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JCT & service of Proceedings abroad

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JCT Construction Contracts: JCT Serving Proceedings Abroad

If the Employer of a construction contract is based overseas you may wonder how you serve court proceedings overseas. Is the issue of   JCT serving proceedings abroad addressed? 

Occasionally,  the employer in construction contracts has its registered address outside of the jurisdiction of the United Kingdom.  This occurs for a number of legitimate reasons. But consider the issue how you effect  service of claim form overseas

Some years ago, we acted for a mechanical and electrical contractor where the employer was based in the Cayman Islands. The contract was an unamended JCT form of contract.

More recently, we have acted for: (i) an interior office refurbishment contractor who entered into contract with the American parent company of a UK subsidiary. (ii) a main contractor, where the employer was based in the Channel Islands. (iii) a specialist interiors contractor, where the ultimate owner of the premises being refurbished was based in the Middle East. All of these contracts were under the JCT Design and Build 2016 Contract (with no amendments).

The standard forms of JCT (unamended) do not address the issue of JCT  serving proceedings abroad

The unamended service, dispute and law provisions of the JCT may look something like:

Applicable law

This Contract shall be governed by and construed in accordance with the law of England.

Article 9: Legal proceedings

Subject to Article 7 and (where it applies) to Article 8, the English courts shall have jurisdiction over any dispute or difference between the Parties which arises out of or in connection with this Contract.

1.7 Notices

.1 Any notice or other communication between the Employer (or Employer’s Agent) and the Contractor that is expressly referred to in the Agreement or these Conditions (including, without limitation, each application, approval, consent, confirmation, counter-notice, decision, instruction or other notification) shaft be in writing.

.2 Subject to clause 1. 7.4, each such notice or other communication and any documents to be supplied may or (where so required) shall be sent or transmitted by the means (electronic or otherwise) and in such format as the Parties have agreed or may from time to time agree in writing for the purposes of this Contract.

.3 Subject to clauses 1.7 2 and 1.7.4, any notice. communication or document may be given or served by any effective means and shall be duly given or served if delivered by hand or sent by pre-paid post to:

.1 the recipient’s address stated in the Contract Particulars, or to such other address as the recipient may from time to time notify to the sender;

 or

.2 if no such address is then current, the recipient’s last known principal  business address or (where a body corporate) its registered or principal office

.4 Any notice expressly required by this Contract to be given in accordance with this clause 1. 7.4 shall be delivered by hand or sent by Recorded Signed for or Special Delivery post. Where sent by post in that manner, ii shall, subject to proof to the contrary, be deemed to have been received on the second Business Day after the date of posting.

.5 If in an emergency any communication is made orally with respect to health and safety, risk of damage to property or insurance matters, written confirmation of it shall be sent as soon thereafter as is reasonably practicable.

Where a dispute arises between a UK contractor and an overseas employer, then proceeding with an adjudication causes no particular problems. The Contract, and indeed case law, allow for a fairly large discretion in terms of how, and where, to serve adjudication papers. I  serve construction adjudication papers preferably by fax and post, and also by e-mail. Invariably, the adjudication proceeds in the same way when the client is based in the UK. The contract is based on English law and the adjudicator will apply English law. The proceedings will be conducted in English. Although the JCT contract does not provide for English, it is clearly implied that the language will be English even where the client’s native language is not.

The fact that the client is based overseas has never caused me a significant problem in adjudication.

What, however, of court proceedings? That is when things can start to get messy. JCT serving proceedings abroad is something to be considered. 

JCT Serving proceedings Abroad 

The JCT contract arguably makes no provision for how court proceedings should be served out of jurisdiction. JCT serving proceedings abroad is not addressed.  This means it is necessary to consider complex service treaties, and indeed possibly take advice on the law of a foreign jurisdiction.

You cannot simply put court papers in the post and hope for the best. Inevitably, service will not have been effected. If the foreign employer does not respond to the court papers, you are not entitled to  request a default judgment (as you would with an English employer). If somehow you do manage to secure a default court judgment, there is a considerable risk that it will be invalid and set aside (at your cost).

Such complex issues can generally be overcome by inserting an amendment into the contract, stipulating that service of legal proceedings is to an English address. If this is not acceptable to the employer, try to provide an amendment which stipulates exactly how service is to be effected, so that service of potential legal proceedings is defined by contract, rather than a treaty or foreign law.

Not inserting such a simple amendment can, and in my experience does, present significant issues. For example, take the contract I refer to above, where my M & E contractor entered into a contract in the Cayman Islands. I have no idea what the law of the Cayman Islands says!

I should say at this point that although JCT does provide a clause stating that the English courts have jurisdiction, it does not say exclusive jurisdiction.

I have experienced some overseas jurisdictions, where courts have decided that they have jurisdiction to act, even if there were exclusive jurisdiction clauses. It is necessary to take all possible steps to ensure that any such proceedings will be conducted in England.

Language and Location

Naturally, when issuing proceedings overseas through the complex channels of international treaties, it is necessary to prepare a translation of legal papers into the language of the country where the client is domiciled. This is not only frustrating, when you know that the client conducts itself in English, but also expensive.

If there is a clause in the contract that says communications between the parties, including legal proceedings, are to be in English, then what happens? Will this overcome the need to translate court papers? Frankly it depends on so much.

But if the contract had provided for proceedings to be in England, in English, and if there were contractually agreed methods to serve, (as opposed to going through formal treaty modes of service), then I suggest it may be possible to overcome an expensive need to secure translations.

The intent is to ensure, if there is a need to conduct court proceedings, including adjudication enforcement proceedings, that the English courts have exclusive jurisdiction. Unamended JCT contracts make this very difficult.

Can you enforce?

Of course, even if you secure a judgment against a foreign entity, that entity may not satisfy the judgment. It is then necessary to proceed to enforcement, which brings its own challenges.

There are jurisdictions that will not recognise an English judgment. Even if recognition is resolved, some jurisdictions will not enforce an English judgment if the Defendant did not attend the hearing in which the judgment was granted. I am thinking particularly about Dubai. In such circumstances, a Defendant can deliberately choose to not particulate in English court proceedings, knowing that any attempt to enforce a judgment may fail.

Conclusion

If you are a building contractor, and your client is based overseas, proceed with caution. Even where the contract is an unamended JCT Contract, it would be prudent to take advice from a solicitor with wide experience of the construction industry. MJD Solicitors can suggest special steps to ensure you can recover, where the client is not a signatory to one of the main conventions on service and enforcement.

I have experience of negotiating and drafting contracts to overcome the difficulties that I have identified. I also have experience of conducting disputes with foreign domiciled companies. Because of my extensive experience in both dispute work and contract drafting, (which only a small number of construction lawyers can boast of), I am confident that should assistance be required, MJD Solicitors have the experience to help.

Matthew Dillon

MJD Solicitors

19.07.23

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