The Power Of Irrevocable Process Agent Clauses

Serving proceedings on defendants outside the UK can be an expensive, complicated and time consuming process. It can involve instructing local lawyers to advise on and serve in accordance with local law; possibly require translation of documents into an official language of the country concerned; and, because of the relevant court rules, mean defendants have a longer time to respond to the proceedings.

It is therefore standard practice in most commercial contracts, particularly finance agreements, to include a process agent clause requiring overseas parties to nominate an address for service within the jurisdiction. The boilerplate clause should be uncontroversial, but the recent case of Aquila WSA Aviation Opportunities II Ltd v Onur Air Tasimacilik shows that, whilst issues can arise, the English Court is unlikely to be sympathetic to a defendant who unreasonably tries to evade service.

Facts

Aquila, an Irish finance company, entered into an aircraft lease agreement with Onur Air, a Turkish airline. The lease had a non-exclusive jurisdiction clause in favour of England and was governed by English law. It also contained a process agent clause whereby Onur Air was to irrevocably appoint Corporation Service Company (CSC) as its English based agent for service of proceedings. The clause also stipulated that, if the appointment of the agent was terminated, Onur Air had to appoint a replacement as soon as practicable.

Prior to completion, Onur Air provided a letter confirming the appointment of Corporation Service Company (UK) Limited (CSCUL) as its process agent. This letter stated that the appointment was effective for one year.

Some 15 months later, Aquila attempted to serve proceedings on the agent named in the lease (CSC) at the address given. In fact, CSC did not exist as an entity and the address was a building site. Aquila then sought to effect service on Corporation Services Company Limited (CSCL) at its registered address, relying on the fact that the individual who accepted delivery of the documents confirmed he was able to accept service on behalf of Onur Air.

Finally, it is worth noting that Aquila also sent copies of the proceedings to Onur Air's address in Turkey "for information only". Onur Air also accepted that the proceedings had come to their attention.

Onur Air brought an application disputing service on the basis that the appointment of the agent had lapsed and/or service was affected on the wrong entity and at an address...