Court Will Ordinarily Apply English Law In Absence Of Evidence Of Relevant Foreign Law, Unless Defendant Shows It Would Be Inappropriate To Do So

The High Court has held that where a claim was, in principle, governed by foreign law, but the claimant had not pleaded or proved the content of that law, the court would apply English law to the claim. The claimant had pleaded a viable cause of action which could be determined under English law, and the defendant had not raised any basis for a contention that it would be inappropriate to do so: Iranian Offshore Engineering and Construction Company v Dean Investment Holdings SA [2018] EWHC 2759 (Comm).

This decision confirms that, in most cases, the court will apply English law to a claim unless the claimant pleads and proves the content of a relevant foreign law or the defendant shows that it would be inappropriate to apply English law eg because that would be too strained or artificial in the particular circumstances.

A defendant cannot therefore merely assert that a foreign law applies and thereby put the burden on the claimant to plead and prove the content of that law.

Maryam Oghanna, an associate in our disputes team, considers the decision further below.

Background

The claimant brought claims of an alleged fraud which induced payments to purchase an offshore drilling rig, totalling USD$87million. The claims against the fifth and sixth defendants arose from acts that allegedly took place in Iran and the UAE, and caused damage in Iran. The claimant did not plead any case as to which country's law applied to its claims.

The fifth and sixth defendants pleaded that the claims against them were governed by Iranian Law, but did not plead any case as to the content of Iranian law. Their defence reserved the right to amend after seeking expert evidence on Iranian law. No party had sought expert advice on Iranian law at the point of the pre-trial review (seven weeks before trial).

The claimant did not dispute that, in principle, its claims were governed by Iranian law, but it said this was irrelevant as neither side had pleaded any Iranian law.

The claimant relied on the general common law principle, sometimes referred to as an evidential presumption of English law, which is stated as Rule 25(2) in Dicey, Morris & Collins, “The Conflict of Laws”. Rule 25 states:

In any case in which foreign law applies, the law must be pleaded and proved as a fact to the satisfaction of the judge by expert evidence or sometimes by certain other means. In the absence of satisfactory evidence of foreign law, the court will apply English law to such a case. Dicey...