Shiblaq v Sadikoglu

This judgment begins where my first judgment in this matter given on 25 July 2003 (“the First Judgment”) left off. There are two main issues:

Was the service said to have been effected on the defendant in Turkey on 7 September 2001 or earlier a valid service for the purposes of CPR 12.3(1) so as to entitle the claimant to obtain judgment in default of acknowledgement of service under CPR 12?

If the answer to (a) is that the service was not valid, whether this court should make an order in accordance with the claimant’s applications, issued since the last hearing, under CPR 3.10, which provides as follows:

and/or under CPR 6.9 which provides that the court may dispense with service of a document.

Issue (a) can be sub-divided into two parts:

was the method of service of foreign proceedings adopted in this case permissible under Turkish Law?

Alternatively, was the method of service permissible under Article 15 of the Hague Convention to which both Turkey and the United Kingdom are parties?

As to the validity of service under Turkish Law the following is a summary of the expert evidence.

Professor Helvaci of the Istanbul University Law Faculty, who was consulted on behalf of the defendant and whose opinion is referred to in paragraph 25 of the First Judgment, stated that by reason of the Anglo-Turkish Convention of 1932 valid service could only be effected through diplomatic channels. This convention continued to apply in spite of the Hague Convention. He did, however, state or at least imply that service by a notary public following the procedure in the present case, although invalid as regards foreign proceedings, could be valid as regards Turkish domestic proceedings.

Professor Yavuz of the Law Faculty of Marmara University, together with Professor Celikel and Professor Yildirim, consulted on behalf of the claimant, state that the provisions of the Hague Convention have displaced the 1932 Convention and that, if the proceedings had been Turkish domestic proceedings, they could have been served by a notary public in the manner adopted in the present case pursuant to Article 70 of the Notary Public Law. Service of the foreign proceedings in this case could be validly served by a notary public.

Professor Ata Sakmar, a Professor of Private International Law and International Business Law at Galatasaray University, Istanbul, consulted on behalf of the Defendant, stated that foreign proceedings cannot be served directly on an intended defendant in Turkey save subject to the principles of reciprocity and in any event a notary public has no power to effect service of judicial documents in Turkish domestic proceedings because that must be effected by the court authorities through the Turkish post. He did, however, agree that the Hague Convention superseded the 1932 Convention. However, since a notary public could not directly serve any judicial proceedings, that Convention did not have the effect of permitting service of foreign proceedings by such means.

In a further joint report of Professor Celikel, a former Dean of Istanbul University Law Faculty, Professor Yavuz and Professor Yildirim, it was stated that a notary public could validly serve foreign proceedings direct on an intended defendant. Even if such service was not in accordance with Turkish requirements, the effect of Article 32 of the Notification Law and Article 51 of the Notification Regulation was that if the person ineffectively served had become aware of the proceedings against him he would be treated as duly served. The facts of the purported service by the notary public in this case were such that the defendant must have come to know of the attempted service and the English proceedings soon after the notice slip was attached to the door of the shipyard. Accordingly, there was then deemed to be a valid service. In any event there was valid service under Article 10 of the Hague Convention.

In a Rejoinder Legal Opinion Professor Sakmar reiterated that a notary public does not have power directly to serve domestic proceedings. Further, Article 32 of the Notification Law only applied in cases where the person ineffectively served had formally declared or confessed that he was aware of the ineffective service. It was not open to the claimant party to prove that the contents of the document came to the attention of the addressee. Only the admission of the addressee could be relied on to establish such knowledge and the date when the addressee acquired it. Further, Article 32 could not be deployed for the purposes of the Hague Convention. Accordingly, Article 10 of that Convention could not be relied on.

There is also a yet further response by Professor Sakmar which is substantially consistent with his previous opinions. Finally the claimant’s three advisers have jointly rejected Professor Sakmar’s interpretation of Article 32 so as to require an admission from the addressee as a condition of its cure of an ineffective service. Moreover, the defendant’s refusal in this case to receive the documents to be served was, if necessary, a sufficient admission by them of notice of the proceedings.

I am bound to say that I have found the disagreement of these Turkish professors on what amounts to valid service under Turkish law to be very surprising indeed. One would have thought that the Turkish courts would long since have conclusively determined whether proceedings – certainly domestic proceedings – could be effectively directly served by a notary public. One of the difficulties which has confronted this court in trying to evaluate the conflicting evidence is the familiar problem of the partially opaque nature of much of the English used in the translations of the articles of Turkish law and of the experts’ reports. When confronted by this kind of conflict it is not easy for an English judge to place himself precisely in the shoes of a Turkish court in resolving the issues. One can, however, to some extent test the position by considering whether the propositions advanced about the meaning and effect of codified provisions of Turkish Law are tenable having regard to the translated words used and whether, with regard to the purpose of the provision, one meaning is intrinsically more likely than another. On applications such as this conducted on the basis of written reports alone and without the benefit of oral evidence, the court must also have regard to the preponderance of legal opinion before it.

With this approach in mind and doing the best I can with the translations of reports and procedural rules, I have come to the conclusion that the view shared by Professor Dr Helvaci, Prof Yavuz, Prof Celikel and Prof Yildirim that valid service of domestic proceedings on an intended defendant in Turkey can be effected directly on the defendant by a notary public is correct. It is to be observed that this was the procedure which the claimant’s Turkish lawyer regarded as appropriate and which the notary public also appears to have considered within his powers. Only Professor Sakmar states that it was ineffective and I am bound to say that I find his attempt to cut down the meaning of Article 70 of the Notary Public Law extremely unconvincing.

I conclude, on the basis of the whole of Turkish legal opinion adduced for this hearing, that a notary public is empowered to effect valid service of domestic Turkish proceedings by direct service on the defendant. The question then arises whether according to Turkish Law the same rule applies to foreign proceedings.

Dr Sakmar’s argument is that service of foreign proceedings by that means is impermissible. His opinion rests not only on the assertion that a notary public cannot serve domestic proceedings, but also that Turkey has registered an objection to Article 10 of the Hague Convention. This provides as follows:

There is no doubt that Turkey has registered such an objection.

It will be observed that the purpose of this provision is to preserve those methods of service listed in (a), (b) and (c) in parallel with the methods specified in Article 3 to 6 (service through the Central Authority of the state addressed), Article 8 (service through diplomatic or consular agents) and Article 9 (service through consular channels or the authority in another contracting state designated to receive such service). It is only if a contracting state registers an objection to the use of methods (a), (b) or (c) that under the Convention methods (a), (b) or (c) are not available. Dr Sakmar derives from this objection to Article 10 the proposition that direct service by a notary public in Turkey of foreign proceedings commenced in the courts of a contracting state cannot be permissible.

In a very recent final report the Claimant’s experts have expressed the view that application of the reciprocity principle leads to the conclusion that there has been effective service by post under Article 10(a): Britain has registered no objection to service under 10(a) therefore service by this means in Turkey must be valid. I cannot follow this reasoning. In effect it is using lack of objection by one contracting party to defeat a registered objection by another. This is apparently contrary to principle and to the express words of the Convention. Nothing else in this most recent report effectively displaces Dr Sakmar’s argument that Turkey’s registered objection under Article 10 renders impermissible direct service of foreign proceedings in Turkey by the method used in this case. The fact that Turkey has entered such an objection to such methods of service of foreign proceedings does not conclusively establish that service by the method used in this case is impermissible in Turkey, but it does raise the very strong inference that such is indeed the case. One would thus have expected to find in the final report of the Claimant’s experts a coherent account of why that inference should not be drawn. Instead, the report includes the intrinsically implausible argument on reciprocity to which I have referred together with a bold assertion that service was not effective.

In my judgment, the evidence most recently advanced by the Claimant’s experts has not displaced the inference arising from Turkey’s objection to Article 10 of the Hague Convention that direct service of foreign proceedings in Turkey by methods (a), (b) or (c) is impermissible.

It is, however, on the basis of Article 15 of the Hague Convention that the Claimant primarily relies for the proposition that service on the Defendant in Turkey by a method permissible for the service of Turkish domestic proceedings is sufficient to constitute effective service for the purposes of obtaining a judgment in default of acknowledgement of service.

Article 15 provides as follows:

Mr Joe Smouha QC submits that the effect of this provision is to enable a claimant to obtain a judgment in default if proceedings were served by a method prescribed by the internal law of the state in which service was effected for the service of documents in domestic proceedings on persons within the territory of that state. He further submits that in the present case service was effected in conformity with Turkish domestic law for the service of documents in domestic proceedings – as I have held – and that such service was effected in sufficient time to enable the defendant to defend.

It is argued by Mr David Quest, on behalf of the Defendant, that the function of Article 15 is to provide a minimum level of protection to intended defendants by prohibiting default judgment to be entered unless there has been at least service in accordance either with a method prescribed for service in domestic proceedings or with the method in Article 15(b). In other words Article 15 does not provide for what is to be done by way of service in order to found a default judgment but merely that nothing less must be done than use of one of the specified methods.

The proper construction and effect of Article 15 were expressly left open in paragraph 28 of the First Judgment in this application, although I expressed the provisional view that its effect was not to substitute for any applicable domestic law provision for the method of service of foreign proceedings the method of service of domestic proceedings in the country in question.

Having heard further argument on this point I am not persuaded that my provisional view is not correct. The key to construction of Article 15 is that it is concerned with transmission abroad of a writ or similar document for the purpose of service “under the provisions of the present Convention”. Such provisions include various methods of service, such as service through the Central Authority of that state (Article 5), service directly through diplomatic or consular agents (Article 8) and service through designated state authorities, (Article 9). Further, Article 10 also contemplates a much more liberal service regime unless there is an objection to such method.

Clearly, Article 15 is catering specifically for the giving of judgment in default of appearance following the use of some method of service, involving transmission of documents abroad, which is “under the provisions of the …. Convention”. In other words, this Article does not define available methods of service but rather the necessary minimum characteristics of the method of service adopted if a judgment is to be given. Thus, if one of the methods of service contemplated by the Convention involved service or delivery of the document, otherwise than in accordance with (a) or (b) or in circumstances which gave the defendant insufficient time to defend, judgment could not be obtained for that claim on the basis of that service. I accept the submission that the Article has the purpose of protecting the defendant against judgment obtained in circumstances less favourable in terms of notice to him than the methods specified in (a) or (b) and subject to the method affording to him sufficient time to defend.

Thus, one always starts from a method of service under the provisions of the Convention. In my judgment, this clearly cannot include a method of service under Article 10 to which specific objection has been registered by the state party in which service is effected. If that is what Article 15 meant, it would present a means of nullifying any such objection.

This being so, I conclude that the argument that, because the method of service used would have been a permissible method of serving domestic proceedings in Turkey, it can necessarily provide the basis for a judgment in default of appearance is misconceived. If such method is not a permissible method of service of foreign proceedings in Turkey under Turkish procedural law, Article 15 of the Convention does not provide any alternative route to effective service for the purpose of obtaining judgment in default.

It therefore follows that the method of service adopted in this case was not permitted by the law of Turkey within CPR 6.24(a). Even if it was permitted under Turkish law for service of domestic proceedings, it was not a method permitted for service of foreign proceedings. Indeed, it was a method expressly excluded by reason of the Turkish objection registered under the Hague Convention and could not therefore be within the scope of CPR 6.24(a). Nor was it a method of service designated by CPR 6.25(1) as appropriate where the claim form is to be served on a defendant in a country which is a party to the Hague Convention.

Accordingly, subject to the Claimant’s applications under CPR 3.10, for the court to remedy errors in service and under CPR 6.9 to dispense with service, this judgment in default of acknowledgement of service must be set aside under CPR 13.2. I must therefore now consider these applications.

Mr Smouha submits on behalf of the claimant in relation to CPR 3.10 that it was established under the Rules of the Supreme Court that the purpose of service is to bring the proceedings to the intended defendant’s attention and that the court will consider curing irregularities in service, including service outside the jurisdiction, where it can be shown that, in spite of the defect in service, the proceedings were brought to the defendants’ attention. In this case the conduct of the defendant called for the court’s intervention. In particular, he had at the last hearing conceded that he had heard of the proceedings much earlier than he originally claimed to have done. Yet between December 2001 when he conceded he had notice of the proceedings and May 2003 he did not instruct English solicitors and offered no satisfactory explanation for having failed to do so. Further, although on 17 May 2003 he obtained an adjournment of the Dubai enforcement proceedings on the grounds that he was applying to set aside the English judgment he did not even issue the present applications for another month. Accordingly, it was to be inferred that the methods of service used – which were valid for Turkish domestic proceedings - had provided him with adequate notice and therefore the court should now cure the defect in service. The defendant would not be prejudiced since he must have had notice of the claim at the material time, namely when the ineffective service was carried out. The application of the court’s power to remedy the defect in service therefore should result in the case being taken out of CPR 13.2 because the judgment was not “wrongly entered” since the exercise of the CPR 3.10 remedial power would result in the service in Turkey being deemed to be valid, an acknowledgement of that service not having been filed and the judgment in default consequently having been properly entered. It would follow that there should be no mandatory setting aside of the judgment, thereby leaving only the discretionary power to set aside under CPR 13.3.

In support of his submissions Mr Smouha relied on the decision of the Court of Appeal in The Goldean Mariner [1990] 2 Lloyd’s Rep 215.

The consequence of these submissions would be that, notwithstanding the express provisions of CPR 6.24 setting out the permissible methods of service outside the jurisdiction, the English courts could exercise a residual discretion to substitute a different method of service and one which was impermissible either under the law of the country in which service was attempted or under any relevant Civil Procedure Convention. The result would be the exercise of extra-territorial jurisdiction in circumstances where the formalities of service prescribed by local law or international convention had not been complied with. This would be an approach which the English courts would in principle hesitate long before adopting and which is not consistent with the jurisdictional basis of CPR 6.24(2).

The Goldean Mariner, supra, was concerned with the application of the predecessor of CPR 3.10, namely RSC Order 2, rule 1. This provided as follows:

Leave having been given ex parte to serve a number of defendant reinsurers outside the jurisdiction, six of them were served with writs in identical form but each of the writs was addressed to the wrong defendant. A seventh defendant was not served with any writ but merely with an acknowledgment of service form bearing the names of all the defendants in the title. The primary issue was whether these steps engaged the court’s jurisdiction to exercise its discretion under RSC Order 2, rule 1(2). Phillips J. had held that they did not. The Court of Appeal held that they did in relation to the six defendants, and by a majority (McCowan LJ. and Sir John Megaw) in relation to the defendant who never received a writ. Lloyd LJ. agreed with Phillips J. that in the latter case the failure to serve anything more than an acknowledgement of service form was an omission so serious that it was not a failure to comply with the requirements of the Rules by reason of something left undone.

McCowan LJ. and Sir John Megaw held in relation to the latter defendant that there had been an attempt to take a step in the proceedings but a failure to comply with the Rules as to what document should be served for that purpose. There was a purported commencement of proceedings within RSC Order 2, rule 1 in relation to which there had been a failure to comply with a requirement of the Rules.

It is to be observed that the wording of RSC Order 2, rule 1(1) was significantly more specific than the wording of CPR 3.10. In particular the use of the phrase “in beginning or purporting to begin any proceedings” points reasonably clearly to attempting unsuccessfully to bring proceedings due to a failure to comply with the requirements of the rules. Those words are thus clearly wide enough to include the use of a document which does not qualify as a writ. The phraseology of CPR 3.10 directs itself to an error in procedure which might otherwise render invalid “any step taken in the proceedings”. The commencement of proceedings takes place when a claim form is issued by the court (CPR 7.2(1)). It follows that the service of a claim form whether in this country or outside the jurisdiction is a “step in the proceedings”. Thus, there is at least on the face of the wording of CPR 3.10 jurisdiction under (a) to order that an error in service (by non-compliance with a rule or practice direction) shall invalidate service and under (b) to make an order remedying any such error.

But how far does this rule go? Does it enable the court to remedy an error in a step in the proceedings on the basis of validity of which further steps have already been taken, such as those in the present case, which have involved impleading a foreign defendant in a manner impermissible by the law of his country and under any international convention and, in reliance on that erroneous step, taking the further step of signing judgment in default of an acknowledgement of a service which under the law of both countries he was entitled to ignore (see First Judgment paras 20-24)?

It would indeed be very remarkable if the answer to this question were yes. For it would mean that the court could retrospectively order that service was valid with the effect that retrospectively it engaged the (invalidly served) defendant’s duty to acknowledge service when at the relevant time he was under no present duty to do anything at all (see First Judgment paras 20-24) and thereby retrospectively to create all the facts which would have existed had there been a presently valid service and so justify signing judgment in default. Such a result would be palpably absurd.

In Elmes v. Hygrade Food Products plc [2001] EWCA CIV 121 it was held by the Court of Appeal that CPR 3.10 could not be used so as to have the effect that an order for alternative service under CPR 6.8 should retrospectively be deemed to have been made prospectively. That was a case where the error in service consisted of serving the defendants’ insurers instead of the defendants themselves. The claim form having been issued on the last day of the limitation period and mis-served on the last day of the four month validity of the form for service, the claim had become time-barred unless the service could be retrospectively validated. It is, however, clear from the judgment of Simon Brown LJ. that this feature of the case played no part in the court’s reasoning.

The present case points even more obviously than Elmes v. Hygrade Food Products plc, supra, to the inapplicability of CPR 3.10.

It illustrates the limits on the manner in which that rule can be retrospectively applied. Specifically it cannot be used to avoid the consequences of failing to utilise CPR 6.8 prospectively in order retrospectively to validate defective service. It certainly cannot be used retrospectively to create a deemed breach of the duty to acknowledge service and thereby to justify signing judgment in default. I would hold that this is not merely a matter of the exercise of the court’s discretion to remedy errors under CPR 3.10(2) but goes to the scope of CPR 3.10(1). Accordingly, the approach of the Court of Appeal in The Goldean Mariner, supra, does not apply to the scope of CPR 3.10.

If I am wrong in concluding that the effect of CPR 3.10(1) does not extend to render valid an ineffective service out of the jurisdiction and that there is no jurisdiction under 3.10(2) retrospectively to validate such service, I would hold that the discretion to remedy such an error should not normally be exercised 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.

In a case where retrospective validation of such service is deployed by a claimant in order to justify a judgment in default of acknowledgment of service, I would hold that it would be an inappropriate exercise of the discretion to remedy the defect in service, even if it were established that the intended defendant had become well aware of the claim within the time period for acknowledgment of service. A defendant cannot be put in the position of being subjected to a default judgment by retrospective validation of service when he had not failed to file an acknowledgment of service which at the relevant time he was under no duty to file.

The Claimant’s application under CPR 3.10 is therefore refused.

As to the application under CPR 6.9, that rule provides as follows:

It is submitted on behalf of the Claimant that the court should now cure retrospectively the position arising from the failure to accomplish effective service in Turkey by an order dispensing with service. In other words, the defendant would be impleaded outside the jurisdiction by simply being informally notified of a claim and could then be subjected to a default judgment because he had failed to acknowledge service which was ineffective and had been subsequently dispensed with.

In Godwin v. Swindon Borough Council [2002] 1 WLR 997 the claimant sought to avoid the effect of CPR 7.6(3), which lays down the only circumstances in which the court has power to extend time for service of the claim where the application is made for extension of time after the period for service has already expired, by applying for an order dispensing with service under CPR 6.9. The Court of Appeal concluded that CPR 6.9 could not be used retrospectively to provide what would have the effect of an extension of time in circumstances which were outside those identified in CPR 7.6(3).

However, in Anderton v. Clwyd County Council (No.2) [2002] 1 WLR 3174 the Court of Appeal, while accepting that CPR 6.9 could not be applied retrospectively on the facts in Godwin, held that there might be cases where it could be applied retrospectively. At page 3197 Mummery LJ. said this:

The application of that approach led to the court allowing the appeal in Chambers v. Southern Domestic Electric Services Ltd, at p3198-3199, a case where the claim form was received by the defendant and had come to its solicitor’s attention before the end of the period for service but had not been formally served until after its expiration. By that time the defendant had already admitted liability and negotiations as to quantum were afoot. A settlement offer had been made. It could thus be regarded as “an exceptional case”.

In Cranfield v. Bridgegrove Ltd [2003] EWCA Civ 656, the Court of Appeal expanded on the circumstances in which CPR 6.9 could be used with retrospective effect. At paragraph 86 the court decided that good service had been effected at the company’s registered office. However, in case that was wrong, the court considered (obiter) whether it was an appropriate case to dispense with service. At paras 87-88 Dyson LJ. said this:

On the basis of these decisions it can be concluded that CPR 6.9 can only be applied with retrospective effect in exceptional cases particularly where the making of such an order has the same effect as if an order had been made extending time for service or dispensing with service of the claim form. What facts are necessary to render the circumstances exceptional cannot be pre-defined, but in general the starting point will normally be that within the time for service the defendant has been as fully informed of the claim against him as if service of the claim form had been properly effected. The provision of effective service would therefore not provide the defendant with anything of substance he did not already have, except a formal document.

All these cases were concerned with service within the jurisdiction.

In only one reported case has CPR 6.9 been considered in the context of service outside the jurisdiction. That is the decision of Lawrence Collins J. in Bas Capital Funding Corporation [2004] 1 Lloyd’s Rep 652. In that case, leave having been given to serve English proceedings in Malta, the claim form and particulars of claim were faxed and emailed and delivered by hand at the registered offices of the company and at the private address of the owner and a director of the company. All these methods were ineffective as service under English law or Maltese law. Upon an application by the claimant to dispense with service under CPR 6.9 Lawrence Collins J., having referred to Knauf UK v. British Gypsum Ltd [2002] 1 WLR 907, observed at p674-675:

He then adjourned determination of the application of CPR 6.9 by which time proper service could be effectively carried out or the defendant could have withdrawn objection to defective service.

In Knauf UK v. British Gypsum Ltd, supra, the relevant issue was whether an order should have been made under CPR 6.8 to permit service on German defendants’ solicitors in England where, under the Hague Convention and the Anglo-German bilateral treaty, it was impermissible to serve the defendant in Germany by post, so that much time would be saved by service on the solicitors in England. At p921 Henry LJ. giving the judgment of the Court observed:

With regard to the jurisdictional requirements of the Brussels Convention the judgment continued at p924:

Although this decision is concerned with the prospective applicability of CPR 6.8, the underlying principles are relevant to the retrospective applicability of CPR 6.9. In particular, there is the strong disapproval of the deployment of the rule to subvert the requirements of the Hague Convention (where an objection under Article 10 has closed off a less cumbersome method of service) so as to engage the rules of the Brussels Convention as to jurisdictional precedence. I have already referred to this problem in paras 36 and 37 above. It was no doubt with this in mind that Lawrence Collins J. expressed hesitation as to the use of CPR 6.9 in Bas Capital, supra, although in that case no international service convention was involved.

The correct approach is, in my judgment, that neither CPR 6.8 (prospectively) nor CPR 6.9 (prospectively or retrospectively) should normally be used if their deployment is for the purpose of substituting a form of service or avoiding a defect in service which is inconsistent with a service convention binding as between this country and the country of service. Where it is sought to apply CPR 6.9 retrospectively, if the effect of dispensing with service is to place the defendant in the same position as he would have been in if service had not been by an impermissible method but by a method provided for by such service convention, no order should be made. The impleading of a foreign defendant which is provided for by international convention should not be effected by a fictional device aimed at circumventing the formal requirements of the relevant convention. This is an emanation of the fundamental principle of international comity and is not amenable to dilution by any feature of the Overriding Objective in CPR 1.1.

Further, even if one took the view that CPR 6.9 could be applied retrospectively to cure defective service in a case such as this, its application would not have the effect of retrospectively imposing on the defendant a duty to acknowledge service. Ex hypothesi there never has been any service such as to engage that duty at the time when it would fail to be performed. It follows that there is no way in which the retrospective application of the rule can found a basis for obtaining judgment in default.

For these reasons, the defendant’s application to set aside the judgment in default succeeds. The claimant’s applications in respect of CPR 3.10 and CPR 6.9 are refused. The order is therefore that the judgment in default is set aside under CPR 13.2. It follows that no discretionary order under CPR 13.3, whether in the terms set out in paragraph 46 of the First Judgment or otherwise, is called for. The defendant is entitled as of right to an order under CPR 13.2. The claimant should be left to a method of service specified by the Hague Convention and to which Turkey has registered no objection.