High Court reaffirms process agent clause

High Court reaffirms process agent clause

The High Court recently had to consider whether documents had been properly served on a process agent in accordance with the CPR 6.11.

Background

In Banco San Juan Internacional Inc v Petroleos De Venezuela SA [2020] EWHC 2145 (Comm) Foxton J had to decide whether proceedings brought by a bank against an oil company (PDVSA) had been properly served on a process agent.

The structure of the relevant clause was:

  • PDVSA was obliged to immediately appoint a process agent as an authorised agent for service of proceedings in England.
  • If for any reason the process agent ceased to be such an agent, PDVSA must immediately appoint a new agent and notify that appointment within 30 days.
  • If PDVSA failed to comply with its obligation to appoint a new agent, the bank could appoint an agent for service on PDVSA.

PDVSA did initially appoint a process agent but then let the appointment expire in breach of the process agent clause and did not appoint a process agent in respect of a second facility a year later.

The bank then appointed a new process agent for service under the terms of the clause, on behalf of PDVSA. PDVSA argued that the agent was not validly appointed by the bank and the papers could nt be validly served.

Decision

Foxton J rejected this argument, as the clause expressly permitted the bank to appoint an agent on PDVSA’s behalf.

The judge also rejected the argument by PDVSA that it had to be notified in respect of the appointment or that it had any consent rights over who the process agent should be or the terms of the appointment.

Conclusion

The UK Courts have once again reaffirmed the validity of a process agent clause and the appointment of a process agent, which is only good news. However, it does show the importance of this clause and the nature of the appointment.

From the perspective of the non-UK party, if they let a process agent appointment lapse, then there is a risk that they will be landed with a process agent not of their choosing and on terms they did not want.

From the UK party’s perspective, it shows the importance of having a proper process agent clause in place that allows the UK party to appoint a new process agent.

How Elemental can help

As well as acting as a process agent in the normal course, we also have a specialist service where we are being appointed by the bank or UK party under a clause such as that in this case. Please get in touch if you are interested in using this service.

Nick Lindsay
nick.lindsay@elementalcosec.com
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