability as between the principal and his contractual counterparty. It is not intended to connote irrevocability as between the principal and his agent.

29.

If the service of suit clause is to serve its purpose, it must not be capable of being frustrated by the simple expedient of terminating the service agent’s actual authority. It operates as an agreement that whatever the position vis-à-vis the service agent itself, the agreement between the two counterparties is that service on that person shall be effective service, and that agreement cannot be revoked or withdrawn unilaterally.”

The important provision in the Facility Agreement is clause 40.2.2, which provides that:

“If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrower must immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Lender. Failing this, the Lender may appoint another agent for this purpose.”

Clause 40.2.2 therefore provides for a mechanism whereby the irrevocably appointed service of process agent who can no longer act as such is to be replaced by an agent appointed by the Borrower within five days, and failing such appointment, by the appointment made by the Claimant as the Lender. If such an appointment is made by the Borrower, the Borrower is acting on behalf of the guarantors pursuant to clause 3 of the Facility Agreement. It follows that if the Borrower fails to make the appointment, and the Claimant steps forward and makes the appointment, the appointment is effectively made on behalf of the Obligors.

There is no provision which requires the service of process agent, whether the originally appointed agent (Areval) or the replacement agent, or the Borrower or the Claimant to notify the guarantors (including the First and Second Defendants) of any service of process. Such service will be effective if the relevant proceedings are served on the originally appointed agent (Areval) and thereafter any replacement agent (in this case, Law Debenture) (Bank of New York Mellon, London Branch v Essar Steel India Ltd [2018] EWHC 3177 (Ch), para. 16).

Nor is there any provision - at least no express provision - which requires the appointment of a replacement service of process agent to be notified to the First and Second Defendants. It seems to me that if there is such an appointment, there should be notification of that appointment to the Borrower, because a principal should be made aware of who its appointed agent is and because the Claimant’s power to appoint arises only if the Borrower fails to make such an appointment. However, I do not consider that there is any requirement to extend such notification to the First and Second Defendants, given that the Borrower is the Obligors’ Agent and by clauses 3.1.1(b) and 3.1.2 any notification given by the Claimant to the Borrower is treated as notification to the First and Second Defendants themselves.

In this case, notification of the appointment of Law Debenture was provided to the Borrower and the First and Second Defendants. Although the First and Second Defendants have questioned the adequacy of notice provided to them, no question has been raised as to the adequacy of notice provided to the Borrower.

In these circumstances, based on the evidence currently available to me, I find that the Claimant has discharged the burden of proof based on the balance of probabilities on this ground. Accordingly, the First and Second Defendants are not entitled to succeed in their application under CPR rule 13.2 on this ground.