The Public Institution for Social Security v Khaled Al Rajaan & Ors

This is an appeal by the 42nd to 45th Defendants (“the Al Rajaan Children”) from an order made by Jacobs J on 16 December 2024 dismissing their challenge to the jurisdiction of the courts of England and Wales in respect of a claim by the Claimant (“PIFSS”) for the reasons he gave in a judgment of the same date [2024] EWHC 3321 (Comm). The judge granted the Al Rajaan Children permission to appeal.

The Al Rajaan Children are the children of the late Fahad Al Rajaan, who was the First Defendant until his death on 6 September 2022. Together with their mother, Muna Al Rajaan Al Wazzan, the Al Rajaan Children are Mr Al Rajaan’s heirs. Ms Al Wazzan was the Second Defendant at the time of her husband’s death.

PIFSS alleges that corrupt schemes were orchestrated by Mr Al Rajaan, who was its Director General from 1984 to 2014, with the assistance of other defendants. It is PIFSS’s case that Mr Al Rajaan abused his position at PIFSS to secure payment of secret commissions to himself and third parties who assisted him. Mr Al Rajaan submitted to the jurisdiction and defended the claim until his death. The claim is a very substantial one, and Jacobs J is presently engaged in hearing a lengthy trial of it.

PIFSS accepts for the purpose of this application that the Al Rajaan Children are all resident outside the jurisdiction, and therefore (subject to the qualification explained in paragraph 6 below) it needs the permission of the court to serve the claim form on them out of the jurisdiction. For that purpose PIFSS must establish a “good arguable case” that its claim falls within one of the gateways in paragraph 3.1 of CPR Practice Direction 6B. PIFSS does not allege that any of the Al Rajaan Children participated in the alleged corrupt schemes, or provided any assistance for them. It seeks to join them purely because they are their father’s heirs and with a view to enforcement of any judgment it obtains against Mr Al Rajaan’s estate. The basis on which it does so is that they are each “a necessary or proper party to the claim” within Gateway 3.

The Al Rajaan Children’s application and appeal were argued on the assumption that Mr Al Rajaan was domiciled in Switzerland at the time of his death, as is Ms Al Wazzan’s case. While Mr Al Rajaan had some assets in England, he had more assets in Switzerland. If PIFSS’s claim against Mr Al Rajaan’s estate succeeds, it is clear that the assets in England will be wholly insufficient to satisfy the judgment debt, and therefore PIFSS anticipates that it will need to try to enforce the judgment against assets in Switzerland.

It is common ground that the 44th Defendant Fajer Al Rajaan was a director of two English companies and gave the address of the companies’ accountants in London as her address for service. PIFSS served the claim form on her at that address. Accordingly, PIFSS contends, if necessary, that it validly served Fajer Al Rajaan within the jurisdiction pursuant to section 1140 of the Companies Act 2006.

On 14 November 2022 the judge made an order appointing Ms Al Wazzan to represent Mr Al Rajaan’s English estate pursuant to what is now CPR rule 19.12(1)(b).

On 26 March 2023 Henshaw J made an order appointing Ms Al Wazzan as administrator of Mr Al Rajaan’s English estate pursuant to limited grants ad litem and ad colligenda bona. Since then, Ms Al Wazzan has been the personal representative of Mr Al Rajaan’s English estate under those limited grants.

On 25 April 2024 the judge granted PIFSS permission to amend its claim form and Particulars of Claim to join the Al Rajaan Children as defendants (and Ms Al Wazzan in her capacity as an heir) pursuant to rule 19.2(4) alternatively 19.2(2)(b).

On 11-12 June 2024 PIFSS applied for and was granted permission to serve the claim form on the Al Rajaan Children out of the jurisdiction on a without notice application. On 23 July 2024 the Al Rajaan Children applied to challenge the jurisdiction of the courts of England and Wales and to set aside service of the claim form.

PIFSS relies upon unchallenged expert evidence of Swiss law given by Professor Dominique Jakob of the University of Zurich. The judge summarised Prof Jakob’s evidence at [12]-[22]. Summarising still further, Prof Jakob’s evidence establishes the following points.

First, Swiss law, like many civil law systems, has no concept of administration of the estate of a deceased person. Instead, it follows the principle of universal succession. At the moment the deceased passes away, the heirs automatically succeed him or her with regard to all his or her assets and liabilities. There is no succession of individual heirs to individual assets. Rather, the heirs as a group jointly assume the deceased’s legal position pertaining to assets and liabilities, and henceforth constitute a community of heirs. This process happens automatically, i.e. no official act or acceptance (or even knowledge) on the heirs’ part is necessary. It also happens regardless of whether the deceased’s assets exceed the liabilities or vice-versa. The heirs may agree upon a division of the assets. All heirs are jointly and severally liable for the debts. If the debts exceed the assets, or indeed for any other reason, the heirs may disclaim their inheritance within three months of notice of the death. That deadline may be extended for good reason.

Secondly, in order to enforce a judgment against estate assets in Switzerland, the judgment must be binding on all the individuals who own the estate. This is a result of the principle of joint ownership of the estate assets. The estate itself does not have legal personality and cannot, in principle, sue or be sued. If the defendant recorded in the judgment is “the estate”, such a judgment would, from the Swiss point of view, not be binding on the heirs. If the recorded defendant is one heir only, then such judgment may be enforced against that heir and their quota of the estate, but not the estate as a whole. If the judgment lists all heirs as defendants, then the judgment binds the entire community of heirs, and as a result the entirety of the estate assets can be used in its enforcement. The judgment can then (in some cases) be enforced against the estate or (in other cases) against the individual heirs.

Thirdly, under Swiss private international law, the domicile or habitual residence of the defendant at the time of filing the claim are decisive, not the circumstances at the time that judgment is rendered. Accordingly, the fact that heirs succeeding a deceased defendant in English proceedings may not have been domiciled in England when the court reached its decision would not prevent recognition and enforcement of the judgment in Switzerland so long as, from the perspective of Swiss law, the English court had jurisdiction over the deceased.

Fourthly, the principle of universal succession applies to procedural particularities, such as the rules relating to jurisdiction, that applied to the deceased. Therefore, if court proceedings have been initiated against the deceased before their death and the court had jurisdiction over the deceased, the court continues to have jurisdiction over the deceased’s heirs.

The applicable test for determining whether a person is a “necessary or proper party to the claim” is well established. It is set out in the judgment of Lord Collins of Mapesbury in Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Limited [2011] UKPC 7, [2012] 1 WLR 1804 at [87] as follows:

“... the question whether D2 is a proper party is answered by asking: ‘supposing both parties had been within the jurisdiction would they both have been proper parties to the action?’ … D2 will be a proper party if the claims against D1 and D2 involve one investigation … [or if they are] ‘closely bound up’ [or involve] ‘a common thread’…”

In paragraph 12A of its much-amended Particulars of Claim PIFSS pleads:

“In addition to PIFSS’ claim against the estate, PIFSS claims against Ms. Al Wazzan and the Forty-Second to Forty-Fifth Defendants, who are the late Mr. Al Rajaan’s and Ms. Al Wazzan’s children, namely Khaled Al Rajaan, Fawaz Al Rajaan, Fajer Al Rajaan (or Al Wazzan) and Farah Al Rajaan (“the Al Rajaan Heirs”) on the following basis:

a.

If the First Defendant’s case that Mr. Al Rajaan was domiciled in Switzerland when he died and/or that the administration of his estate is governed by Swiss law is correct, PIFSS is entitled to and claims against the Al Rajaan Heirs on the basis that they are the statutory heirs of Mr. Al Rajaan as defined in Articles 457 and 462 of the Swiss Civil Code and are jointly and severally liable as successors to the civil liability of Mr. Al Rajaan under Title Seventeen of the Swiss Civil Code, in particular (without limitation) Articles 560, 603 and 639.

b.

Further or alternatively, regardless of whether Mr. Al Rajaan was domiciled in Switzerland when he died (which is not admitted), PIFSS claims against the Al Rajaan Heirs to ensure that it obtains effective remedies in circumstances where:

a.

Swiss law applies to issues of succession in the case of any Swiss immovables owned by Mr. Al Rajaan at the time of his death and the Al Rajaan Heirs are joined to ensure that PIFSS obtains effective remedies against any such assets.

b.

If Mr. Al Rajaan was domiciled in England, a Swiss Court would apply English law to issues of succession in the case of any Swiss movables owned by Mr. Al Rajaan at the time of his death, and English law would on the First Defendant’s case follow Mr. Al Rajaan’s selection of Swiss law in his Will.

c.

Mr. Al Rajaan held assets in different jurisdictions (including Switzerland) at the time of his death and other jurisdictions may hold that some or all of those assets have become assets of the Al Rajaan Heirs (or some of them) and where an enforceable judgment against those assets in relation to Mr. Al Rajaan’s liabilities depends (or may depend) on judgment having been entered against the Al Rajaan Heirs.”

This pleading sets out two alternative bases for PIFSS’s contention that the Al Rajaan Children are proper parties to the claim. The first (referred to in the course of argument as “the Substantive Basis”) is that, as Mr Al Rajaan’s heirs under Swiss law, they are jointly and severally liable for torts committed by Mr Al Rajaan as successors to the liability of Mr Al Rajaan. The second (referred to in the course of argument as “the Enforcement Basis”) is that, in order to enable PIFSS to enforce any judgment that it obtains against Mr Al Rajaan’s estate against Swiss assets to which the Al Rajaan Children have succeeded, they should be bound by the judgment.

The difference between the Substantive Basis and the Enforcement Basis is that the Substantive Basis would lead to substantive relief being granted against the Al Rajaan Children, whereas the Enforcement Basis would not. As Nugee LJ pointed out in the course of argument, the Enforcement Basis can be regarded as a claim for purely declaratory relief against the Al Rajaan Children, namely a declaration as to the liability of Mr Al Rajaan. The purpose of that claim is to obtain a binding determination as between PIFSS and the Al Rajaan Children of Mr Al Rajaan’s liability. It is not to obtain a determination by the English court of any liability of the Al Rajaan Children to satisfy a judgment against Mr Al Rajaan’s estate.

The judge considered that the Substantive Basis was “by no means straightforward”, but held that PIFSS had a good arguable case that the Al Rajaan Children were necessary or proper parties on the Enforcement Basis. His reasoning can be seen from the following passage in his judgment:

“49.

…. there is an issue, as between PIFSS and the heirs, as to whether there is in fact a liability on the part of the estate to PIFSS; i.e. the very issue that is to be determined in the forthcoming trial. It is also clear that the heirs have not given any indication, let alone any undertaking, that in the context of enforcement proceedings in Switzerland …, they would not take the point that the issue of liability had yet to be determined as against them.

50.

In the light of Professor Jakob’s evidence, it cannot now be assumed that the heirs will be able successfully to disclaim their inheritance. Accordingly, and bearing in mind that the estate’s English assets will be insufficient to meet a substantial judgment, it is reasonably possible that there will indeed be enforcement proceedings in Switzerland, in which PIFSS seek to enforce the liability of Mr Al-Rajaan (and now his estate) against the heirs. Professor Jakob’s evidence indicates that an English judgment against Ms Al-Wazzan as administrator will not be sufficient to bind the heirs, and that what is required is for the defendants recorded in the judgment to include all of the deceased’s heirs.

51.

This is not a case where a claimant is seeking to join random parties. It is a case where Mr Al-Rajaan has died, and where the 42^nd – 45^th Defendants, his children, are in fact his heirs. It is also the case that under Swiss law, which is alleged to be the domicile of Mr Al-Rajaan, the process of liabilities being passed to their heirs has (as Professor Jakob has said) occurred automatically.

52.

It does seem to me that in circumstances where the heirs are on any view closely associated with Mr Al-Rajaan, and where there is prospective enforcement against assets in Switzerland which would otherwise belong to the heirs, there is every reason why it is necessary and proper for them to be joined as parties to the present proceedings, so as to ensure that they are bound by the result. If so, then they would not be in a position to assert in the context of Swiss enforcement proceedings that there was in fact no liability on the part of the estate to PIFSS. If the position were otherwise and they were not joined to the present proceedings, PIFSS would potentially be in the position of having to prove again the liability which, on this hypothesis, they had successfully established by virtue of a trial which is going to last the best part of a year. Absent joinder, PIFSS would therefore potentially have to surmount a substantial obstacle to enforcement in Switzerland, because the heirs could contend that they were not bound by the result of the major trial that is going to take place. I consider that this would be a most undesirable consequence.”

Although the judge noted that this meant it was not necessary to determine the question of whether Fajer Al Rajaan had validly been served pursuant to section 1140, he nevertheless made a declaration that she had been, relying upon a line of first instance authorities holding that a claim form can be served without the permission of the court upon a person at an English address for service provided by that person pursuant to section 1140 even if that person is outside the jurisdiction.

The Al Rajaan Children appeal on two grounds. Ground 1 is the judge was wrong to hold that PIFSS had a good arguable case that they were necessary or proper parties on the Enforcement Basis. (The Al Rajaan Children contend that for the same reasons there is no serious issue to be tried against them and that England and Wales cannot be the appropriate forum for any claim against them, but they advance no separate argument in those respects.) Ground 2 is that the judge was wrong to hold that Fajer Al Rajaan had been validly served pursuant to section 1140. It is common ground that ground 2 only arises if ground 1 succeeds. PIFSS has served a respondent’s notice contending that the judge should have held that PIFSS had a good arguable case that they were necessary or proper parties on the Substantive Basis.

The Al Rajaan Children’s argument in support of ground 1 begins with six propositions of English law, none of which is disputed by PIFSS.

First, “the law of England and Wales distinguishes between, on the one hand, the administration of an estate and, on the other, succession”: Viegas v Cutrale [2024] EWCA Civ 1122, [2025] 1 WLR 1467 at [118] (Newey LJ).

Secondly, “it is the duty of executors, as a matter of the due administration of the estate, to pay the debts of their testator with due diligencehaving regard to the assets in their hands which are properly applicable for that purpose”: In Re Tankard [1942] Ch 69 at 72 (Uthwatt J). Thus, “matters relating to the collection of a deceased person’s assets and the payment of debts are considered to relate to the ‘administration of estates’”: Viegas v Cutrale at [120].

Thirdly, pursuant to section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934, “on the death of any person after the commencement of this Act all causes of action subsisting against or vested in him shall survive against, or, as the case may be, for the benefit of, his estate.” For that reason, the editors of Williams, Mortimer & Sunnocks – Executors, Administrators and Probate (22nd ed) explain at 37-03 that “[i]f a claim is based on a cause of action against the deceased, it will (unless it was personal to the deceased or was a claim in defamation) survive and be enforceable against their representative”. That is true even in the case of a limited grant: 37-04. Thus the correct defendant to such a claim is the personal representative: High Commissioner for Pakistan in the United Kingdom v National Westminster Bank plc [2015] EWHC 3052 (Ch) at [29] (Henderson J).

Fourthly, pursuant to section 1(6) of the 1934 Act, “[i]n the event of the insolvency of an estate against which proceedings are maintainable by virtue of this section, any liability in respect of the cause of action in respect of which the proceedings are maintainable shall be deemed to be a debt provable in the administration of the estate, notwithstanding that it is a demand in the nature of unliquidated damages arising otherwise than by a contract, promise or breach of trust”.

Fifthly, an English grant of representation only extends to property of the deceased locally situate in England at the time of their death (and movables subsequently brought into England): Dicey, Morris & Collins on The Conflict of Laws, Rule 156. The administration of the English estate is governed by English law: Dicey, Morris & Collins,Rule 158; Viegas v Cutrale at [99] to [100].

Sixthly, a grant of representation or other authority to represent a deceased person under the law of a foreign country has no operation in England: Dicey, Morris & Collins, Rule 159. Equally, a foreign personal representative is not, as such, under any liability in England and cannot, as a foreign personal representative, be sued in England: Dicey, Morris & Collins, Rule 160 (which is based on, among other authorities, the decision of this Court in Degazon v Barclays Bank International Ltd [1988] 1 FTLR 17).

Counsel for the Al Rajaan Children submits that it follows that the Al Rajaan Children cannot be made defendants to this claim merely on the basis that they are his successors under Swiss law. The only proper defendant to PIFSS’s claim against Mr Al Rajaan now that he is dead is his personal representative, Ms Al Wazzan. She is the administrator of the English estate. Her authority derives from the order of Henshaw J appointing her. That authority is limited to assets in England, and it stops at the border. Accordingly, the English court cannot make any order against Mr Al Rajaan’s successors under a foreign system of law in respect of assets situate in a foreign jurisdiction.

Counsel for the Al Rajaan Children further submits that this is not affected by the apparent desirability of binding Mr Al Rajaan’s heirs with regard to the determination of Mr Al Rajaan’s liability for the purposes of enforcement abroad because the heirs cannot be subject to any order of the English court, and it is wrong in principle to join parties who have no connection to the proceedings purely for the purposes of binding them to the result.

Tenaciously though counsel developed these submissions, I do not accept them. In my judgment the judge was right for the reasons he gave. Given that the Al Rajaan Children decline either to admit that Mr Al Rajaan was liable to PIFSS as alleged or to accept the English court’s determination of that liability, the same issue arises as between PIFSS and the Al Rajaan Children as it does between PIFSS and Mr Al Rajaan’s estate: was Mr Al Rajaan liable to PIFSS as alleged? It is true that this issue will only become material as between PIFSS and the Al Rajaan Children if and when PIFSS attempts to enforce any judgment of the English court against the Al Rajaan Children in Switzerland, but nevertheless the issue remains the same. That issue should only have to be determined once. Given that it will be determined as between PIFSS and Mr Al Rajaan’s estate in proceedings properly instituted in this jurisdiction for that purpose, it should also be determined as between PIFSS and the Al Rajaan Children in the same proceedings.

Contrary to the submission of counsel for the Al Rajaan Children, this is not to collapse the distinction between administration and succession in English law. Determination of Mr Al Rajaan’s liability to PIFSS as between PIFSS and the Al Rajaan Children does not involve the English court determining any issue as to succession. For example, if the Al Rajaan Children decide that they wish to apply for an extension of time for disclaiming their inheritance, that will be entirely a matter for the Swiss courts to determine applying Swiss law.

Accordingly, if the Al Rajaan Children were present in this jurisdiction, it would be proper for them to be joined as defendants pursuant to rule 19.2(2)(b) in order to enable the issue of Mr Al Rajaan’s liability to be determined between PIFSS and the Al Rajaan Children as well as between PIFSS and Mr Al Rajaan’s estate. Otherwise, as the judge pointed out, the issue of Mr Al Rajaan’s liability would have to be determined all over again after having been determined at vast expense in these proceedings when it came to enforcement of the judgment.

The judge saw no objection of principle to joining a party to a claim in order to ensure that that party is bound by the court’s determination, if that was appropriate in the circumstances. He noted three examples of this identified by counsel for PIFSS: the Chabra jurisdiction in the context of freezing injunctions, where it is permissible to join a party against whom no cause of action is asserted, but who holds an asset allegedly belonging to another; joinder of an assignor to proceedings brought by an assignee; and orders made under rule 19.13. Counsel for the Al Rajaan Children submitted that none of these examples were analogous to the present situation. In one sense that it is true, but nevertheless I agree with the judge that they are illustrations of the broader principle he identified. As counsel for PIFSS pointed out in this Court, the broader principle is the counterpart to the principle that persons with an interest in the subject matter may be permitted to intervene in proceedings: see Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 WLR 452 at 460 (Kerr LJ) and Her Majesty’s Revenue and Customs v Gresh [2009-10] GLR 239 at [19] and [23]-[24] (Vos JA (as he then was) delivering the judgment of the Guernsey Court of Appeal).

Given that it would be proper to join the Al Rajaan Children as defendants if they were present in the jurisdiction in order for the issue of Mr Al Rajaan’s liability to be determined as between PIFSS and the Al Rajaan Children, it follows that they are proper parties to the claim within Gateway 3. Although I would reach this conclusion starting from first principles, it is consistent with the reasoning of Foxton J (as he then was) in Commercial Bank of Dubai PSC v Al Sari [2024] EWHC 3304 (Comm) at [273]-[280].

Counsel for the Al Rajaan Children’s submissions might have more traction with regard to the Substantive Basis advanced by PIFSS, because that basis involves PIFSS claiming substantive relief against the Al Rajaan Children, but given my conclusion on the Enforcement Basis it is not necessary to consider that question or the interesting arguments we received in relation to it.

It also follows that it is unnecessary to consider ground 2.

For the reasons given above I would dismiss the appeal.

I agree.

I also agree.