Key takeaways
English court confirms jurisdiction in fraud dispute
Exclusive jurisdiction clauses remain a powerful safeguard.
Directors face personal exposure in tort claims
Fraud and conspiracy allegations can cross borders.
Service out rules demand careful compliance
Formalities matter when serving parties abroad.
Sucden Financial Ltd -v- TMT Metals AG & others [2025] EWHC 2006 (Comm)
The English Court has dismissed jurisdictional challenges brought by the sole director, Mr Gupta, of a Swiss metals trader in an attempt to derail a summary judgment decision against the company for a contractual debt arising under a facility agreement.
As a result, related claims against Mr Gupta in tort, for deceit or fraudulent misrepresentation, together with related conspiracy claims can proceed in the English Court.
The background facts
Sucden Financial Ltd (Sucden) is a derivatives and commodities broker incorporated in England & Wales. Mr Gupta is resident in Dubai and is an indirect shareholder in, and sole director of TMT Metals AG (TMT), a metal trader incorporated in Switzerland.
In February 2010, Sucden agreed to provide TMT with a futures and options trading facility (Facility). The Facility was governed by English Law and contained an exclusive English Court jurisdiction clause.
In March 2022, Sucden made margin calls on TMT, in respect of the Facility. TMT did not pay. Sucden subsequently argued it was induced by TMT, Mr Gupta and another company, Mine Craft Ltd (MCL), to refrain from taking enforcement action against TMT, and in that connection to rely on a bill of lading (Bill) as security for TMT’s liability to it. A Memorandum of Deposit (Memorandum) dated 19 August 2022 in favour of Sucden was eventually signed, by Mr Gupta, for TMT, in respect of the Bill.
The Bill stated that the shipper was MCL, said to be headquartered in Hong Kong and controlled at all material times by Mr Gupta. The Bill described as “particulars furnished by shipper” nine containers “said to contain” bundles of nickel full plate cathodes.
The containers were shipped to Shanghai from Rotterdam. When the containers were opened at Shanghai, they were found to contain a low value composite rather than high value nickel. Sucden alleged that TMT and Mr Gupta had fraudulently represented that these were shipping containers containing nickel and that Mr Gupta, TMT and MCL were guilty of a conspiracy to defraud Sucden.
The claims
On 11 August 2023, Sucden issued English court proceedings against TMT for a contractual claim under the Facility, claiming over US$6.6 million in debt or as damages (Contract Debt). As against TMT and Mr Gupta, Sucden claimed almost US$6.75 million in tort, for deceit or fraudulent misrepresentation. As against TMT, Mr Gupta and MCL, Sucden claimed that same amount of US$6.75 million for conspiracy to harm Sucden by causing it to accept security for debt that was not of the value suggested.
The difference between the two amounts claimed in the contractual and tortious claims comprised demurrage charges in Shanghai, plus customs fees, warehousing, storage fees and similar expenses (Expenses).
The proceedings were served out of the jurisdiction on Mr Gupta and also served by alternative means.
On 18 April 2024, Sucden obtained summary judgment against TMT for the Contract Debt. The Court held that TMT’s defence that Sucden had waived its right to call for prompt payment of the margin call, or was estopped from doing so, had no real prospect of success in that it was inconsistent with the express terms of the Facility. The Court granted summary judgment in favour of Sucden against TMT in the amount of US$6.6m plus interest and costs.
Service out of the jurisdiction
Pursuant to clause 26.1 of the Memorandum, TMT and Sucden agreed that the English Court would have exclusive jurisdiction “to settle any dispute arising out of or in connection with” the Memorandum “including any non-contractual obligation arising out of or in connection with” the Memorandum.
Clause 26.3 of the Memorandum contained agreement by TMT for Sucden to serve proceedings on TMT by service on an agent within the jurisdiction, and this course was used by Sucden.
TMT did not dispute that it was bound by the exclusive jurisdiction clause. However, Mr Gupta challenged service as he was not personally a party to the Memorandum. He also challenged service on TMT even though TMT had not contested jurisdiction.
Sucden had sought leave to serve the defendants out of the jurisdiction pursuant to the following jurisdictional gateways.
Damage sustained within the jurisdiction
Jurisdictional gateway 3.1(9) under CPR PD6B allows a claimant to serve a claim form out of the jurisdiction with the permission of the Court under CPR 6.36 where a claim is made in tort and “(a) damage was sustained … within the jurisdiction”.
On the evidence, the Court found that (I) by a letter dated 24 March 2022, Sucden had agreed to delay taking action to enforce the Contract Debt against TMT (Reliance Letter) and (ii) at a meeting in London on 22 June 2022, representatives of TMT, including Mr Gupta, had confirmed that TMT would formalise the agreement contained in the Reliance Letter by way of a pledge of the Bill as security for the Contract Debt.
The damage said to have been sustained by Sucden due to Mr Gupta’s alleged deceit and fraudulent misrepresentation, and the conspiracy in which he was alleged to have taken part, took two forms. First, delay in pursuing the Contract Debt and, second, the incurring of the Expenses.
In the Court’s view, the alleged meeting was sufficient to show damage sustained within the jurisdiction, in the form of delaying pursuit of the contract debt. On the allegations made, the meeting in England caused Sucden, itself in England, to continue to wait rather than act to enforce the Contract Debt, including through commencing proceedings in the jurisdiction.
Necessary or proper party
Permission to serve Mr Gupta out of the jurisdiction had also been obtained pursuant to gateway 3.1(3) under CPR PD 6B, on the basis that he was a “necessary or proper party” to the claims being brought against TMT.
By contrast with the other heads of jurisdiction under the CPR, this gateway is not founded upon any territorial connection between the claim, the subject-matter of the relevant action, and the jurisdiction of the English courts.
Mr Gupta argued that this gateway could only be used in respect of a claim relating solely to the contract containing the terms for service on an agent (as in the Memorandum), whereas here there were claims in tort.
In circumstances where a contract contains an exclusive English jurisdiction clause, then service out of the jurisdiction without permission would be permitted under CPR6.33(2B)(b), provided that, pursuant to CPR 6.34, a notice containing a statement of the grounds on which the claimant is entitled to serve the claim form out of the jurisdiction is filed before service.
The Court noted that such a notice had not been filed in this case and that there was therefore a potential obstacle to reliance on this gateway. However, the Court was satisfied that there was a good arguable case that the claims fell within at least one of the heads of jurisdiction.
The Court further concluded that there was a serious issued to be tried as against Mr Gupta.
Appropriate forum
The Court also considered whether the English Court was clearly and distinctly the most appropriate forum to determine the claim against Mr Gupta, and whether to exercise its discretion to permit service of the proceedings out the jurisdiction.
The facts of the case involved a number of jurisdictions in Europe, the Middle East and the Far East. It was possible to make points for and against the appropriateness of a number of jurisdictions. However, in the Court’s view, the balance clearly and distinctly showed the English Court to be the most appropriate forum and it should exercise its discretion in favour of permitting service of the proceedings out the jurisdiction.
Among other considerations: (i) Sucden was based in the jurisdiction, including its management and at least some of its employees who could give evidence; (ii) the commercial context was said to include access by TMT to trading on the London Metals Exchange; and (iii) the Memorandum was governed by English law.
Finally, the Court dismissed the challenge to the order for alternative service. To do otherwise would only lead to unnecessary delays.
Comment
In circumstances where the Court had already held that the defences to the contractual claim had no real prospect of success, it was not minded to decline jurisdiction with regard to the non-contractual claims.
For those who are commencing proceedings pursuant to an exclusive English court jurisdiction provision in their contract, it is worth keeping in mind that service out of the jurisdiction may be effected, without leave from the Court, if the requisite formalities are complied with.
