Phillips & Ors v Symes & Ors

This is the next round of the proceedings that have broken out between various parties concerning the form of the partnership carried on between Christo Michailidis and the First Defendant Robin James Symes (“Mr Symes”).

The present Application Notice dated 12^th May 2005 seeks declarations in the form of the draft orders annexed to the applications. The order first sought is an order pursuant to CPR 6.9 that service of the original English Claim Form upon the Second Defendant (“Mrs Nussberger”) and the Third Defendant (“Nefer”) be dispensed with. Further declaratory relief is sought to the effect that Mrs Nussberger and Nefer were validly served on 19^th January 2005 and that this court was seised of the proceedings no later than that date for the purposes Article 21 of the Lugano Convention in respect of the claims made against those Defendants in this action. Alternatively the Claimants seek an order pursuant to CPR 6.8 that they be permitted to serve Nefer by delivery to the office of Walder Wyss and Partners of 9 Grays Inn Square London WC1R 5JQ and that the deemed date of service be on 19^th or 20^th January 2005.

As I said above the dispute arising consequent on the death of Mr Michailidis has spawned a tremendous amount of litigation. Two hearings are relevant for the purpose of the present application. The first of those is my decision on 22^nd May 2003 ([2003] EWHC 1172 (Ch)). The second of those is my decision on 13^th January 2005 ([2005] EWHC 25 (Ch)).

Both of those judgments arise out of determinations of issues as to assets comprising the partnership and breaches of various orders made earlier in the proceedings. Detailed reference to the disputes can be discerned from an examination of those judgments. In addition after the decision on 13^th January 2005 by me to refuse an adjournment of the outstanding committal application I heard the committal application on 21^st January 2005 ([2005] EWHC 90 (Ch)).

On that day in view of Mr Symes’ admitted contempt I sentenced him to a period of 2 years in prison. On appeal on 6^th May 2005 ([2005] EWCA CIV 553) The Court of Appeal reduced the sentence to a period of 12 months imprisonment.

It is important to set out the background in some detail to understand the present proceedings.

As I have said Mr Symes and Mr Michailidis were involved in a partnership. That business was the buying and selling of antiquities. Part of the business was carried out through a company Robin Symes Limited (“RSL”). It is now in liquidation.

Mr Michailidis died in an accident in July 1999 as a result of falling down a flight of stairs whilst staying at a friend’s villa in Italy. He was a Greek national and the Third Claimant is his sister and she and his mother Irene Michailidis are entitled to his estate.

Mr Symes was the sole director of RSL although he contended in his evidence that all the administration was carried out by Mr Michailidis. A dispute arose between the Michailidis family and Mr Symes as to the nature of the business relationship, if any, between Mr Symes and Mr Michailidis. This led to the present proceedings. It is only a small part of the proceedings in which the parties have become embroiled. In addition there are proceedings in the Isle of Man, Guernsey, Switzerland and Greece. Now as a result of this application there are further proceedings in Switzerland brought by Mrs Nussberger and Nefer.

The Claimants alleged that Mr Michailidis and Mr Symes were equal partners in the antiquities business and had equal shares in it. They contended that the partnership was a partnership at will which was dissolved on his death. Mr Symes’ original defence which he maintained for 2 years in the present proceedings was that Mr Michailidis was a mere employee and had no interest in the business which at all material times belonged to him beneficially as did the shares in RSL.

In January 2003 Mr Symes abandoned this contention and obtained permission to amend his Defence. By that amendment he acknowledged that Mr Michailidis was a partner but the partnership was he contended an unusual partnership in that he contended whilst the partnership provided for profits to belong to them in equal shares, the assets of the partnership, he alleged were joint so that they passed to him entirely by survivorship. In January 2003 in granting permission to amend I fixed a trial of that issue to be heard in June 2003 for a period of some 5 - 8 days. I gave directions extending time to 31^st March 2003 for Mr Symes to provide disclosure. He failed to comply with that order and on 4^th April 2003 his Amended Defence and that of RSL was struck out by reason of his failure to comply with the disclosure. On 27^th March 2003 Mr Symes was also made bankrupt. The Fourth and Fifth Defendants are his Trustees in Bankruptcy. By an order of 4^th April 2003 in addition to striking out the defence I directed the usual partnership enquiries and vacated the trial which was listed for 3^rd June 2003.

On 24^th July 2002 Mr Justice Hart had put in place the interlocutory regime which was designed to enable the partnership business and RSL’s business to be carried on pending the finalisation of the dispute. On 4^th April 2003 I directed that regime was to continue until further order but discharged the Claimants’ undertaking as to damages in view of a final judgment they had obtained by that order.

The action attracted a quite extraordinary number of applications (see my judgment of 22^nd May 2003 paragraph 35). As that part of the judgment shows, Mr Symes persistently failed to comply with orders that were made.

The nature of the interlocutory regime was to permit Mr Symes and RSL to sell antiquities during the course of the business provided that the rules of the interlocutory regime were complied with. In essence he gave undertakings not to sell a chattel save for full consideration together with an undertaking in accordance with a prescribed sale notice of any sale and a further undertaking to pay the proceeds of sale of any relevant chattel into a new account with CitiBank in the name of RSL. Provisions were made for the operation of the funds thereby paid into that account.

He was also required to identify by an order of Hart J on 29^th January 2002 all relevant chattels in which it is alleged any third party has an interest.

His compliance affidavit (after a delay) was his 8^th affidavit of 17^th April 2002. He provided a list of 108 items. Mrs Nussberger is identified as having sufficient interest via her third party company Nefer. Another antique dealer in Switzerland a Mr Domercq through his gallery Sycomore gallery is identified as having an interest in one (102).

A statue (“The Statue”) was sold by orders of Hart J after notices given by Mr Symes purportedly in accordance with the interlocutory regime on 5^th April 2002. The sale of the statue was to a company called Philos Partners Inc which it was claimed operated out of Cheyenne, Wyoming at a price of $1,600,000. The Claimants contended that the transaction was not as said but in reality a sale by RSL at the instigation of Mr Symes to Sheik Al-Thani (a collector of Egyptian antiquities) at a price of $4,500,000. The Claimants alleged that the interposition of Philos was a dishonest act on the part of Mr Symes to conceal from the Claimants the true consideration of $4,500,000. This enabled Mr Symes and RSL to transfer a valuable asset out of the jurisdiction of the court in breach of the restrictive regime imposed by the orders of the court and enabled a spiriting away of some $2,900,000.

The Claimants by an application notice issued 10^th March 2003 sought an order requiring Mr Symes to pay the balance of $3,000,000 representing the purchase price in to court and sought that an issue be tried as to whether or not Mrs Nussberger and Mr Domercq had an interest in the statue. Both Mrs Nussberger and Mr Domercq provided witness statements to Mr Symes’ then solicitors Peters and Peters before a hearing before me on 13^th March 2003. Those witness statements were to support Mr Symes’ contention that Mrs Nussberger and Mr Domercq had interests of one third in the statue and that RSL had only a one third interest which was a justification for the purported sale at $1,600,000.

Mr Domercq and Mrs Nussberger were therefore willing to assist Mr Symes in his difficulties as regards the ownership of the statue in these existing proceedings. It was self evident to me at the time (and remains self evident) that it is essential that Mr Domercq and Mrs Nussberger participated in the action as parties if they were going to give evidence on the ownership of the statue which they claimed. Otherwise they could come to court give evidence before this court in the belief that any decision in the court would not bind them. There was clearly an urgency for the resolution of this dispute and service on Mr Domercq and Mrs Nussberger and their joinder would be correct under Article 6 of the Lugano Convention given the existing proceedings raising the issue as to the statue in which they were clearly interested (see Article 6 paragraph 1 and paragraph 2).

In the event neither Mrs Nussberger nor Mr Domercq participated in the trial of that issue despite being aware of the action and having been served alternatively under CPR 6.8 on Peters and Peters. Mr Martin QC who with Mr Lowe appeared before me on the present application for Nefer and Mrs Nussberger described the order of service as being informal. I disagree. The purpose and validity of the order for service arose out of a need for service for an expeditious resolution of proceedings that were already before this court. The court (as Mr Martin QC concedes before me) retains a discretion to dispense with service if it is appropriate to do so or to provide for alternative service if it is appropriate to do so that is what happened.

It must be appreciated that the early determination arose in particular because it was an essential issue in the committal proceedings which were proceeding against Mr Symes. It simply would not have been right for those committal proceedings to be delayed for a long period of time which would have happened if the proceedings had been served in accordance with the Hague Convention. That appeared clearly from the evidence that Mr Roberty gave before me.

The hearing took place before me between 30^th April and 13^th May 2003 and I delivered judgment on 22^nd May 2003. Mr Roberty a Swiss lawyer retained by Mrs Nussberger gave evidence but neither Mrs Nussberger nor Mr Domercq attended. Mr Symes gave evidence and I determined on the evidence before me that the Statue belonged beneficially to RSL as to 100%. An appeal against that decision by Mr Symes (effectively on behalf of Mrs Nussberger and Mr Domercq) was dismissed by the Court of Appeal.

I determined that on a balance of probability. In the judgment I determined that I was unable to determine that issue beyond reasonable doubt. It followed therefore that the breach of the undertaking which was also before me at the time was limited to Mr Symes not having given the full picture of the sale as opposed to a sale at an undervalue. He admitted that contempt and was given a suspended sentence of imprisonment of 12 months provided he complied with various undertakings.

In the proceedings which Mrs Nussberger and Nefer have instituted in Zurich (see below) Mrs Nussberger had sought to revisit that decision.

As part of the order arising out of the hearing Mr Symes gave further undertakings.

After I delivered judgment on 22^nd May 2003 Mr Symes with the benefit of experienced solicitors and leading counsel gave to the court an undertaking that he would by affidavit no later than 29^th May 2003 give the true source of funds deposited by Lombardi (a company of which he was the beneficial owner registered in the British Virgin Islands). When he purportedly complied by his 20^th affidavit on 28^th May 2003 he repeated a story which he had recounted before. Briefly this was suggestion that the funds were provided by a woman who was going to help him out of his difficulty.

In addition the interim regime still remained in place.

In July 2003 the Claimants found from discovery given by the estate of Leon Levy who lived in New York but who had dealings with Mr Symes that Mr Symes had offered to sell a further statue (“The Akhenaten Statue”) to the same Sheik Al-Thani for $8,000,000. The Claimants knowledge was not detailed but by early August 2003 (less than 2 months after the previous committal hearing) the Claimants issued a further application dated 11^th August 2003 seeking Mr Symes’ committal for breach of the undertakings (in repeating a false story about the Lombardi funds which had nothing to do with the present matter) and in respect of the sale of the Akhenaten.

In response the application by his 25^th affidavit dated 22^nd August 2003 Mr Symes deposed on oath that he on behalf of RSL had bought the statue from Mr Domercq prior to Christo’s death for around $2,500,000 and sold it to a Mr and Mrs Beierwaltes in exchange for shares provided by them. He said he thought the sale was around 2000 but was not sure. He then said that they later (2000 or 2001) asked for his help to sell the Akenaten but he was unable to do so. Instead he deposed he “introduced [Mr Beierwaltes to Mrs Nussberger earlier this year i.e. 2003] who sold the statue”.

The Claimants investigated the matter further and Mr de Walden on behalf of the Claimants in his 14^th affidavit of 3^rd September 2003 set out the result of those investigations. Ultimately Mr and Mrs Beierwaltes spoke to him on 5^th September 2003 (i.e. after Mr Symes’ 25^th affidavit) that they had initially agreed to purchase the statue but could not pay and it had been shipped back to Geneva for Mr Symes in May or June 2002.

None of this had ever been revealed before. Further the shipping back occurred during the existence of the interlocutory regime so the Akhenaten became subject to that regime when Mr Symes got it back. The Claimants obtained documents from Sheik Al-Thani which showed that Mr Symes had been negotiating the sale well before June 2003 on behalf of Mrs Nussberger who was purporting to sell the statue for $3,000,000. Mr Symes was to receive $300,000 commission. A sale was agreed on 14^th August 2003. That sale date falls between the application for committal on 11^th August 2003 and Mr Symes’ 25^th affidavit of 22^nd August 2003 where he said “the statue had been sold earlier this year by Mrs Nussberger”.

Completion of the sale was supposed to take place on 30^th September but was deferred until 20^th October. On 22^nd October Mr Symes’ then solicitors the sixth defendants herein (“BR”) received the $300,000 on the basis that it was a commission that Mr Symes obtained by virtue of his efforts.

During the course of the appeal from my judgment of 22^nd May 2003 Mr Slade of BR told the Court of Appeal that Mr Symes’ 25^th affidavit contained unsatisfactory evidence but did not elucidate. The documents obtained from Sheik Al-Thani showed that Mr Roberty, Mrs Nussberger’s lawyer had written a letter to the Sheik’s lawyers on 30^th April 2004 summarising his understanding as to the devolution of title and ownership of the statue. It is summarised in paragraph 46 of Mr de Walden’s affidavit and it suggests that Mr Symes had sold the statue to Nefer on 13^th February 2003 for $3,000,000. No money changed hands because Mrs Nussberger claimed to have various set offs most of which may or may not be justified which meant that she obtained the statue and discharged her liability to pay by setting off sums as set out in the invoice. It is difficult to see how this can have any legal effect but of course that is a matter for determination in this action as I shall set out below. It occurred of course shortly before his bankruptcy and at a time when Mr Symes could only have sold the Akhenaten in accordance with the interlocutory regime.

The $300,000 received by BR was split less $30,000 paid to Mr Symes, between BR on account of their fees and Beachcroft Wansborough the then solicitors for the Trustees on account of their fees. The Claimants were completely kept in the dark about all of this and only discovered about the sale much after the event. The $300,000 has been paid into court.

The committal proceedings were much delayed. The first delay arose over an investigation as to Mr Symes’ mental capacity see my judgment [2004] EWHC 1888 (Ch).

I determined Mr Symes did not lack capacity and the committal proceedings were re listed which led to the hearing in January 2005 to which I have already made reference. Mr Symes denied he was in contempt of court until shortly before the hearing when he confessed to both contempts and was dealt with (subject to appeal) as I have set out above. He therefore confessed that what he had said about the sale of the Akhenaten was untrue and dishonest. Of course that confession does not bind Mrs Nussberger who has not provided any evidence on the merits yet.

The present proceedings were commenced on 16^th December 2004. As I have said Mr Symes is the First Defendant, Mrs Nussberger is the Second Defendant, Nefer is the Third, the Trustees are the Fourth and Fifth. BR is the Sixth. They acted for Mr Symes from the second day of the hearing before me which commenced on 30^th April 2003. They advised him throughout the summer period when the sale of the Akhenaten took place. They were still acting for him in the Court of Appeal when the sale was completed at virtually the same time and received 10% of the sale proceeds which they dispersed as I have set out above.

The Claimants seek an order that Mr Symes, Mrs Nussberger and Nefer jointly and severally pay $3,000,000 together with interest less such sums that might be paid to the Claimants by the Trustees. Alternatively a sum of $2,700,000 is sought on accounting basis or alternatively damages for wrongful interference with the property of RSL (namely the Akhenaten). Separately they seek payment of the $300,000 and claim damages against BR representing the value of the Akhenaten statue less such sums that the Claimants recover from the other Defendants.

The claim against Mr Symes whilst he is bankrupt is not necessarily illusory. Whether or not he has assets whether on finalisation on the partnership accounts or otherwise cannot be said with certainty. The events occurred shortly before the commencement of his bankruptcy but the sale took place after his bankruptcy.

On 15^th December 2004 the day before the Proceedings were issued I made a freezing order against Mrs Nussberger and Nefer up to the figure of $3,000,000. That order had been served on both Nefer and Mrs Nussberger. They were then sought to be enforced by attachment proceedings in Zurich (as against Nefer) and in a different jurisdiction where Mrs Nussberger lived in the District Court of Zurzach in the Canton of Aargau.

The Zurzach court granted ex-parte attachment against both parties Mrs Nussberger and Nefer but Mrs Nussberger challenged that on 30^th December 2004.

The attachment in Zurich as against Nefer was refused and the Claimants appeal against that refusal was dismissed.

The attachment hearing challenge brought by Mrs Nussberger took place in the District Court of Zurzach on 19^th January 2005. On that day the attachment was discharged as against Mrs Nussberger and Nefer. What happened on that day is vital to the application before me. For the moment I am merely setting it out in the context of the commencement of the present proceedings.

The Claimants were authorised to bring the proceedings against both the English Defendants and Mrs Nussberger and Nefer as a result of Article 6 of the Lugano Convention and The Claim Form contained a statement which was verified by Mrs Eyre a partner in Lane & Partners the Claimants’ solicitors that the High Court of England and Wales had power under the Civil Jurisdiction and Judgments Act 1982 to hear the claim and further that no proceedings concerning the claim were pending between the parties in Scotland, Northern Ireland or another convention territory or any contracting State as defined by section 1 (3) of the Act. That was indeed true until 4^th February 2005 as I shall set out further in this judgment.

I now set out the nub of the present dispute which has given rise to the present proceedings. It has led to a detailed and complicated argument based on facts which are so bizarre as to defy belief. The resultant difficulties based on those bizarre facts have led to a problem which a professor of International Law would be proud of if he was setting a conflicts law question based on service.

An important factor from the Claimants’ point of view is that Mrs Nussberger is the sole shareholder of Nefer and its sole Officer. She further is the person that would procure Nefer to effect any sale of the Akhenaten if it sold the Akhenaten as opposed to her. Nefer’s registered office is in Zurich. Mrs Nussberger as I have said is resident in Aargau.

On 18^th December 2004 the Claimants’ Zurich lawyers filed the two requests for attachment against Mrs Nussberger and Nefer. On 20^th December 2004 the request in the Zurzach court was admitted and it was enforced on 21^st December 2004 by the enforcement Magistrate who visited Mrs Nussberger personally and physically handed her the attachment order documents for herself and Nefer. That included the order I made on 15^th December 2004 and the draft Particulars of Claim but not the Claim Form.

The service on Mrs Nussberger personally took place at her private address Rutihof 39, Bobikon, Aargau.

Prior to service on Nefer the Claimants’ Swiss lawyers had found a private registry called Teledata details of its address for service. The address given for Nefer was Glockenglasse 18. However the Teledata information (page 50 of exhibit KK1 to the witness statement) of Karolina Kuprecht (the Claimants’ Swiss lawyer) dated 18^th March 2005 also showed that it had a post address “postfach 6636, 8001 Zurich”.

When the Swiss lawyers sought to serve the request for attachment they attended Nefer’s premises and found no signs and no doorbells or mail boxes. The nameplate on the front of the building was blank as regards the 5^th floor (where Nefer carried on its business).

The attachment via the Zurich court was refused on 23^rd December 2004 by written decision. The reason given was that there was no justification merely because of the apparent closing down of the business for granting the attachment and there was no exhibit to prove that the signs had been removed. An appeal was lodged exhibiting a photograph showing the lack of nameplate. However by that time the doorbells now carried a sign Galerie Nefer/Marc Odermatt. The view was taken by the Claimants’ Swiss lawyers that Nefer was not carrying on a business and did not appear to have offices.

In the application heard by the Zurzach court by Mrs Nussberger and Nefer to discharge the exparte order it had made, Mrs Nussberger provided evidence which showed that the premises where Nefer carried on business had been part sub let to Mr Odermatt. By the 27^th December 2004 the Galerie Nefer/Mark Odermatt sign had been affixed having been affixed between 16^th/17^th December and 27^th December.

This is confirmed by a witness statement of Gabriele Kozak dated 15^th April 2005 on behalf of Nefer. No challenge is made to that evidence by the Claimants.

That witness statement also made reference to the PO Box address which has been Nefer’s sole postal address since 1^st October 1996.

Miss Kuprecht in paragraph 14 of her witness statement recounts what the Swiss postal service say in their letter 7^th March 2005. It is said that the postman went to the address Glockenglasse 18 on 19^th January 2005 in an attempt to serve the Claim Form and other documents (see further below) on Nefer. At that time there was no post box with the name Nefer on it but he said that there had been such a name until December 2004 to January 2005. That is challenged by Nefer as set out in Ms Kozak’s statement. This is accepted by the Claimants.

Accordingly the postal address for service of documents on Mrs Nussberger is her home in Aargau and the postal address for service of documents on Nefer is the PO Box number identified in the Teledata search.

As I have said the Claimants relied on Article 6 of the Lugano Convention. The Claim Form was duly endorsed as required by CPR 6.19 (1) as set out above. Unfortunately on issue by the Court Office the Claim Form was stamped in red ink prominently on the front “Not for service out of the jurisdiction”. This was an error because the Claim Form was eligible for service out of the jurisdiction in Switzerland by virtue of the certificate verified by Mrs Eyre. Initially in the evidence on behalf of the Claimants it was asserted that the court officer’s error was not noticed by the Claimants’ solicitors Lane & Partners. After the hearing had completed they applied to adduce further evidence to correct the evidence previously given. I granted them permission to adduce that evidence. It showed that the error had in fact been noticed and that fresh draft Claim Forms were taken for issue. The Court Official noticed the error but apparently in view of Mrs Eyre’s certificate permitted issue but did not delete the stamping nor require clean copies which would have been available if requested. Thus on that evidence the English service on Mrs Nussberger and Nefer included the erroneously stamped Claim Form by the High Court. The package was taken by hand to the Court Service on 31^st December 2004. The identical packages one for service on Mrs Nussberger and one for service on Nefer each contained:-

The English original Claim Form (erroneously stamped as above)

A German translation of the Claim Form (including the not for service) stamp

Particulars of Claim

A German translation of the Particulars of Claim

Acknowledgment of service and notes for Defendants with German translations with certificates of authority from the translators.

In addition various other documents were included arising out of my order on 15^th December 2004.

The Claimants opted for service of the proceedings on Mrs Nussberger and Nefer via the Hague Convention. This required service through the judicial authorities of Switzerland which is the appropriate method of service of foreign process on Swiss nationals in Switzerland.

Mrs Nussberger was to be served at her Aargau address and Nefer to be served at Glockenglasse 18. The address for service of Nefer identified in appendix A of the Claim Form does not include the PO Box number. That too was not noticed by the Claimants’ lawyers (the Swiss lawyers) despite their obtaining from Teledata a printout which showed the Post Office Box number.

On 31^st December 2004 the Claimant’s solicitors delivered the documents for service together with a request for service of document abroad to the Senior Master for the Court to effect service through the proper channels on Mrs Nussberger (giving her home address) and on Nefer (giving the address of Glockenglasse 18).

There were (as conceded by the Claimants) two potential errors. The most significant is the Claim Form was stamped as I have said above. The second is that the Post Office Box address of Nefer was not included. The Court effected the service without removing the stamping on the Claim Form. It would not of course notice the lack of Post Office Box number because it would not know about it.

In accordance with CPR 6.28 the Senior Master then arranged for service on the relevant legal authorities under the Hague Convention.

At the hearing of 19^th January 2005 when Mrs Nussberger and Nefer jointly obtained the discharge of the attachment order made against them the Zurzach judge himself handed the bundle of documents to effect service on Mrs Nussberger. He handed her the documents (apparently all of them) contained in the package that Lane & Partners had dispatched and she accepted them and voluntarily signed a receipt. Mr De Walden and the Claimants’ Swiss lawyers were present. Neither of them knew what was in the package. They were entitled to assume that the package was as it was when it had been delivered to the Senior Master some 20 days earlier. In fact unknown to the Claimants and their lawyers a clerk of the Zurzach judge had inspected the contents of the package. He came across the original English Claim Form noticed the stamp took it upon himself to remove the original Claim Form from the package and re-seal it. Mr de Walden in his witness statement deposes that Dr Cotti the Chief Clerk admits that the removal was an error under the Hague Convention. I agree with that analysis for reasons I will set out below.

The package which was served on Mrs Nussberger contained everything in respect of the English proceedings save the original Claim Form in English. She was already aware of course of the nature of the proceedings by virtue of having received the documents that were served on the attachment. Equally Nefer through Mrs Nussberger is also fully aware of the nature of the claim.

Neither Mrs Nussberger or Nefer have said that they were prejudiced in any way by the service of the documents omitting the original English Claim Form. This is hardly surprising bearing in mind both CPR 6.28 and Hague Convention 1965 (Article 5) requires the service of a translation. It is self evident that the service of the translation is so that the recipient can know in their own language what is being claimed against them. The translation in this case scrupulously followed the Claim Form including the phrase Not for Service Abroad

It is to be noted that at the hearing in Zurzach the Claimants believed that Mrs Nussberger alone (i.e. not Nefer) was being served with all the documents required to be served on her. There was no question in the mind of the Claimants advisors that she was being served on behalf of Nefer. The set of documents for Nefer were being served separately in Zurich and the outcome of that was not known.

The court in Zurzach filled in a certificate under Article 6 of the Hague Convention as to service. Article 6 requires that the certificate shall state that the documents have been served, shall include the method, the place and date of service and the person to whom the documents were delivered. If the document has not been served, the certificate is required to set out the reasons which have prevented service. In paragraph 1 of that certificate dated 11^th March 2005 the documents are listed as having been served except the original Claim Form, this service is stated to be on Mrs Nussberger personally and it is expressly stated that the original Claim Form was not served and reference is made (in English) to “Not for service outside of the jurisdiction”.

This document is somewhat confusing but I am satisfied that when a bit of time is devoted to it, it can be discerned that the original Claim Form has not been served and the reason why is set out there.

This document in my view is merely a certificate of service under Article 6. Equally in my view it is only a certificate of service on Mrs Nussberger personally. It is also in my view the case that it certifies that service was on Mrs Nussberger “who accepted it voluntarily”. This is a reference to Article 5 which provides that service can be made by delivery to an addressee who accepts it voluntarily as an alternative to service by a particular method requested by the Applicant (unless that method is incompatible with the law of the state address).

I do not see that this advances the Claimants’ case because I simply cannot see how it can be argued that these documents were served on Mrs Nussberger on behalf of Nefer. I accept that she is the guiding hand of Nefer and that there is no prejudice in there not being a second bundle of documents severally to give to her on behalf of Nefer but the plain fact is that this was never intended to be service on Nefer and subject to what I say about Swiss law below I do not accept that it is service on Nefer.

Mr Martin QC submitted that this certificate also operated under Article 4. Article 4 enables the central authority of the state addressed, i.e. in this case Aargau courts to consider whether or not request for service complies with the provisions of the Hague Convention. If it does not it is required “promptly” to inform the Applicant and specify its objections to the request.

I do not believe that the Clerk was acting under Article 4. It seems to me that if he were a separate certificate would have been given. I accept that no form of Article 4 certificate is specified by the Hague Convention but to my mind that does not enable a person to adopt what is plainly an Article 6 certificate and treat it as an Article 4 certificate because it is convenient so to do. I do not believe that the Clerk’s actions were justified. The English Court is to decide what it requires to be served and not the Swiss Court unless the documents infringe Swiss Law in some way. It is not alleged that the original Claim Form stamped, as it was could not have been lawfully served in Switzerland. Accordingly I do not accept he was acting correctly when he removed the Claim Form. He further compounded his actions by not telling anybody what he was doing. Had he done so I have no doubt the error could have been resolved that day. Equally the same point could have been addressed to the documents in the process of being served on Nefer in Zurich

Even if that is wrong the obligation of the person purportedly acting under Article 4 is to inform the Applicant promptly. The Claimants received a certificate back on 11^th March 2005 nearly 2 months after the service. I do not see how it can seriously be argued that that is prompt service. The Applicant was actually represented in court on 19^th January 2005 yet they were not told what had been done. The Claimants therefore in my view have suffered as a result of a procedural error of the Swiss court in what it did.

I will deal further in this judgment with Mr Martin QC’s submissions as to whether or not the Lugano Convention or the Hague Conventions require service of an original Claim Form in English.

Nevertheless the result is that Mrs Nussberger unbeknown to the Claimants was not served with an original Claim Form.

Subsequently Mrs Nussberger’s lawyers argue through the statement of Micha Buhler that Mrs Nussberger did not accept service voluntarily. I do not accept that is correct. She would have been entitled to examine the documents at that time before deciding whether to accept them. Nevertheless for the reasons I have set out above that does not matter because what she received was validly served on her. The issue is what was not served on her.

Mr Buhler sets out in Part IV of his witness statement what happened after that. He reviewed the documents over the next two days after the receipt of Mrs Nussberger and he noticed a German translation of a document but no equivalent original English document. He suspected that this was an error. He spoke to the Zurzach court ultimately on 24^th January 2005. By this time the certificate had not been completed but he was told that the original Claim Form had not been served and was in the court office.

Mr Buhler could of course have done a number of things. First he could have attended the court on behalf of Mrs Nussberger to collect it. It was clearly obvious notwithstanding the stamping that his client was intended to receive the original English Claim Form. There is no logical point in serving a German translation of the Claim Form with the forms of acknowledgment of service if the original is not also to be served. Second he could have contacted the Claimants’ solicitors and informed them of the fact that the original Claim Form was missing. He did neither of those. Instead Mrs Nussberger embarked on a third course of action.

Nefer and Mrs Nussberger on 3^rd February 2005 in the Zurich court instituted proceedings against the Claimants. They did this pre-emptively without advising the Claimants. They then (having instituted those proceedings) wrote to the Claimants solicitors on 9^th February 2005 informing them of the fait accompli of their proceedings. They contended that those proceedings are now the proceedings where the disputes between the parties are definitively pending for the purpose of the Lugano Convention and are therefore prior in time. This arises from a difference it is said as between Swiss law and English law as to when a court is definitively seised of proceedings. In Switzerland for the purpose of the Lugano Convention the Swiss court is definitively seised when the proceedings are lodged in the Swiss court.

In England the letter submitted (and Mr Martin QC repeated before me) that for the purpose of the English court it is definitively seised as regards proceedings for the purpose of the Lugano Convention when proceedings are issued and served. Mr Millett QC who appeared for the Claimants does not accept that that is a correct summary of the law but I will deal with that further on the legal submissions below.

Thus Mrs Nussberger and Nefer’s Swiss lawyers contended that the English court was obliged to decline jurisdiction because the Swiss court was first seised.

The Swiss court has agreed not to take any further step in its proceedings pending determination of the status of the present proceedings as regards the Lugano Convention.

Thus the Claimants were out flanked by Nefer and Mrs Nussberger if her proceedings are those first seised for the purposes of the Lugano Convention. This arises solely out of the events which I have set out above.

Although Mr Millett QC complained about Mrs Nussberger’s conduct in effect in going and issuing proceedings rather than drawing the matter to the attention of the Claimants given the “no holds barred” nature of these proceedings it is hardly surprising that she was unwilling to help the Claimants with their procedural difficulties. Although there were suggestions that she has been evading service none was pursued by Mr Millett before me and he was right not to do so. Equally whilst the Claimants were suspicious initially about the failings of service on Nefer they do not make any allegations of evasion as regards Nefer.

Of course, Mrs Nussberger knew by the middle of December 2004 that proceedings had been issued against her. She also knew of course that she had not been served and her lawyers would have been in a position to advise her at that time the same way in which they apparently advised her after the 19th January 2005. She would have therefore been in a position to issue her proceedings before the 19^th January 2005 but she chose not to do so. No reason has been given for that and it is not suggested in the evidence before me that she has been prejudiced by the lack of Claim Form as I have said. Nor is it alleged in the evidence before me that she will suffer any prejudice if she is required to have this dispute litigated in the English court as opposed to the Zurich court.

If the determination is that the English court is first seised, the Claimants will then have to apply in the Zurich court to invoke Article 21 of the Hague Convention to stay Mrs Nussberger’s and Nefer’s proceedings. That of course is a matter for the Swiss court which will consider its own position if necessary on such an application.

The Zurich proceedings are exhibited at page 6 of LAP de W4. The first point to note is that Nefer’s address for service does not include its Post Office Box address; it replicates the address for service as set out in the Claimants’ English Claim Form.

The second point to note is that despite the complaint made about Mr Symes in the Claim he is not a party. The only Defendants are the Claimants in the English action. It is in the form primarily of a negative declaration although that is disguised by prayer for relief paragraph one.

At paragraphs 10 and 11 it refers to the disposal of the Statue and the Akhenaten as if they were the subject matter of pending claims for contempt although by the time of the issue of the form on 3^rd February 2005 Mr Symes had admitted both contempts and had been sent to prison.

Mrs Nussberger and Nefer re-introduced the claim in respect of the Statue despite their failing to take any actions within this jurisdiction either before or after my judgment of 22^nd May 2003. This stance is completely unmeritorious because they were both willing to give evidence in support of Mr Symes but that was on a no risk basis for the reasons that I have set out above. As I have said the Court of Appeal dismissed any complaint about the judgment save in respect of how the timetable for the committal application was to be disposed of. It has of course always been open at any time since the order for joinder was made for them to have applied either for an extension of time to comply with the timetable which was necessarily circumscribed because of the committal proceedings. Alternatively they could have applied to set aside the proceedings (like they do now) but they chose not to do so.

The rest of the claim is in effect a counterpart to the Claimants case in England.

There are of course important problems by virtue of the constitution of the proceedings. First the main player who created all of this was of course Mr Symes yet he is not sued. The Zurich proceedings will therefore not bind Mr Symes. Second the Zurich proceedings the other English Defendants are not sued although of course it was always open to Nefer and Mrs Nussberger to do so under Article 6 of the Lugano Convention. The result is that even if I stay the proceedings as against Mrs Nussberger and Nefer the English proceedings will continue against the English Defendants. One of the purposes of the Lugano Convention was to avoid the same issues being determined simultaneously in different jurisdictions. That is what will happen unless I accede to the Claimants’ application in full. That has been occasioned by the decision of Mrs Nussberger and Nefer to institute their own proceedings in Zurich, despite not showing any justification or need so to do beyond a mere assertion that they have “Article 2” rights which they are entitled to pursue. This was a key recurring theme in Mr Martin QC’s submissions before me to the effect that I should not make any order which pre-empts the priority of the Zurich proceedings which are in exercise of Nefer’s and Mrs Nussberger’s rights under Article 2 of the Lugano Convention.

However as Mr Millett QC pointed out in his closing submissions the Zurich proceedings are not proceedings under Article 2 of the Lugano Convention Article 2 provided:-

I do not see how it can be said that the Zurich proceedings are proceedings under Article 6 either in view of the lack of Swiss based Defendants. I have referred to Article 6 above. The difficulty Mrs Nussberger and Nefer will have in establishing that the Zurich proceedings are under Article 6 is the lack of Zurich based Defendants. All of the Defendants are English based. In fact Article 2 gives the English based Defendants to the Zurich action a right to be sued in England.

None of these matters is technically before me as they are matters to raise before the Zurich court because plainly I have no jurisdiction to interfere with or make any orders in respect of Zurich court proceedings. Nevertheless it does seem to me that as part of considering whether to exercise a discretion I can examine the nature of the Zurich proceedings.

Equally as I have said the consequences of Nefer’s and Mrs Nussberger’s application will create duality of proceedings. They have created that artificially and for no just reason so far as I can see. Mr Martin QC submitted that it could be addressed by bringing the English Defendants into the Zurich action by the English Claimants raising a counterclaim against them along with the Zurich based Defendants. This to my mind is unreal and artificial. Further I cannot see such an exercise having any remote prospect of success for a number of reasons.

First the English Defendants have already been sued and served within the jurisdiction of the English court. They have a right to be sued under Article 2 within that jurisdiction. By way of contrast the Claimants in the English action have no right to bring proceedings in Zurich by way of counterclaim it seems to me. Even if they did the English Defendants would be able to stay those proceedings under Article 21 of the Lugano Convention because as regard them the English courts were plainly first seised long before the Zurich proceedings were even commenced by Nefer and Mrs Nussberger. The Zurich court would not therefore be able to entertain a counterclaim joining the English Defendants.

Further such an action would be an abuse of the process of the court. I do not see how the English Claimants can sue the English Defendants and incur costs in relation to those matters and then commence fresh proceedings against them in Zurich. The difficulties that the English Defendants will face as regards dealing with a counterclaim there do not justify such an action. It follows therefore that I do not accept Mr Martin QC’s submission that the duplication of proceedings’ difficulty can be addressed in the way he submits. It is quite clear on the authorities that an operation of the Lugano Convention can create duality of proceedings see The Tatry [1994] ECRI 5439. I accept that that can be a consequence but that does not mean that it must be a consequence. It should be borne in mind that I do not see that the suggested solution (Article 22) applies in the present case and no one has suggested that it does. The difficulty is the Zurich court having jurisdiction over the English Defendants in respect of both applications.

Therefore as regards service on Mrs Nussberger the issue to be determined is whether or not the Claimants can maintain service on Mrs Nussberger on 19^th January 2005 for the purposes of first seisin under the Lugano Convention despite the wrong stamping of the original Claim Form and its subsequent removal by the court clerk in Aargau.

Mr Millett QC accepts that if he cannot maintain the events of 19^th January 2005 as being first seisin that an order cannot be made retrospectively so as to create retrospectively a priority over the Zurich proceedings. The reason for that concession arises out of the Court of Appeal decision in Knauf v Peters [2002] 1 WLR 907 to which I shall make reference further in this judgment.

The Claimants intended to serve Nefer in Zurich at its registered office Glockenglasse 18.

Delivery was attempted on 20^th January 2005. According to the letter from the Post Office dated 7^th March 2005 the postman did not deliver and the bundle was marked returned “departed”. The postman erroneously disregarded as the mailbox (see above). The certificate of non-service was dated 20^th January 2005 but was not returned to the Claimants until March 2005 i.e. after the Zurich proceedings were commenced. They did not know in the intervening period whether or not Nefer had been served.

This appeared to be an error of the Swiss Post Office. Although the proceedings did not contain the Post Office Box number nor did the request for service, that is not necessary. Nefer had a Post Office Box and the obligation of the Swiss post authorities is to deliver the post to that Post Office Box however the letter is addressed. Alternatively if the letter is sent by registered mail against confirmation of receipt, a mail collection notice should be left in the mailbox. The result is that the postman made a mistake and, as confirmed by Mr Reuter in his witness statement on behalf of the Defendants states (paragraph 16), Nefer was not aware of the service of any of these documents by attempted service via the post.

However that is not the entire picture because Nefer through Mrs Nussberger was of course aware that some proceedings had been issued by virtue of the attachment orders. Interestingly, the attachment orders were served successfully on Nefer in Zurich despite the documentation then also lacking the Post Office Box. I have already commented on the fact that Nefer itself has not used the Post Office Box number. The resolution of this is to be discerned from Mr Reuter’s statement and the cross-examination of the Claimants’ Swiss law expert Mr Donzallaz. He acknowledged in cross- examination that the lawyers do not necessarily know the Post Office Box number and whilst it is advantageous to include it the lawyer would expect the Post Office to investigate whether there was a Post Office Box (30-06-05 pages 39-40).

It follows that the only reason why Nefer was not effectively served arose out of the failure of the Swiss Post Office properly to carry out its procedures. In this context there was no question of the Zurich court opening the parcel and removing a Claim Form. Therefore but for the intervention of the Post Office Nefer would have been served with a complete set of documents.

As I have said Nefer of course was in fact aware of the existence of the proceedings through Mrs Nussberger. It became aware of the existence of the same form of documentation as Mrs Nussberger on 19^th January 2005 when she was served with the documents at Zurzach. As she is the controller Nefer equally is not prejudiced by missing the original Claim Form. Nor is it prejudiced by the fact that service was not effected at its office in Zurich.

The Claimants contend now (having earlier asserted that evasion of service was taking place) that Nefer had been effectively served by the same documentation (in its singular form) that was served on Mrs Nussberger. It follows therefore to succeed against Nefer requires the Claimants to establish two things. First it requires (like the case against Mrs Nussberger) that I determine that Nefer was served with sufficient materials so that the English court is first definitively seised when it received on 19^th January 2005 all the documents save the original English Claim Form. Second in addition it requires me to determine in their favour that by handing one set of documents to Mrs Nussberger on 19^th January 2005 that under Swiss law was good service on Nefer. That is despite the fact that it was not intended to be served on Nefer on that occasion as such nor for the reasons that I have set out above can it have been intended that Mrs Nussberger was receiving the documents on behalf of Nefer.

The contrasting arguments are between a technical argument on the part of the Defendants and an argument on the Claimants which is based on a proposition in effect that it does not really matter how Nefer is served as long as the documents are drawn to the attention of the officer whether intended so to be served or not.

I go on now to consider the legal principles applicable to this case under the various areas sought to be invoked by the parties. The following matters are however agreed. First it is for the English court and the English court alone to decide what documents it requires to be served on foreign Defendants. Second the cases under the various provisions under the Civil Procedure Rules confer on the English court a discretion as to what it requires to be done in respect of failures to comply with the Civil Procedure Rules and as regards to service of documents. It has a discretion to make orders which might result in for example taking away a foreign based Defendant’s right to institute proceedings in another jurisdiction. Mr Martin QC acknowledged that there was a discretion which can be discerned from the numerous authorities cited to me but he has submitted that that discretion in effect should never be exercised if the result would be to change the priorities that would arise by an application of the Lugano Convention. That he submitted was a rigid mechanistic rule which had to be applied in each case to determine the priority. Both parties equally acknowledge that the Lugano Convention confers no discretion on the courts as regards service. Service is either in accordance with the Convention or not.

The parties were also in agreement that the Swiss court had acknowledged (and the Defendants have correspondingly so acted) on the basis that the English court can determine what service actually occurred according to Swiss law. The parties acknowledged that that issue can only be determined in accordance with Swiss law and there is no residual discretion in the English court which enables it to override the Swiss legal principles. The reason for that is that Article 3 of the Hague Convention requires service in accordance with Swiss law through a “central authority”. Postal service from abroad is only possible if the relevant member state has not objected to postal service from abroad (Article 10). Switzerland has so objected. Switzerland is a federation and a superior court of each Canton is designated as a central authority. Thus for the purposes of service on Nefer Zurich is the relevant Canton and the central authority as regards Mrs Nussberger is the Aargau superior court. The district court in Zurzach was not the central authority for Aargau. Nor had the district judge in Zurzach received a request from the Zurich Canton to effect service on Nefer.

The important point is that the question as to what is to be served is in the context of determining whether the English court being definitively seised by virtue of the documentation that was actually served on 19^th January 2005. Mr Millett QC acknowledges that for the purposes of prosecution of an action and (for example) its obtaining orders and default judgments or any other kind of judgments in the normal case the proceedings must be commenced by the issue of a Claim Form. Further he acknowledges that for the Defendant to be in default (unless alternative service is obtained in accordance with the requirements of the alternative service rules) a Defendant must be served with an original Claim Form.

However for the purposes of definitive seisin under the Lugano Convention Mr Millett QC had three submissions.

First in his supplemental skeleton argument he submitted that for the purposes of Article 21 both Nefer and Mrs Nussberger were served for the purposes of the Hague Convention by delivering the documents to the Senior Master for service on them under that Convention on 31^st December 2004. At first blush that seems a startling proposition. It is difficult to see how service under the Hague Convention on foreign Defendants can be effected by leaving the documents with a Senior Master at the English court. He based his submission on part of the judgment of Lord Hoffman in Canada Trust v Stolzenberg [2000] 3 WLR 1376 at page 1391 H where Lord Hoffman said this:-

Thus for definitive seisin it is not essential he submits under English law for the Defendant to have knowledge of the proceedings. What matters he submits is whether there is an objective and readily identifiable act which constitutes definitive pendancy.

This seems to me to fly in the face of two Court of Appeal decisions and the judgment (for example) of Lord Steyn in Canada Trust at page 1384.

The first of those cases is Dresser UK Ltd v Falcon Gate Freight Management Ltd [1992] QB 502 in that decision Bingham LJ as he then was conducted a review of when an English court was definitively seised for the purposes of the Lugano Convention. It is quite clear in the ordinary case that Bingham LJ considered that an English court was definitively seised when the Defendants were served. I accept that he was unwilling to give any finite ruling and expressed the view that the English courts might on other occasions be definitively seised at a different time see page 523:-

Ralph Gibson LJ (page 525) and Sir Stephen Brown P both agreed and stated that proceedings in England cannot be regarded as being “definitively pending“ merely by issue. That is of course contrary to other jurisdictions (including Switzerland).

This matter was further considered by the Court of Appeal in The Sargasso [1994] 2 LLR 6. The Court of Appeal there held that the court was not seised as regards a Defendant until he had been served. In addition the court disagreed with the observations of Bingham LJ in Dresser and held that the grant of provisional measures i.e. mareva injunction or an Anton Piller order did not by itself result in the English Court being definitively seised as jurisdiction on the merits of the dispute. Nor was a court which exercised jurisdiction merely to order service out of the jurisdiction definitively seised for that reason either. In so holding Steyn LJ (as he then was) reviewed Bingham LJ observations in Dresser at page 11 as follows:-

I have to observe that Lord Justice Steyn’s observation that the date of service has been a simple and practical rule which will be readily understood in England is not borne out by the facts of this case. It would have been simple and practical if the issue of proceedings itself was definitive seisin for the purpose of the Lugano Convention like it is in many other jurisdictions. Nevertheless it is quite plain that Steyn LJ expresses the view that there are not any genuine exceptions to the rule that the date of service marks the time when the English court becomes definitely seised.

Peter Gibson LJ delivered a concurring judgment see page 12. Sir Tasker Watkins also expressed the view that there was no exception to the rule that definitive seisin occurred upon service not issue.

It is in the context of those decisions that the Canada Trust case in my view must be considered. The House of Lords in Canada Trust were invited to overrule Dresser and Sargasso and determine that they were wrongly decided. It is important to note why both cases had to be challenged namely that both cases decided in the ordinary case mere issue was not sufficient. As Lord Steyn (as he had by then become) indicated (page 1384) the House of Lords declined to discuss the correctness of the decisions. As he said the purposes of the Convention was to determine within its own rules a tie break rule when two courts were in process of entertaining proceedings as if they had jurisdiction.

There is nothing to suggest that any argument in any of these cases raised the possibility of definitive seisin occurring by virtue of point of delivery to the Senior Master. Had they done so and had the argument been accepted all of the decisions would have been decided in a different way. I do not accept that there is any authority in England which can justify determining that definitive seisin occurs when proceedings are delivered to the Senior Master for onward transmission. Such a determination would be contrary to the clearly expressed views in the three cases to the effect that definitive seisin requires something more that mere issue. I cannot see that starting the process of service advances the argument.

However even if I was persuaded that there was something in the argument it seems to me it necessarily involves consideration by the Court of Appeal and probably the House of Lords. At first instance in my judgment for the purpose of the English courts definitive seisin requires issue and service.

The next question however is Mr Millett QC’s second point “what is required to be served?” He submits for the purpose of the court being definitively seised it is for the Court to determine what documents it requires to have been served by that time. He submits also that the Court has a discretion to determine that no documents are required to be served for the purposes of becoming definitively seised. That of course is relevant only if his service arguments as against Nefer fail.

He submits that the English court should determine that it is definitively seised by accepting the documents thus far served as being sufficient for that purpose. He raises the following factors. First he points out that the Claimants have issued proceedings correctly and in accordance with Article 6 and are seeking to exercise those rights. Second whilst he acknowledges that the failure to notice the endorsement is a factor to which the Claimants have been contributory that is overborne by the fact that it is an error on the part of the Court and the Court itself did not require the error to be rectified when the documents were presented for service. Further when the Senior Master authorised the sending of the documents for service in Switzerland he required no correction or overlooked the stamp. Third, no earlier proceedings had been instituted by Nefer or Mrs Nussberger so there were then no existing proceedings (despite having had an opportunity of a little under a month so to do if they so wished) which could be affected by validating the decision as to priority as at 19^th January 2005. Fourth he points out that no prejudice will be occasioned by the omission and no prejudice has been identified as being created if the proceedings in England continue. Fifth it was not the Claimants’ fault that the clerk in Zurzach removed the original Claim Form and did not tell anyone. Sixth Mrs Nussberger was not misled. She had already known at the attachment stage that proceedings were to be served and she knew full well the nature of the proceedings as she had received the translation. Seventh it had been open to Mrs Nussberger to obtain the original from the court or alternatively raise its absence with the Claimants. She chose not to do so but instead commenced her own proceedings. Those proceedings do not secure anything other than a tactical advantage it is submitted on her behalf. Eighth in fact in Mrs Nussberger has no Article 2 rights as the Zurich proceedings are not in accordance with Article 2 (see above). In effect he submits Mrs Nussberger is merely forum shopping to delay matters.

He acknowledges that the Court cannot and should not dispense with service for the purposes of putting Mrs Nussberger in default to obtain a default judgment. That can be addressed he says by the court whilst determining it is definitively seised as at 19^th January 2005 also determines it is not in a position to enforce the action until an order is made for service of the Claim Form and Mrs Nussberger is given a chance to respond in accordance with the rules. At the moment of course as Mrs Nussberger has not been served with the original Claim Form she is not in a position to serve an acknowledgment.

The Defendants challenge this submission of Mr Millett QC comprehensively. In order to do justice to that challenge it will be necessary to go through a series of cases cited to me by the Defendants. The general thrust of the submissions is that the priority is governed by the Lugano Convention and nothing should be done to take away the priority that emerges under the Convention. Article 21 provides a simple and precise “Tie-break rule” and nothing should be done that should counter that. The application of the rule is mechanical and it is acknowledged that negative declaratory relief can be sought and the application can in some circumstances lead to fragmentation of litigation although the convention was designed to minimise that occurring.

The first submission of the Defendants in this area is that an original Claim Form has to be served. It submits that the court has no power to dispense with such service retrospectively when the only reason to do so would be to subvert the principle of chronological precedence established under Article 21 of the Lugano Convention or alter the priority otherwise according to the Swiss proceedings. In the alternative it is admitted this would represent improper exercise of the discretion.

The Defendants acknowledge that the method of valid service is a matter for the contracting state under the Hague Convention, the content of the document that has to served is a matter of English law. The Hague Convention leaves the form of the original document being served to the state which is seeking to effect service save as it requires it to be accompanied by a translation. The platform for the argument is of course the Dresser and Sargasso cases referred to above, however the flaw in the argument in my view is the concession by Mr Martin that the principle is not absolute. He acknowledged that the court has a discretion but submits that the discretion ought not to be exercised where the result is the overtaking of the priority as he puts it created by Article 21 of the Lugano Convention.

English proceedings are commenced by the issue of a Claim Form (CPR 7.12 (1)). After a Claim Form has been issued the general rule under CPR 7.5 is that the period of a Claim Form is 4 months after the date of issue. Where the Claim Form is to be served out of the jurisdiction that period is 6 months. Both those periods have now expired. Under CPR 7.6 an order extending the period generally has to be applied for within the period for service of the Claim Form or where an order is being made within the period for service specified by that order. If a Claimant applies outside the period an order can be made extending time but only if the court has been unable to serve the Claim Form or the Claimant has taken all reasonable steps to serve the Claim Form but has been unable to do so and in either case the Claimants have acted promptly in making the Application. Such an Application must be supported by evidence that may be made without notice.

There are separate general provisions in respect of service which have to be considered at the same time. Under CPR 6.8 provided there is good reason the court can authorise a method of service not permitted by the rules. Under CPR 6.9 the court can dispense with service of a document. Finally in this context CPR 3.10 provides that where there has been an error of procedure such as a failure to comply with a rule or practice direction the error does not invalidate any step taken in the proceedings and is not invalidated unless the court so orders but the court may make an order to remedy the error.

The effect of CPR 3.10 in my view is to provide that errors do not invalidate any step taken in the proceedings unless the court so orders. As appears from the decision in Cala Homes (South) Ltd v Chichester DC [2000] C.P. Rep 28 it was determined that in the absence of a court ruling that the proceedings had not started neither the use of the wrong form nor its filing in the wrong office made the application nullity (see summary in the White Book paragraph 3.10.1). This means as Mr Millett QC submits that a breach of the rules does not invalidate anything unless it is brought to the attention of the court and the court rules upon it. That means for example the failure to serve the original Claim Form did not invalidate the proceedings unless the court determines it has that effect. That might seem odd in the case of the actual originating process but there is nothing in 3.10 which deflects from that fundamental principle.

It is of course an entirely different matter once the defect is raised as it is in the present case. How the court exercises its discretion if at all will be governed by the three rules and the case law that has developed in respect of those rules.

The point is that the failure to serve the Claim Form does not invalidate the proceedings unless it is raised. The court can then decide what to do about the failure. This is an extension upon the principles that were established under the old RSC order to rule 1 as considered by the Court of Appeal in “The Goldean Mariner” [1990] 2 Lloyds Rep 215 at pages 222 – 225. As that case established under the old rules where a Defendant was inadvertently not served with a writ but was served with the Form of Acknowledgment of Service, that was interpreted by Lord Justice McCowan (page 223) as an attempt to take a step in the proceedings but an irregular step because it failed to serve the writ. He acknowledged that in many cases where no more was served than the Acknowledgment of Service form, the court would generally exercise its discretion and set service aside. In the present case however the other Defendants reacted in no way differently from the other 6 Defendants, nor was any prejudice alleged, in no circumstance has the court declined to exercise its discretion to set the service aside.

Factually the case appears to be identical to the present case except Mrs Nussberger and Nefer have far more information. They had the attachment proceedings and all the material served there. They also of course had translation of the Claim Form. They were under no illusion as to the fact that they were being sued. In the Goldean Mariner the Court of Appeal by majority of 2 – 1 refused to set aside the service on the Tenth Defendant (a New York resident). The service was of course a defective service namely service of documents without the original writ. This provides an example where the court exercised a discretion not to set aside the proceedings because of irregularity. Mr Millett QC placed heavy reliance upon this decision quite naturally.

The first clutch of cases relied upon by the Defendants are Cranfield v Bridgegrove Ltd [2003] 1 WLR 2441 and Elmes v Hygrade Food Products PLC [2001] EWCA CIV 121. Both cases involve seeking a power in effect to validate the service of a Claim Form which was served in time but incorrectly by virtue of CPR 3.10 (b) and CPR 6.8.

The Cranfield decision considers an earlier Court of Appeal decision of Anderton v Clwyd County Council (2) [2002] 1 WLR 3174 C.A. which also requires consideration.

In Anderton the Court of Appeal considered the power under 6.9. It concluded that there was a power under that provision to dispense with service of the Claim Form both retrospectively and prospectively but was only exercised retrospectively in exceptional circumstances. It could not be used to circumvent the restrictions on granting extensions on time from service laid down in rule 7.6 (3) to which I have already made reference. Mummery LJ said this (page 3195):-

It would be seen that at paragraph 55 they disagree with the obiter view of Simon Brown LJ as he was then in Elmes that 6.9 can not be used to dispense with service retrospectively. However they also acknowledge the other part of the Elmes decision that an order for alternative service under CPR 6.8 cannot be made retrospectively.

Neither of the two examples given in paragraphs 57 and 58 precisely fit the circumstances of the case here. The Claimants have attempted service but it was ineffective and it cannot be said that the Defendants have nevertheless received an original Claim Form through another non-permitted method of service. It is true that the Defendants have received a translation and know precisely the case against them.

In Elmes the Court of Appeal also considered the interplay between CPR 6.8 and CPR 3.10 (b) Simon Brown LJ said this at paragraph 12 and following:-

The Claim form was served in time but incorrectly i.e. on the Defendants’ insurers instead of the Defendants themselves. As appears from the extract of the judgment above the argument centred around alternative service under 6.8 as opposed to dispensing with service under 6.9. The main part of the decision is that 3.10 cannot be used to circumvent in effect the requirements under 6.8.

Mr Martin QC relies on the observations in Elmes. He submits there is no distinction to be drawn from a decision by the court not to remove the “windfall” of a limitation defence retrospectively under CPR 6.8 and CPR 3.10 from a decision not to remove the “windfall” created by the Zurich proceedings.

Both Elmes and Anderton were considered in Cranfield. The single judgment of the court was given by Dyson LJ. He considered the differences between Simon Brown LJ and Mummery LJ as regards retrospective dispensing of service. He referred to Simon Brown LJ further observations in the case of Wilkey v British Broadcasting Corporation [2003] 1 WLR 1, the leading judgment is in respect of what is called “category 2 cases”. These are where a Claimant has sought to serve the Claim Form by permitted method of service and the form has in fact been received by the Defendant before the end of the period for service. He proposed a solution that there would be no dispensing of service in these category 2 cases ordinarily post Anderton. A strict approach should be adopted.

The present case is not quite the same as a category 2 because an original Claim Form had never been submitted. It is therefore like the Clauusen v Yeates case heard with the Cranfield appeal where all that was served was a copy of the Claim Form. The court was invited to exercise its discretion analogous to pre Anderton category 2 cases (see paragraph 49). The court did not dispense with service under 6.9 and appeared not to have done so because no original Claim Form had been served. A similar stance was applied in the case of McManus v Sharif heard at the same time. The Court of Appeal took the view that the first instance judge’s order under 6.9 was too liberal. Once again the document purportedly served was not a Claim Form issued by the court. Finally in Murphy v Staples UK Ltd the documents were served on the Defendants when the insurers had invited service on their solicitors Branton Edwards. The challenge was made that service was not in accordance with 6.5 as it ought to have been served on Branton not the Defendants. The Court of Appeal (paragraph 86) concluded that service on the Defendants direct was good service. However they also gave some guidance as to the ability to dispense with service under 6.9. At paragraph 87 they said this:-

As can be seen they concluded obiter that they would have dispensed with service under 6.9. The copy Claim Form had been sent to Branton at the correct address. They were also informed by Horwich Farelly, the Claimant’s solicitors, that the original documents had been served with the result that the only flaw in the process was that a copy of the issued Claim Form rather than the original itself was sent. Significantly they pointed out that if Horwich had sent the Claim Form to Branton by fax that would have been good service (a point not relevant for me). Nevertheless they indicated once again a strict approach.

I draw the following conclusions from these cases.

An application for alternative service under CPR 6.8 cannot be made retrospectively.

Service of a copy Claim Form is not good service but the court may in special circumstances dispense with service under CPR 6.9.

CPR 3.10 should not be used to make an order for alternative service if the application cannot be made under CPR 7.6 (3).

The court has under RSC Order 2.1 refused to set aside a defective service where the original writ was never served.

All of the above cases are domestic cases. The Defendants contend that whilst those discretions are carried into international cases the discretion ought not to be exercised (note not cannot be exercised) in the Claimants’ favour in a convention case.

In Shiblaq v Sadikoglu [2004] EWHC 8 1890 Colman J held that he would not dispense with service under CPR 6.9 when proceedings had not been served in accordance with the reservation requirements of Turkey. It will be seen that the Claimant sought to rely upon CPR 3.10 and 6.9 and The Goldean Mariner. Mr Smouha QC for the Claimants (paragraph 31) submitted that the English courts had a residual discretion to substitute a different method of service on one which was impermissible under the law of the country in which service was attempted or under any relevant Civil Procedure Convention. The judge declined to exercise either discretion. He concluded that CPR 3.10 in the light of the Elmes case meant that it did not have the wide scope to be found in the Goldean Mariner case (paragraph 40) alternatively he concluded that he would not exercise the discretion to remedy an error “normally” so that it had the result of impleading a Defendant outside the jurisdiction in circumstances where the method of service actually adopted was impermissible under the law of the country in which service was attempted.

Further in the judgment he gave some general indications as follows:-

It would be seen that the observations in respect of CPR 6.9 are obiter. It also is to be noted that the decision is in respect of an invalid method of service. It is not a decision as to what has to be served. It can only have any application (if at all) in respect of Nefer on the assumption that I determine that service on Nefer via Mrs Nussberger on 19^th January 2005 is contrary to Swiss law. I accept that Colman J also concluded that the impleading of foreign Defendant, which is provided for by the International Convention, should not be circumvented by a fictional device aimed at circumventing the formal requirements of the relevant convention. I can see the force of that as a matter of general principle but in so far as it is suggesting that the court can never exercise a discretion under CPR 6.9 if that might be the result, I would respectfully disagree with that observation. As I have said earlier in this judgment, it is for this court to decide what documents it requires to be served.

I also note two other decisions referred to in the judgment. First of those is Knauf UK v British Gypsum Ltd [2002] 1 WLR 907. This was a decision of the Court of Appeal on an artificial use of CPR 6.8 “to turn the flank of the service convention” the Claimant was a German company. It wished to bring proceedings in England against an English company and against the Second Defendant another German company. The Claimant feared that once the Second Defendant knew that it might be served with proceedings in England it would commence proceedings in Germany. In Germany a court is first seised when the proceedings are issued with the result that any such proceedings would have priority by virtue of Article 21. The Claimant would then have to litigate in England against the English Defendant and in Germany against the German Defendant. Service by post on the Second Defendant was not permitted.

Accordingly to avoid this happening the Claimant made a Without Notice Application for permission to serve a Claim Form on the Second Defendant by an alternative method namely its London solicitors. The judge granted that application but the Court of Appeal reversed that decision. The decision was also heavily relied upon by the Defendants before me. After reviewing the Brussels Convention and the rule of jurisdiction and how the regime worked they summed up their views as to whether or not there was a good reason under CPR 6.8 to provide for an alternative method of service. Their conclusions were as follows:-

The key part of the judgment is paragraph 59. The alternative procedure rule under CPR 6.8 cannot be used when the purpose of the use is solely to subvert the priority principles provided by the convention. This was even the case when it appeared that there were good reasons why the Claimant would wish to do so (the avoidance of duplicated proceedings). Nevertheless the Court of Appeal were plainly not saying that there could never be a case where CPR 6.8 could be used where there was a difficulty about effecting service. Second of course the case does not consider CPR 3.10 nor CPR 6.9. The principles however I accept appear to be of general application and certainly Colman J considered them to be so in the context of the Shiblaq case see above.

I next refer to the decision of Lawrence Collins J in BAS Capital Funding Corporation [2004] 1 LR 652. In that case there were disputes between the Claimant a Maltese Company and other Malta companies. The relationship was governed by a subscription agreement dated 31^st March 2000 which provided that English law governed the agreement and that the parties submitted to the non exclusive jurisdiction of the English courts in relation to all disputes. The Claimant commenced proceedings in Malta in December 2002. They later commenced proceedings in England and sought to serve the Claim Form out of the jurisdiction under CPR 6.20 (5) (c) and (d) on the grounds that the agreement was governed by English law and conferred jurisdiction on the English courts. Permission to serve out of the jurisdiction was granted ex-parte but Lawrence Collins J set aside the service except as regards one point and refused the injunctions. Malta was not a party to the Hague Service Convention and there was no bilateral convention applicable to Malta. It followed that by CPR 6.24 the Claim Form could be served by any method permitted by the law of Malta and through the Maltese government of British Consular authority. However nothing in the rules permits service contrary to the laws of the country in which it is served. No valid service had been effected by Maltese law or English law.

In the course of a long and detailed judgment which addresses many issues and not relevant to the issues raised in the application before me Lawrence Collins J made observations about service in the context of CPR 6.8 and 6.9 as follows:-

Further in the judgment (paragraph 216) he said this:-

Once again whilst his judgment emphasised that service is looked at carefully in international cases he did not say that the court had no power to review decisions as to what ought to be served under 6.8, 6.9 and 3.10. The decision once again does emphasise that dispensing with service or sanctioning a defective service will only be exercised in exceptional circumstances.

The emphasis in the Knauf case is that an exercise ordinarily of discretion should not occur if it overturns the principles of the Lugano Convention. The Defendants contend that that is in effect what is happening here. They further rely upon in this context the decision of Molins PLC v GD SpA [2000] 1 WLR 1741 at page 1752 and 1754 where Aldous LJ said as follows:-

In passing I note that the Court of Appeal (paragraph 42) did not consider a question of abuse.

The Defendants rely upon this case as showing that the English courts recognise the paramouncy of service in accordance with the convention and applied that to the issue of proceedings in Italy by the Italian Defendant company where the law there as to seisin is apparently the same as in England.

Once again this is a case as to the method of service and not as to the content. Paragraph 38 of the judgment must be read in that context. There is nothing in this decision in my view which impacts on the present case. What was being justified was the possibility of retrospective validation. That is not what is being sought before me. Mr Millett QC seeks confirmation that what has happened is in the English courts is sufficient service on the Defendants for the purposes of it deciding it is definitively seised. The question is therefore whether the English court is satisfied that the material served on Mrs Nussberger on 19^th January 2005 is sufficient for its purpose and does not require that the proceedings should be declared invalid under CPR 3.10 by reason of the missing original Claim Form

As regards Mrs Nussberger there is no doubt that she has been effectively served in accordance with Swiss law. As regards Nefer that will depend on the analysis of Swiss law further in this judgment.

I do not see that a decision made by the court that the material served already is sufficient for the court to conclude that it is definitively seised is a turning of the flank of the convention. It is not like the artificial order in Knauf nor is it like the anti suit injunction which was successfully challenged in Turner v Grovit (ECJ) [2005] 1 AC. What is being sought here is a determination that what has already been done is sufficient. The determination is also being sought not in the context of an artificial desire to reverse the tiebreak priority principles but in effect to give effect to what would be the effect of the tiebreak principles but for the actions of the Swiss Court clerk if the court is satisfied as to the material that is served. The order being sought is an aid to the Claimants seeking to exercise their Article 6 rights.

If the order is granted that will necessarily have the effect of conferring priority on the English proceedings. That is not of itself a ground for challenge. If the proceedings had been fully and effectually served i.e. including an English Claim Form, that would have prevented Mrs Nussberger and Nefer effectively commencing proceedings in Switzerland. To that extent her and Nefer’s “Article 2 rights” are overridden by the issue of proceedings by the Claimants under Article 6. It is common ground between the parties that the question of what material needs to be served (as opposed to the mode of service) is a matter for the English court.

The English court’s discretion to address the lack of service of the original Claim Form for the purposes of establishing definitive seisin is invoked under CPR 3.10 and 6.9. I accept it cannot be invoked via CPR 6.8 because the authorities establish that cannot be done retrospectively.

The theme to be distilled from all of the cases to which I have made reference earlier in this judgment is that even in Convention cases the court retains a discretion. It is plain from the tenor of both the domestic and international decisions that exceptional circumstances or rare circumstances are the occasions when the exercise of the discretion should occur. Such a consideration is necessarily fact based on a case by case basis. Generalised guidance may be obtained from the way in which the court exercised discretion or not exercised discretion in earlier cases. Such factual indications cannot be definitive as regards a future case based on its own facts. I accept that the observation in the courts show that the circumstances have to be as I have said exceptional or rare for the discretion to be exercised especially in the context of international cases where the formalities have to be strictly observed. I stress again that formalities as regards service are clearly more difficult than the contents of the material that is actually being served.

As I have said above I cannot exercise a discretion under CPR 6.8 to provide for an alternative method of service now. Even if I could it would not achieve a priority self evidently because of the Zurich proceedings have already been issued.

The circumstances which have led to the omission of the original Claim Form from the envelope which was handed to Mrs Nussberger are in my view extraordinarily unique. In the light of the fresh evidence of the first witness statement of Anna Louise King dated 26^th July 2005 and the first witness statement of Mr de Walden also dated 26^th July 2005 any criticism of the Claimants’ solicitors is really minimal. Mrs Nussberger was until the 19^th January 2005 in a position of issuing her own proceedings and achieving priority because she had never been served by that time. She did not do so. She has not identified any disadvantage or prejudice that she might sustain. All that she will lose is her priority action in Zurich. As I have set out above it is doubtful whether the proceedings are Article 2 compliant. She obtained that opportunity to seek priority by virtue of her exploiting the fact that the original Claim Form had been removed when so far as I can discern that arose principally out of the failures of the Court Office in England and the clerk in Zurzach. There was nothing the Claimants could have done save (in a perfect world), despite the acceptance by the issuing officer in the English court of the Claim Form, officiously insisting that the red marking either be struck through or clean forms be issued. That is unreal in my judgment in the context of an apparent acceptance by the English court that the document is acceptable.

I have no jurisdiction over the Zurzach court of course but its clerk’s surprising action caused all the problems. It would in my view be a gross miscarriage of justice if the lack of service in circumstances identified in this case meant that their proceedings were to be stayed as against Mrs Nussberger. The circumstances of this case are in my view such that for the purposes of definitive seisin I should determine that the documents served on 19^th January 2005 as against Mrs Nussberger are sufficient. For those purposes I decline to make any order under CPR 3.10 setting aside or staying the proceedings because the original Claim Form was not handed over. Further under my powers under CPR 6.9 in so far as necessary I dispense with service of the Claim Form and determine that this Court was definitively seised when the documents were served on Mrs Nussberger on 19^th January despite the omission of the original Claim Form.

That is not of course the end of the matter because an original Claim Form will have to be served on Mrs Nussberger in due course in order to progress the action. I will hear submissions as to the timetable of the service of such a fresh Claim Form. In the context of Mrs Nussberger it is also interesting (but possibly not of great weight) to note that apparently the Zurich court did not open the envelope to be served on Nefer let alone remove the Claim Form from it.

Accordingly I determine that as regards Mrs Nussberger the Claimants are entitled to the relief under paragraphs (1) and (2) of the draft order attached to their amended application.

For the reasons set out earlier in this judgment if it is relevant I would also determine that if Nefer has been served on 19^th January 2005 I would make a similar order against it. I do not see that the balancing exercise as against Nefer is any different to that which I have applied in respect of Mrs Nussberger.

The first issue that I have to determine against Nefer is whether or not it has been served according to Swiss law. If it has then it seems to me that for the same reason as set out in the previous paragraph I would exercise my discretion in the same way as I have exercised it in respect to Mrs Nussberger’s resistance to the Claimants‘ application.

If the position is that service is not good according to Swiss law, the question then arises in effect as to whether or not I should dispense with service of anything at all on Nefer under CPR 6.9 or CPR 3.10.

In the context of Nefer the defects of the stamping of the Claim Form had no impact. Nor in my view did the lack of reference to the Post Office Box have any impact. That is well demonstrated by the fact that Nefer itself in its proceedings did not use the Post Office Box for service and the fact that the attachment proceedings were effectively served, despite the lack of the Post Office Box number in that documentation.

The sole reason why service was not effected as intended was down to a failure of the postman in Zurich properly to determine that the documents should have been left in the Post Office Box number or alternatively a note left in that number saying documents were available. If the documents had been properly served ultimately they would have been passed on to Mrs Nussberger as she is the sole directing mind of Nefer for the purposes of its activities. She actually had what I have determined is all the necessary material that Nefer could possibly want. The original Claim Form is not necessary for the purposes of definitive seisin as I have determined although I accept the Claim Form will also have to be re-served on Nefer in order to progress the English proceedings if they are not stayed as against it.

Nefer is not disadvantaged. Nefer was present at the hearing on 19^th January 2005. It was represented by lawyers and its prime officer Mrs Nussberger was present. The presence of course was to set aside the attachment but nevertheless it through Mrs Nussberger must have known (just like her personally) by virtue of the attachment that proceedings were contemplated in England. It had had validly served on it for example my order of 15^th December 2004 and the supporting material. Despite that fore knowledge Nefer like Mrs Nussberger had chosen not to issue their own proceedings. They could of course have done so and had they done so under Article 21 (subject to the Article 2 point) those proceeding would have obtained a tie break priority.

The question therefore first to be decided is whether or not service on Mrs Nussberger on 19^th January 2005 was good service on Nefer according to Swiss law. It should in that context be noted of course that I have no discretion either under the Hague Convention for service nor in effect under Swiss law to dispense with service. All I can determine is whether the service as effected was valid or not. Of course I have already determined that for the purpose of the English court the material for service is sufficient. Therefore in contrast to the judgment above dealing with the material as against Mrs Nussberger the issue here is as to the mode of service.

Nefer is Zurich based. Accordingly Zurich cantonal law determines whether or not it can be served in Aargau on 19^th January 2005 as contended for by the Claimants.

I had extensive evidence on Swiss law from both parties. The Defendants provided a report from Professor Karl Spuhler a judge in the canton of Zurich and a legal counsel with the firm of Schurmann and Partners. He had also been a member of the Superior court of the canton of Zurich for 12 years and sat as a federal judge with the Swiss Federal Supreme Court for 17 years. Finally he had also held a chair at the University of Zurich for Civil Procedural Bankruptcy Law and Civil Law since September 2002.

The Claimant relied upon a report by Professor Yves Donzallaz. He had qualified as an Advocat in the canton of Valais in 1988 with the right to practice throughout Switzerland. He is in addition has been a qualified notary since 1987. He has had various teaching posts at the Universities of Lucerne and Savoie (France) and has had an association with the University of Fribourg. Finally his experience of the judicial system in the capacity of an Adovcat had been complimented by work for several years as a clerk to a Police Court at municipality level.

Both witnesses supplemented their reports with live evidence and were extensively cross-examined.

Professor Spuhler gave his evidence in a strong and robust way. He clearly has considerable experience (far more that Professor Donzallaz). In addition the Claimants initially asserted in their case for obtaining attachment in the district courts that service had not taken place on Nefer. The case was apparently based on a deemed service because it was suggested that Nefer for example had been evasive as regards its address for service. It is now accepted that it is not possible to say that Nefer was evading service in any way.

Under CPR 6.24 where a claim is served out of the jurisdiction it may be served by any method permitted by the law of the country in which it is to be served but nothing in any rule or order made by the court could authorise anything in the country where service was to be effected which was contrary to the law of that country. It is common ground that service had to be effected under the Hague Convention which required service in accordance with the Swiss law through a “Central Authority” (Article 3). Switzerland has objected to a postal service from abroad. Service in Switzerland is a formal law and taken very seriously. When it is a matter of foreign service infringing sovereignty it is subject to criminal sanctions under Article 271 of the Criminal Code.

The Superior Court of each canton (in this case Zurich) is the designated Central Authority. The English court requested service on Nefer to be made by the Central Authority of Zurich. No other form of request by the English court would have been in accordance with the Hague Convention. The service thereby sought failed in my view by reason of the failure of the Post Office in Zurich properly to serve the documents by leaving them either in the Post Office Box of Nefer or leaving a note for documents to be collected. The Claimants cannot be blamed for that failure for the reasons I have set out above. I reject the submission of the Defendants that the lack of addressing of the Post Box number had any impact on that failure of the Swiss postal service. Equally as I have said above the stamping of the original Claim Form had no apparent impact at all on the Superior Court in Zurich serving the proceedings.

Cantons in Switzerland are sovereign federal states. On account of the principle of territoriality it is not competent to serve in other member states otherwise in compliance with the Concordat established by the Cantons for inter Cantonal service. Service is apparently permitted between Cantons via post (Article 6) but in any other case they must seek the judicial assistance of the authorities of the other canton (Article 9).

That is reinforced by paragraph 178 GVG for Canton of Zurich which provides that to serve persons living outside the canton they must be served by the judicial assistance of the competent authorities or their place of ordinary residence. Within Switzerland the service may also be made by using the postal service.

There are procedures for fictitious service. That is service which is deemed to have taken place but such only occurs in my view as Professor Spuhler says when a party is evading service. There is no question as I have said of the Claimants now contending that Nefer evaded service. The only reason Nefer was not served was a failure on the part of the Post Office as I have said. Nefer can hardly be said to be acting in an improper way as regards service of documents when there is no evidence which shows that it expected documents to be served on it and took steps to frustrate or hinder such service.

Equally of course no one (including the Claimants) was expecting Nefer to be served on 19^th January 2005. In that context the procedure applicable by the Zurich cantonal law set out above would only have enabled that service to take place if a request had been made to the Aargau Superior Court or it was effected by post. Both of those alternatives would of course require action on the part of the Zurich canton. No such action was taken in this case.

As I have said above when the judge in Zurzach served Mrs Nussberger it was plain he did not understand he was thereby purporting to serve Nefer. It is true that Nefer was there represented by lawyers and Mrs Nussberger but they were there for an entirely different purpose. Even if the judge had purported to serve Nefer he had no authority so to do absent a request from the Zurich canton to effect such service. It will also be appreciated that the request for service emanating from the English High Court was addressed to the Zurich court as regards Nefer and not the Aargau court. It is also true that the Claimants at the time believed service was in the process of being effected on Nefer in Zurich.

The Claimants (through Professor Donzallaz) suggests that the acceptance by Mrs Nussberger of the package on 19^th January 2005 is a voluntary acceptance on behalf of Nefer by Article 5. I do not agree. For the reasons set out above earlier in this judgment I do not see how it can be argued in any credible way that she was voluntarily accepting service on behalf of Nefer.

This is the thrust of the evidence of Professor Spuhler which I unhesitatingly accept. I reject Mr Donzallaz’ suggestion that service on Mrs Nussberger as a director could be valid under Swiss law because it could pierce the corporate veil and treat service on her as having been made on Nefer. Professor Donzallaz said this would be an extreme case to justify piercing the corporate veil because she was the only representative as the sole shareholder and because they were represented by the same lawyer. I prefer the evidence of Professor Spuhler (paragraph 56 of his report date 13^th May 2005). Whilst it is clear that service can be effected in an extreme case it seems to me that can only arise when there is an exceptional and extreme case of blatant abuse. As Professor Spuhler says the principle of legal autonomy of a legal entity in each shareholder can only be disregarded in instances where the legal independence of the company were deliberately and fraudulently deployed in order to mislead the other party and to induce it to misapprehend the identity of its counterpart in legal relationship. There has been no such action on the facts before me by either Nefer or Mrs Nussberger. As I have said above the failure to serve Nefer arose solely out of the actions of the Post Office.

I do not see therefore that there is any gap in the Zurich law as regards service which can justify treating service on the director in this case.

Professor Donzallaz’ second argument was based on Article 65 LP. This is a federal code applicable primarily in insolvency and bankruptcy. It is true that it prescribes a permissive method of service on (amongst others) a director. However I do not see that there is any void in the Zurich court procedure which would allow Article 6 to be had recourse to for the purposes of service in this action. The Zurich Code by paragraph 178 has a comprehensive method of service which is supplemented by paragraph 179 dealing with fictional service.

Professor Donzallaz expressed the view that by virtue of Article 5 (3) of the Swiss Constitution and Article 2 of the Swiss Federal Code each party to proceedings must act in the manner conforming with the rules of good faith and may only exercise his rights in accordance with the rules of good faith. Professor Spuhler expressed the view that that duty if it arose at all only applied after the parties had been engaged i.e. served. He expressed the view that the relevant sanction that is applicable by analogy to good faith before the proceedings are served is the ability to invoke the fictitious service rule when a proposed recipient of proceedings is evading service. This seems to me to be compelling and I prefer Professor Spuhler’s opinion to that of Professor Donzallaz. I accordingly conclude therefore that there was no duty of good faith on Nefer unless and until it was served in accordance with Zurich cantonal law or service was disposed of under Article 179 for example of the Zurich Code.

In case I am wrong in that I find it impossible to find any breach of good faith by Nefer, Nefer was not evading service. It was not making it difficult for service. It had not misled the Claimants that service would be valid if handed over to Mrs Nussberger. I do not see that they had any duty to make themselves available for service.

The best that can be said is that when Mrs Nussberger became aware of the deficiencies in the documents served on her Nefer came under an obligation to draw that to the attention of the Claimants and make itself available for service. I do not see that it has any such duty. Nor can I see any basis for suggesting that what was done after the 19^th January 2005 was in bad faith. If Nefer had a right to institute proceedings under Article 2 I do not see how it can be said that the institution of those proceedings with a view to obtaining Article 21 priority as opposed to giving the Claimants an opportunity to effect service and achieve priority as regards the English proceedings can be said to be a breach of good faith.

Accordingly in my view it is not possible to allege that Nefer (taking into account my view about the need for an original Claim Form) has been validly served according to Swiss law on 19^th January 2005.

That is not however the end of the matter. Both parties accepted that the question of the mode of service was that to be determined by the applicable Swiss law to either Mrs Nussberger or Nefer as the case may be. Both parties acknowledge it is for the English court to determine what has to be served. I have already determined that the material handed to Mrs Nussberger (and validly served on her according to Swiss law) on 19^th January 2005 is sufficient for this court to be definitively seised for the purposes of the dispute between the parties.

I have determined that Nefer was not served. Nevertheless Mr Martin QC acknowledges that even in the case of convention cases CPR 6.9 gives the English court a discretion to dispense with service of the Claim Form. He submits (and is supported by cases set out earlier in this judgment) that the exercise of a discretion to dispense with service of the Claim Form should be undertaken only in very exceptional circumstances. I have already determined that the circumstances regards Mrs Nussberger are my view sufficiently exceptional. It seems to me that the circumstances that apply to Nefer are equally sufficiently exceptional for this court to dispense with the need for service on it of the Claim Form for the purpose of this court being definitively seised for the purpose of the action. My reasons are as follows:-

Mrs Nussberger has been served and by reason of my decision remains a party to the action in England.

Nefer via Mrs Nussberger was completely aware of the proceedings which were brought against it.

Nefer was aware before 19^th January 2005 via Mrs Nussberger with knowledge of the attachment and by the service of the attachment on it both in Zurich and Aargau that proceedings were brought against it.

Mrs Nussberger on 19^th January 2005 (taking into account my decision in respect of the original Claim Form) had enough material for Nefer to understand that proceedings were brought against it and the nature of those proceedings. That is at the least demonstrated by the contents of the Zurich proceedings which were issued on 4^th February 2005.

The only reason the Claimants failed effectively to serve Nefer was a failure of the Swiss Post Office which was a circumstance beyond their control. But for that failing it would have been validly served and in any event the English court would have been definitely seised.

It would be unjust in my view that the Claimants should carry the consequences of that decision in the light of Nefer’s knowledge attributed to it by Mrs Nussberger above to such an extent that the English proceedings should not regard themselves as definitively seised.

No prejudice has been identified by Nefer. All it has done is attempt to issue its own counter proceedings with a negative declaration. If those proceedings remain there will be duplication of proceedings which can (see Tatry) be a result of the application of the Lugano Convention but is an unintended result. I say that because the purpose of the Lugano Convention was to provide a mechanism to avoid duplication of proceedings. The irony is that Nefer’s arguments are designed to ensure a duplication of proceedings on the basis of (interalia) arguments asserting rights for service under the Lugano Convention

Accordingly I conclude the English court is definitively seised as regards Nefer. This decision is made as an aid to the Claimants enforcing their Aritcle 6 rights in respect to the English proceedings. I do not see that there is any injustice in that nor can I see that that is taking away any rights it has.

As with Mrs Nussberger for the purposes of prosecution of the English action a Claim Form will have to be served so that Nefer like Mrs Nussberger has an opportunity to file acknowledgment forms so the action can proceed. Nevertheless for reasons set out earlier I am satisfied that the English court is definitively seised as regards Nefer also.

In case I am wrong as regards Nefer I would not think it appropriate to stay the English proceedings merely because there were Zurich proceedings in place. I do not see why the Claimants should suffer that disadvantage. Nor for that matter do I see why the English Defendants should have proceedings brought against them subject to a stay pending the outcome of the Zurich proceedings when the result of those proceedings does not bind them.

The duplication of proceedings which would thus ensue arises solely out of the actions of Mrs Nussberger on her own and Nefer’s behalf. If the result is that the English proceedings are to continue as against her but not Nefer it is for her to decide whether that is a sensible course of action. She can address whether Nefer and her interests are best addressed by the single English proceedings resolving the disputes between the parties. It is however in that context solely a matter for her.