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Is a good arguable case good enough? The Court of Appeal considers the test for establishing jurisdiction

19 February 2019. Published by Emma West, Senior Associate and Geraldine Elliott, Global Head of Commercial Disputes

The test for deciding whether a claimant has a good arguable case is relative following the Court of Appeal's decision in Kaefar v AMS Drilling and others.

It is appropriate for a court to take into account the relative merits of the parties' arguments in deciding whether a claimant has a "good arguable case" that a jurisdictional gateway applies, following the Court of Appeal's decision in Kaefar Aislamientos SA de CV v AMS Drilling Mexico SA de CV and others [2019] EWCA Civ 10 . Where the court does not have the evidence to decide which party has the better argument a more flexible approach should be adopted.

What happened?

The claimant carried out work to an oil drilling rig in the Gulf of Mexico and sought permission to serve four companies out of the jurisdiction for sums due under the relevant contract. The claimant argued that the jurisdictional gateway in Article 25 of the Recast Brussels Regulation applied, because the parties were bound by an exclusive jurisdiction clause in favour of the English courts.

However, only two of the defendants (AMS and AMS Mexico) were parties to the contract containing the exclusive jurisdiction clause and they were in financial difficulties. In order to establish that the jurisdictional gateway applied in respect of the other two defendants (AT1 and Ezion), the claimant had to show a good arguable case that they were acting as AMS and AMS Mexico's undisclosed principals in relation to the contract and so were bound by the exclusive jurisdiction clause.

What did the Court of Appeal decide?

The Court of Appeal decided that it did not have jurisdiction over AT1 and Ezion because on the facts the claimant did not have a good arguable case that they acted as AMS and AMS Mexico's undisclosed principals and were therefore bound by the exclusive jurisdiction clause.

How do you show a good arguable case?

The Court confirmed that the test to be applied when determining whether the claimant has established a good arguable case that a jurisdictional gateway exists is as follows:

• The claimant must have a plausible evidential basis that the relevant jurisdictional gateway applies. The court should consider whether the claimant has a better argument that the evidential basis exists, though a "much" better argument is not required. The test is therefore relative and a claimant's success will depend on the strength of its arguments as against the defendant's arguments.

• If there is an issue of fact or some other reason for doubting whether the jurisdictional gateway applies, the court must take a view on the material available if it can reliably do so. This acknowledges that an element of pragmatism is required where the decision on jurisdiction is taking place at an interim stage without all the evidence that would be available at a trial.

• If no reliable assessment can be made of the evidential basis for the gateway then there will be a good arguable case if there is a plausible (albeit contested) evidential basis for it. In these circumstances, the court does not need consider which party has the better argument.

Is it all relative?

It is now clear that a claimant usually needs to show that it has the better argument that a jurisdictional gateway has been established before it obtains permission to serve out of the jurisdiction. In circumstances where the evidence is thin, it is not all relative and a claimant is just required to demonstrate a plausible evidential basis that the gateway exists. A word of warning though - the Court warned that claimants should not try to engineer a lack of evidence by making extensive document requests from defendants.