Case No: 2003 Folio 466

Neutral Citation No [2004] EWCH 129 (Comm)

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 4th February 2004

Before :

THE HONOURABLE MR JUSTICE DAVID STEEL

---------------------

Between :

MARCONI COMMUNICATIONS INTERNATIONAL Claimant

LIMITED

- and -

PT PAN INDONESIA BANK LIMITED TBK Defendant

---------------------
---------------------

Anthony Bueno QC (instructed by Hamilton Downing Quinn) for the Claimant

Angus Glennie QC (instructed by Thomas Cooper and Stibbard) for the Defendant

---------------------

Judgment
Mr Justice David Steel:

Introduction

1. The Claimant (Marconi) is an English company. It changed its name from

GPT International Limited in December 1998. The Defendant (Panin Bank) is an

Indonesian bank. It has no place of business within this jurisdiction. Marconi claims

damages against Panin Bank for breach of contract in respect of the latters failure to

honour its obligations as a confirmer of a Letter of Credit. Marconi alleges that Panin

Bank wrongfully failed to accept drafts properly drawn upon it and presented to it

under the terms of that credit.

2. In this application Panin Bank applies: -

i) To set aside the order of Andrew Smith J dated 16th May 2003

permitting Marconi to serve the claim form on Panin Bank out of the

jurisdiction.

ii) To set aside the order of David Steel J dated the 12 th June 2003

permitting the Claimant to serve the claim form on the defendant at the

London Offices of Messrs Thomas Cooper and Stibbard, Panin Banks

solicitors.

iii) To set aside the service of the claim form on Panin Bank.

iv) For a declaration that, in all the circumstances of the case, this court

has no jurisdiction over Panin Bank in respect of the subject matter of this

action.
 3. Marconi resists the application on the basis that it has a good arguable case

that the English court has jurisdiction and that England is clearly the most convenient

forum for the determination of the claims.

Background

4. Marconi is a manufacturer of telephone equipment. Pursuant to a sale contract

concluded in 1996, Marconi agreed to supply telephone equipment and services to an

Indonesian company called PT Prismasentra Agung (the Buyers). The total contract

price was for $14,221,972.60 fob UK port, to be shipped from a UK airport or seaport

to Singapore. The price was expressed to be payable by means of Letters of Credit,

60 days from date of shipment, such credits to be established two weeks prior to the

commencement of deliveries for the subsequent 3 month period.

5. The sale contract further provided that such letters of credit shall be

established and advised through Standard Chartered Bank, 25 New London Bridge

House, London SE1 9TB (SCB) to GPT upon contract signature. The payment for

the equipment would be upon presentation of documents at the counters of the

advising bank. Clause 23 of the sale contract stipulated that its validity constitution

and performance. shall be governed by English law.

The Letter of Credit

6. In accordance with the terms of the sale contract, the Buyers established

various Letters of Credit, including two relating to the final call-off of 7,500 units.

The first, which related to 3,000 units, was paid. The second, and final, Letter of

Credit was issued in respect of the remainder (4,500 units) of the call-off. It is this

second, and final, Letter of Credit (the L/C) which is the subject of these

proceedings.
 7. The L/C was issued by Hastin Bank, another Indonesian bank, on the

application of the Buyers and it was duly advised to Marconi in this country by SCB

London by telex dated 27th March, 1997 at the direction of Hastin Bank. The relevant

terms of the L/C were as follows: -

TO : STANDARD CHARTERED BANK. LONDON

ATTN : L/C DEPT

FM : HASTIN BANK, H.O., JAKARTA

8. WE OPEN USANCE IRREVOCABLE CREDIT AVAILABLE BY

NEGOTIATION OF BENIFICIARYS DRAFT AT 60 DAYS AFTER AWB AND OR

B/L DATE DRAWN ON US FOR 100 PCT OF THE INVOICE VALUE

INDICATING CREDIT :

9. ..

10. ISSUE DATE: MAR.27, 1997

11. EXPIRY DATE: APR.21, 1998 IN BENEFS COUNTRY

12. APPLICANT: PT. PRIMASENTRA AGUNG

13. WISMA TAMARA LT.2, SUITE 1102

14. JAKARTA SELETAN.

15. BENEFICIARY: GPT INTERNATIONAL LTD

16. EDGE LANE, LIVERPOOL L7 9NW, UNITED

KINGDOM

17. L/C AMOUNT: GBP.3,307,500.00 CIF

 18. SHIPMENT: PARTIAL ALLOWED

19. TRANSHIPMENT: ALLOWED

20. PORT LOADING: UNITED KINGDOM AIRPORT AND OR

SEAPORT

21. PORT DESTINATION: SINGAPORE AIRPORT AND OR SEAPORT

22. DESCRIPTION OF GOODS:

PAYPHONES AND EQUIPMENT

23. COUNTRY OF ORIGIN: UNITED KINGDOM

24. DOCS REQUIRED:

- SIGNED COMMERCIAL INVOICE

- PACKING LIST IN THREE FOLDS

- ORIGINAL MASTER AIRWAY BILL

- CERTIFICATE

OF ORIGIN

- INSURANCE CERTIFICATE

25. OTHER CONDITIONS:

26. THIS CREDIT REQUIRES CONFIRMATION BY PANIN BANK,

JAKARTA AND CONFIRMATION FEE FOR APPLICANTS ACCOUNT.

 27. THE ADVISING BANK IS REQUIRED TO NOTIFY THE

BENEFICIARY WITH ADDING THEIR CONFIRMATION.

28. THE AMOUNT OF EACH DRAFT MUST BEENDORSED ON THE

REVERSE OF THE CREDIT BY THE NEGOTIATING BANK.

29. INSTRUCTION FOR

NEGOTIATING BANK:

30. - UPON RECEIPT OF DOCUMENTS BY US IN FULL

COMPLIANCE WITH THE CREDIT TERM AND CONDITIONS. AT

MATURITY DATE WE SHALL REMIT THE PROCEEDS IN

ACCORDANCE WITH NEGOTIATIONS BANKS INSTRUCTION.

31. WE HEREBY AGREE WITH DRAWERS, ENDORSERS AND BONAFIDE

HOLDERS OF DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE

TERMS OF THIS CREDIT WILL BE HONOURED AND THAT DRAFTS

ACCEPTED WITHIN THE TERM OF THIS CREDIT WILL BE DULY

HONOURED AT MATURITY:

32. THIS CREDIT IS SUBJECT TO THE UCP FOR DOCUMENTARY CREDIT

1993 RE VISION, ICC PUBLICATION NO.500.

33. Panin Banks confirmation was added to the credit by telex dated 1 st April

1997 addressed to SCB with the request:

PLEASE ADVISE BENEFICIARY ACCORDINGLY.

34. The credit was also amended that same day to provide that the Beneficiarys

draft should be drawn on Panin Bank and that the documents were to be sent to Panin

Bank in Jakarta.
The Claims

35. The first and second shipments, respectively of 1000 and 500 units of

telephone equipment from the final call under the sale contract, were shipped by sea

to Singapore for delivery to the buyer. Marconi drew two drafts on Panin Bank

which, together with the other documents stipulated in the credit, were presented on

its behalf to Panin by SCB which, it is alleged, acted as Marconis collecting agent.

These documents were sent on about 23rd December 1997 and on 16th January 1998

respectively and were received by Panin Bank in Indonesia a few days later.

36. It appears, that on receipt of these documents, Panin Bank passed them on to

Hastin Bank which rejected them as not conforming to the documents required by the

credit. In turn Panin Bank also refused to take up the documents or accept the two

drafts, which had been drawn upon it, adopting the reasons for rejection advanced by

Hastin Bank. It is accepted that the reasons given by Hastin Bank for rejecting the

documents are, to put it no higher, arguably unjustified. By way of example, the

credit described the Beneficiary as GPT International Limited, Edge Lane, Liverpool

L7 9NW United Kingdom whilst the documents referred to GPT International

Limited Payphone Systems, Edge Lane, Liverpool L7 9NW, a difference

characterised by Hastin Bank as a discrepancy.

37. The various discrepancies were rejected by SCB on Marconis behalf as

unjustified. But Panin Bank maintained its refusal to pay. Hastin Bank, in the

meantime, became insolvent. Indeed it is notable that shortly after the rejection of the

documents, both the Buyers and Hastin Bank asked for the balance of the sale

contract, and also the credit, to be cancelled because of the rapidly deteriorating

economic situation in Indonesia.

 38. Aside from contending that the documents were not discrepant, SCB further

asserted on Marconis behalf that Panin Bank, as the confirming bank, was

responsible for communicating discrepancies under Article 14 (G) (i) of the UCP to

SCB from whom it had received the documents. An opinion supporting this

interpretation of Panin Banks obligations as a confirming bank was given by the ICC

UK Committee on 7th June 1997. Panin Bank has refused to accept this opinion.

39. Marconi has been paid for these two consignments by its Credit Insurers.

These proceedings have been brought in Marconis name for the benefit of such

insurers.

40. After correspondence and discussion failed to resolve the situation, a statutory

demand was then issued against Panin Bank in this country and, upon its failure to

comply, a winding up petition was presented against it. Panin Bank disputed the

jurisdiction of the Companies Court to wind it up. Panin Bank retained Messrs

Thomas Cooper and Stibbard for that purpose. Thereafter, Panin Bank, it was alleged,

removed its only asset from the jurisdiction, which was said to have consisted of a

credit balance with HSBC. In any event, the petition was dismissed by consent in

March 2003.

41. It was following such dismissal that this action was commenced in which the

claim is for I,102,500.

Permission to serve out

42. The basis of the successful application to serve proceedings out of the

jurisdiction pursuant to CPR 6.20 was formulated in various ways: -

a) The contract between Panin Bank, as confirming bank, and

Marconi, as beneficiary, was made within the jurisdiction.

 b) The contract was made by SCB London who was Panin Banks

agent for the purpose of advising the confirmation to Marconi.

c) The credit was governed by English law.

d) The failure to honour the credit constituted a breach of contract

within the jurisdiction.

43. Panin Banks response in short is that the credit was governed by Indonesian

law not English law and, further, that by virtue of Indonesian law, all three of the

alternative grounds cannot be made out either.

Governing Law

44. In the light of this summary of the issues, it is obviously convenient to start

with the question whether there is a good arguable case that the contract is governed

by English law rather than Indonesian law (the only viable alternative): Seaconsar

Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC.438.

45. Of course the primary question is what is the governing law of Panin Banks

confirmation albeit it is common ground that the same system of law must govern the

co-existing contracts between the issuing bank and the beneficiary, between the

issuing bank and the confirming bank and between the advising bank and the

beneficiary. However, in common with most letters of credit, the credit does not

contain a proper law or jurisdiction clause. Moreover, the UCP makes no provision as

to how the system of law governing the credit is to be determined.

The Rome Convention

46. The issue is to be determined by reference to the Rome Convention. The

relevant article is Article 4: -

 1. To the extent that the law applicable to the contract has
not been chosen in accordance with Article 3, the contract shall
be governed by the law of the country with which it is most
closely connected. Nevertheless, a severable part of the
contract which has a closer connection with another country
may by way of exception be governed by the law of that other
country.

2. Subject to the provisions of paragraph 5 of this Article,

it shall be presumed that the contract is most closely connected
with the country where the party who is to effect the
performance which is characteristic of the contract has, at the
time of conclusion of the contract, his habitual residence, or in
the case of a body corporate or unincorporate, its central
administration. However, if the contract is entered into in the
course of that partys trade or profession, that country shall be
the country in which the principal place of business is situated
or, where under the terms of the contract the performance is to
be effected through a place of business other than the principal
place of business, the country in which that other place of
business is situated.

5. Paragraph 2 shall not apply if the characteristic

performance cannot be determined, and the presumptions in
paragraphs 2, 3 and 4 shall be disregarded if it appears from the
circumstances as a whole that the contract is more closely
connected with another country.

47. It was Panin Banks submission that the presumption in Article 4 (2) inevitably

let to the conclusion that the contract is governed by the law of the place where the

confirming bank was situated i.e. Indonesia. In support, the bank relied upon a

passage in Dicey and Morris 13th Ed. Para 33-304.

Thirdly, where the correspondent bank confirms the credit, an

independent contract arises as between the bank and the seller
(beneficiary). At common law, this contract was held to have
its closest and most real connection with the country where the
branch of the bank at which payment was to be made to the
seller was situated. The same view has been expressed, obiter,
as to the position under the Rome Convention. That view is
supported by the fact that the characteristic performance
remains that of the bank, either because the bank is providing a
banking service or because it is critically central to a letter of
credit that the bank undertakes to pay the seller (beneficiary) on
presentation of conforming documents. The presumption in
Article 4 (2) of the Convention therefore refers to the law of the
country in which the branch (the relevant place of business) of
the bank where payment is to be made is situated. Again it is
 most unlikely that, in relation to this contract, there would be
circumstances justifying displacement of the presumptively
applicable law in favour of the law of another country, pursuant
to Article 4(5) of the Rome Convention.

48. In support of this passage, particular reliance was placed by Panin Bank on the

decision of Mance J in Bank of Baroda v Vysya Bank [1994] 2 Lloyds Rep.87. In

that case the relevant credit, issued by an Indonesian Bank, was confirmed by the

London Office of the claimants. Since the performance characteristic of Bank of

Barodas contract with Vysya was the addition and honouring of its confirmation of

the credit in favour of the sellers, the presumption contained in Article 4(2) was

accordingly that the contract between Vysya and the Bank of Baroda was governed by

English law. In turn this led to the conclusion that, to avoid the governing law

varying as to whether one was looking at the position of the issuing bank or the

confirming bank, the appropriate application of Article 4 (5) resulted in the conclusion

that the contract between Vysya and the buyer was governed, not by Indian law the

country in which the banking facility had been provided, but English law.

49. As put by Mance J in his judgment: -

It follows in the present case, looking at the position of the

Bank of Baroda in relation to the confirmation given to
Grenada, that the performance characteristic of the Bank of
Barodas contract with Vysya, however made, was the addition
and honouring of its confirmation of the credit in favour of
Grenada. That performance was to be effected through the
Bank of Barodas City of London office viz a place of
business other than its principal place of business and so by
the expressed terms of Article 4(2) the presumption is that the
English law governs the contract between Vysya and the Bank
of Baroda.

50. The position in the present case is of course that SCB did not confirm the

credit. Does this affect the position bearing in mind that:

 i) SCB advised Marconi both of the issuance of the credit (by their letter

dated 27th March) and of its confirmation (by their letter dated 1st April), both

as required under the credit.

ii) The credit was available by negotiation and SCB were contemplated

by the credit as the (or one of the) negotiating banks. Although SCB did not in

the event negotiate the credit, it acted as collecting bank in checking and

forwarding the documents and requesting payment to their own London

account.

iii) Panin Bank undertook to reimburse SCB if SCB negotiated the

documents.

51. In short, it was contemplated that the credit would be communicated in this

country and become effective here, that the documents would be presented here and

that payment would be here. It does not seem to me to be a matter of great

significance in considering the application of Article 4 taken as a whole that SCB did

not add its confirmation. The availability of SCB as a negotiating bank would give

rise to the same closeness of connection with England. The performance characteristic

in those circumstances would remain the provision of the banking service in the form

of payment on presentation of non-discrepant documents. Given the availability of

negotiation in that form, it would be contrary to the requirement of avoiding the

governing law being dependant on the mode of negotiation chosen to contemplate that

a different law would govern in the event that negotiation did not take place.

52. Thus, whilst Article 4 (2) might still lead to the presumption that the contract

is most closely with Indonesia (being the country where the party who was to effect

performance which was characteristic of the contract was situated), there is a good
arguable case in my judgment that the application of Article 4 (5) would lead to a

disregard of that presumption since the circumstances as a whole demonstrate that the

contract was more closely connected with England.

53. Such would probably have been the outcome at common law. For instance, in

Offshore International SA v Banco Central SA [1976] 2 Lloyds Rep. 402 [1977] 1

WLR 399 the relevant letter of credit had been issued by a Spanish bank although

opened and advised (but not confirmed) by a New York bank. Payment was to be

made in US dollars against documents presented in New York. Ackner J summarised

the position as follows: -

The contest here is between New York law and Spanish law.
What are the relevant factors in favour of each? As regards
New York, the credit was opened through a New York bank;
payment was to be made in US dollars. Further, such payment
was only to be made against documents presented in New York.
In favour of Spanish law being the proper law, is the fact that
the letter of credit was opened by a Spanish bank, the 1st
defendants.

Thus, on the side of New York are all matters of performance,

whereas, in relation to Spanish law, Spain and a Spanish bank
was the source of the obligation. In my judgment, it is with
New York law that the transaction has its closest and most real
connection. Moreover, I am satisfied that Mr York was
correct in his contention that very great inconvenience would
arise, if the law of the issuing bank was to be considered as the
proper law. The advising bank would have constantly to be
seeking to apply a whole variety of foreign laws. Indeed it is
very difficult to follow exactly what would flow from Mr
Alexanders submission, if the advising bank was (as was not
in this case) to confirm the letter of credit.

54. In Power Curber International Ltd v National Bank of Kuwait SAK [1981] 1

WLR 1233 (C.A.), the claimant, a company based in North Carolina, contracted to

sell machinery to buyers in Kuwait. At the request of the buyers, the defendant bank

issued an irrevocable letter of credit to a North Carolina bank in favour of the

claimant. Against this factual background the Court of Appeal held that it was the law
of North Carolina with which the contact had its closest and most real connection

being the place where payment was to be made against presentation of documents.

Lord Denning observed that Offshore International SA and Banco Central SA was

rightly decided and could not be distinguished on any valid grounds. Lord Justice

Griffiths put the matter in this way at p.399: -

In my view the proper law of the letter of credit was the law of
the State of North Carolina. Under the letter of credit the bank
accepted the obligation of paying or arranging the payment of
the sums due in American dollars against presentation of
documents at the sellers bank in North Carolina. The bank
could not have discharged its obligation by offering payment in
Kuwait. Furthermore, the bank undertook to reimburse the
advising bank if they paid on their behalf in dollars in America.
In Offshore International SA and Banco Central SA Mr
Justice Ackner held that the place at which the bank must
perform its obligation under a letter of credit determine the
proper law to be applied to the letter of credit. In my view that
case was correctly decided.

55. These two decisions were of course reached before the implementation of the

Rome Convention. However, the proper approach to the issue, in circumstances

where the letter of credit has not been confirmed by the advising bank, was revisited

in Bank of Baroda v Vysya Bank (supra). Mance J in an obiter passage at p.93

stated: -

The fact that the credit was to be confirmed by Bank of

Baroda City of London branch highlights the need for Article 4
(5) and its applicability in this case. But I should not be taken
as suggesting that the conclusion would be any different if the
credit had been an unconfirmed credit to be opened and advised
on Vysyaa behalf in London through National Westminster or
Bank of Baroda city branch available for negotiation here. I
agree with the editors of Dicey and Morris that the application
that the law of the place of performance would in such a case
still be likely to be to result, by application of Article 4 (5), as it
did apply common law principles

56. I find that the claimants have made out a good arguable case that the contract

between the confirming bank (Panin Bank) and the beneficiary (Marconi) was
 governed by English law since a chosen method of performance was by way of

negotiation of the documents at the offices of the advising bank in London with

payment in sterling. Any other conclusion would give rise to the very great

inconvenience contemplated by Ackner J. This conclusion cannot be affected by the

fact that, in the event, the documents were not negotiated by the advising bank but

were forwarded to the confirming bank as a collecting bank with the request that

payment be effected in London.

57. As I understand it, if that conclusion be correct, it is common ground not only

that there is a serious issue to be tried as regards the conformity of the documents but

also that the defendants have not made out that the Indonesian Courts are distinctly

the more appropriate forum for determining the issues. Strictly speaking this makes it

unnecessary to consider the alternative paragraphs under CPR 6.20 relied upon by the

claimants. But, on the assumption that I am wrong and the Indonesian law is to be

treated as the governing law of the contract, I turn to consider the other grounds said

to justify leave for service out of the jurisdiction.

Contract made within the jurisdiction

58. As regards the question whether the contract was made within the jurisdiction

or was made by or through an agent trading or residing within the jurisdiction, the

starting point is Article 8 of the Roman Convention: -

8. Material validity.

(i) The existence and validity of a contract, or of any term

of a contract should be determined by the law which
would govern it under this convention if the contract or
term were valid.

59. In respect of the question as to where the contract was made, the defendants

rely upon an opinion of an Indonesian firm of lawyers, Messrs. Remy and Darus, to
 the effect that the contract was made as a matter of Indonesian law in Indonesia. This

is a somewhat surprising proposition given that the opinion expressly recognises that

a legal relationship is established if but only if the confirmation is conveyed to the

beneficiary. For my part, I have difficulty in understanding why, as the opinion goes

on to assert, the General Rule of Legislation for Indonesia Chapter 18 (which

provides the form of legal action decided by the court will be in accordance with the

laws and legislation of the country or place where the legal act took place)

nonetheless leads to the conclusion that the contract is not made at the place where

(and at the time when) the confirmation was duly conveyed. Thus, if it had been

material, I would have accepted that there is a good arguable case that Indonesian law

is no different from English law in this respect: see Jack Documentary Credits 3rd

Ed. para 2.11.

Contract made by agent trading or residing within the jurisdiction

60. As regards the question whether SCB was an agent of Panin Bank in advising

confirmation of the contract, this of course is well established as a matter of English

law: see Bank Melli Iran v Barclays Bank 1951 2 Lloyds Reps 362. The opinion of

the defendants Indonesian lawyer seeks to draw distinction between a middleman

(who is an agent) and a correspondent (who is not). The advising bank was

categorised as a correspondent. The distinction is not enlarged upon. Again I regard

it as very surprising that, as a matter of Indonesian law, SCB is to be treated as merely

a conduit or post office if that be the concept leading to categorisation as a

correspondent. I am not persuaded that Indonesian law is different from English law

in this respect. In short, if material, I would have accepted that there remains a good

arguable case for service out on this ground.

Breach occurring within the jurisdiction

61. As regards the fourth ground relied upon to serve out, namely that the failure

to pay out under the letter of credit amounted to a breach occurring within the

jurisdiction, the Indonesian lawyers emphasise that the obligation to pay was on Panin

Bank who was resident in Indonesia and the decision to refuse to pay was taken in

Indonesia. But it does not necessarily follow it seems to me that the breach did not

occur in England. I agree with the claimants that it must be extremely doubtful

whether it was open to Panin Bank to effect payment in Indonesia. On the face of it,

they were required to pay in London whether as a consequence of negotiation or, as

here, as a consequence of the request of SCB made for payment in London as, it is

alleged, a collecting bank. These considerations are not dealt with in the opinion of

the Indonesian lawyers and I conclude that there also remains a good arguable case

for service out on this ground even if, contrary to my earlier finding, Indonesian law

is the governing law.

62. Of course, if Indonesian law is the governing law, this in turn would have

some bearing on the question whether this jurisdiction was an appropriate forum. But

the primary issues turn on an analysis of the documents (which are all in English) as

against the terms of the UCP for documentary credits. There is little, if any, scope for

witness evidence of fact. Any expert evidence is likely to be more readily available in

this country rather than in Indonesia. The provisions of UCP are expressly

incorporated in the credit (and in any event are apparently incorporated by Indonesian

Law). Where, as it follows, the competing fora have domestic laws which are

substantially similar in all material respects, the governing law is a factor of little

significance in determining the appropriate forum.

 63. In this regard it is also appropriate to take into account the evidence of delay

in the Indonesian courts. The evidence adduced by Marconi asserted that it is quite

usual for cases to exceed 10 years from commencement in the District Court to a

decision of the Supreme Court, and indeed, for the Supreme Court to remit the entire

case back to the District Court for re-hearing. There was a late response from Panin

Bank to the effect that the policy of the Indonesian courts is to achieve a much shorter

timetable. However, it is clear that the volume of business (or a shortage of judicial

manpower) renders this policy difficult to implement.

64. Whilst it is invidious to draw comparisons as to matters of relative quality of

procedure and experience of the competing courts, it is legitimate to have some regard

to potential delays of this magnitude, not least in a claim involving a letter of credit

the defences to which can fairly be categorised as unconvincing. Accordingly even if

Indonesian law governs the credit, it is not shown that Indonesia is distinctly the more

appropriate forum for the determining issues relating to it.

Alternative Service

65. I turn now to the challenge to the order permitting alternative service on

Messrs.Thomas Cooper and Stibbard. The basis of the leave that was granted was as

follows: -

As an alternative to serving out of the jurisdiction, I ask the

courts permission to serve these proceedings together with a
copy of this witness statement and a copy of the order upon
Messrs Thomas Cooper and Stibbard solicitors who represented
Panin Bank in the winding up proceedings. . If service were
to be effected by DX I would submit that the documents would
be deemed to be served on the seventh day after closing the
document exchange. Service in this way in accordance with
rule 6.8 would save considerable time and expense in a
situation where the solicitors are clearly fully conversant with
the issues in this case and where the solicitors continue to act
 on behalf of Panin Bank in relation to the costs of the winding
up proceedings.

66. In a supplementary statement the claimants solicitors have set out in some

detail the procedure under Indonesian law for service in that country (which is not

controversial) adding: -

It is anticipated that the procedure for service in Indonesia will

take at least one year during which time there will be no
prospect of the claimant being able to enforce its claim against
the defendant.

67. The defendants argue that these considerations do not constitute good reason

for permission to serve by an alternative method under CPR 6.80 (1). In that regard

particular reliance was placed on a passage in the judgment of the Court of Appeal in

Knauf UK Gmbh v British Gypsum Ltd [2002] 1 WLR 907: -

It may be necessary to make exceptional orders for service by

an alternative method where there is good reason: but a
consideration of what is common ground as to the primary
method for service of English process in Germany suggests that
a mere desire for speed is unlikely to amount to good reason,
for else, since claimants nearly always desire speed, the
alternative method would become the primary way.

68. I am not persuaded that much assistance is to be derived from that case where

the enthusiasm for speed arose from a desire by the German claimant to avoid the

process of service under the Hague Convention (or under the bilateral convention

between the United Kingdom and Germany) which might take up to some 3 months

during which period there was a risk that the proposed German co-defendant would

institute its own proceedings in Germany and thus gain priority under Article 21 of the

Brusselss Convention.

69. The essence of the decision of the Court of Appeal is to be found in paragraph

59 of the judgment: -
 In our judgment there cannot be a good reason for ordering
service in England by an alternative method on a foreign
defendant if such an order subverts, and is designed to subvert
in the absence of any difficulty about effecting service, the
principles upon which the service and jurisdiction are regulated
by agreement between the United Kingdom and its convention
parties. This is not a matter of mere discretion, but of
principle.

70. Here there is no question of the claimant seeking to steal a march on Panin

Bank. Whilst it is pointed out in the evidence filed by Panin Bank that part of the

elaborate procedure laid down for service of proceedings in Indonesia has a 14 day

time limit, there is no challenge to the assertion emanating from Marconi that, overall,

the process of service would take at least one year. Given the contemplated length

of proceedings in that jurisdiction referred to earlier in this judgement, this assertion

strikes me as entirely plausible. As I understood the thrust of the defendants

submission, it was to the effect that good reason for alternative mode of service could

not be established absent it being shown that service out of the jurisdiction was

impractical. This strikes me as an attempt to reintroduce the equivalent provisions of

the rules in force prior to the implementation of CPR. In my judgment the discretion

afforded by the new rules is much broader than that.

71. Whilst it cannot be said that service was impractical in Indonesia, it would

involve very extensive delay in a claim which was already stale. Furthermore the

inference I draw, given the apparent lack of merit in the defence, is that delay was the

sole aim of the defendant rather than any genuine desire to ensure the proprieties of

service where met. It is notable that Panin Bank had appointed Messrs Thomas

Cooper and Stibbard in September 2002 in response to service of Marconis petition

out of the jurisdiction by courier post to their principal office some time in August.

Albeit the petition was dismissed, it does not appear to be in issue that Thomas

Cooper and Stibbard were still actively involved in the proceedings on the question of
costs. In all these circumstances I regard the claimants as having established a

sufficiently good reason to justify the alternative mode of service.

72.