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Update: New gateway for service out comes into force on 1 October 2022

Commencing proceedings against a foreign party can often be a perilous journey filled with pitfalls, however, forthcoming changes to Practice Direction 6B will make this a potentially more streamlined and easier process in certain circumstances.

Practice Direction 6B of the Civil Procedure Rules deals with service outside of the jurisdiction. Within the Practice Direction there are gateways which define the circumstances in which the Court may give permission for a claim to be served out of the jurisdiction and as such, they are central to defining the scope of the territorial jurisdiction of the Courts of England and Wales.

In order to commence any proceedings, the defendant has to be served so that they are aware of the existence of the proceedings. This can prove tricky if the defendant is not in England and Wales as there is a strict process that you have to adhere to. In most cases to serve outside of the jurisdiction you will require the permission of the court and you will have to show how the claim comes within one of the jurisdictional gateways detailed in Practice Direction 6B.

New provisions

From 1 October 2022 there are amendments to these gateways that provide both helpful clarification and, in some cases, expand the gateways further. One of the most interesting and significant changes is the brand-new jurisdictional gateway relating to information orders such as Norwich Pharmacal or Bankers Trust Orders. This new gateway will be at paragraph 3.1(25) and is as follows:

Information orders against non-parties

(25) “A claim or application is made for disclosure in order to obtain information—

(a) regarding:

(i) the true identity of a defendant or a potential defendant; and/or

(ii) what has become of the property of a claimant or applicant; and

(b) the claim or application is made for the purpose of proceedings already commenced or which, subject to the content of the information received, are intended to be commenced either by service in England and Wales or pursuant to CPR rule 6.32, 6.33 or 6.36.”

The outcome of this addition is that whilst court permission is still required there is now a gateway through which the claim can proceed internationally.

Practical application

In fraud litigation, these kinds of applications are often used to allow fraud victims to establish where their money has gone and trace potential defendants. For example, victims of authorised push payments can obtain the name and details of the bank account that their money was paid to. The expansion of the jurisdictional gateways will be helpful to these victims as often the payments are made into bank accounts that are held overseas.

This is not the only advantage to this expansion; it also has the effect of helping those who have lost cryptoassets. In recent years investing in cryptocurrency has moved into the mainstream, however, cryptocurrency is largely unregulated and is often the basis upon which fraudsters elicit funds from victims.

There are no borders with cryptocurrency and as such cryptocurrency exchanges are often based outside of the jurisdiction making it difficult to locate where the money has gone. The changes to Practice Direction 6B mean that rather than a victim having to bring a proprietary claim against “persons unknown” first they can just proceed under the new gateway, saving time and costs.

The Master of the Rolls, Sir Geoffrey Vos, stated that he hoped that these developments in the Court’s rules will make it “generally easier to litigate on issues that arise in relation to on-chain transactions and tracing of crypto assets”.

Tenet can help ease the burden of financial crime compliance using our litigation case experience to help you, your organisation and your customers stay safe. Learn more about our Compliance & Regulatory service.

Published on September 15, 2022

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