Jurisdictional Gateway and Standard of Proof for Contract Claims

05/04/11

Global 5000 Ltd. v. Wadhawan [2011] EWHC 853 (Comm)

On 5 April 2011 Mr. Justice Beatson, sitting in the Commercial Court, gave judgment on a jurisdiction challenge which dealt with interesting questions as to the meaning of the jurisdictional gateways contained in CPR Part 6 concerning claims made in respect of contracts and the standard of proof applicable to alleged contracts.

The claimant, Global 5000 Ltd. ("Global"), is a Jersey company and the defendant, Mr. Wadhawan, is an Indian citizen and resident. Global's claim is for damages pursuant to a contract of guarantee between Global and Mr. Wadhawan ("the guarantee") whereby Mr. Wadhawan would see to it that Privilege Airways PVT Ltd. complied with its obligations to pay for a Bombardier corporate jet aircraft under an agreement with Global ("the purchase agreement").

The main ground of Mr. Wadhawan's challenge to the jurisdiction of the English Court was that Global was unable to satisfy the relevant jurisdictional gateway in CPR Part 6 (the claim was made "in respect of a contract governed by English law") because Global did not have a good arguable case as to the existence of the contract of guarantee. Mr. Wadhawan also contended that England was not the appropriate forum and Global was guilty of material non-disclosure when it sought permission to serve the claim form out of the jurisdiction.

Global submitted that: (1) on its true construction, the jurisdictional gateway was satisfied because the claim was made in respect of the purchase agreement between Global and Privilege which was expressly governed by English law; (2) the standard of proof applicable to the existence of the guarantee was whether there was a real prospect of success; and (3) there was a real prospect of establishing the existence of the guarantee at trial.

The Court held that Global could not satisfy the jurisdictional gateway by relying on the purchase agreement and it had to rely on the guarantee for this purpose, the standard of proof applicable to the existence of the guarantee was whether Global had a good arguable case, and Global did not have such a good arguable case. As a result, the Court set aside Global's permission to serve the claim form out of the jurisdiction on Mr. Wadhawan.  The Court rejected all of the other grounds of Mr. Wadhawan's jurisdiction challenge.

However, Beatson J granted Global permission to appeal.  The appeal raises important questions as to the meaning of the jurisdictional gateways contained in CPR Part 6 PD 3.1(6) concerning claims made in respect of contracts and the standard of proof applicable to alleged contracts.

The judgment is here.