Commercial Court holds that claim should be heard in England because cross-examination unavailable in Saudi Arabia; refuses to allow $31 million interest claim to proceed

02/08/16

Burton J has handed down an important judgment on the proper approach to granting leave to serve a claim form outside the jurisdiction, as well as the common law test for identifying the forum conveniens in international disputes.              

The claim concerns an alleged agreement by the First Claimant (Sheikh Mohamed) to lend $30 million to the First and Second Defendants (Sheikhs Walid and Majid). The purpose of the alleged loan was to fund a new Arabic news service in London.

The Defendants argued that they had not been validly served in England, and that in any event the claim should be stayed in favour of the Saudi Arabian courts.

As regards Sheikh Majid (who was conceded not to be ordinarily resident in England) Burton J held that, based on the untested evidence before him, there was a sufficiently strong case that a loan agreement was entered into in London. He therefore granted permission for the claim form to be served on Sheikh Majid in Saudi Arabia.

However, he went on to hold that the Claimants had failed to establish a good arguable case that there was an implied term requiring interest to be paid on the loan. He therefore refused permission to serve a claim for such interest out of the jurisdiction, which knocked out more than half of the claim ($31 million).

As regards the most appropriate forum, Burton J found that the claim “did not have a clear ‘Saudi Arabian’ feel”. He went on to state that the exercise of identifying the most appropriate forum is “inevitably a comparative one”, and that oral evidence and cross-examination was not normally available under Saudi Arabian procedure. He found that oral evidence “would be absolutely crucial” in this case and he did not see how the issues could be resolved “other than by lengthy and careful oral examination and testing by experienced counsel”. He therefore held that the more appropriate forum was England.

The judgment raises the very interesting issue of whether the fact that cross-examination is available in England, but not in another jurisdiction, is a legitimate (or indeed decisive) ground for finding that an English court is a more appropriate forum than a foreign court.

The judgment appears here.