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The Court of Appeal has given judgment in this case concerning (i) the proper approach to applications for permission to service out of the jurisdiction and (ii) the implication of terms as to interest.

The underlying facts of the case relate to the Claimants’ claim that they made a $30 million loan in early 2002 to two brothers, in order for the brothers to set up the Al Arabiya television station. The brothers accept that the $30 million payment was made, but assert that it was paid as a fee in respect of services one brother had provided to the First Claimant. The Claimants claim repayment of the $30 million loan, plus interest pursuant to an implied term of the contract of loan.

These interlocutory proceedings concern whether the English court has jurisdiction to hear the case as against the Second Defendant, who is resident in Kuwait. The Claimants require the permission of the Court to serve the proceedings out of the jurisdiction.

At first instance, Burton J held that the Claimants had permission to serve out the claim in respect of the repayment of the principal of the loan. However, in respect of the claim to interest, Burton J considered that the Claimants could not, as a matter of law, demonstrate a good arguable case that there was such an implied term. He relied upon the summaries of the law contained in Chitty on Contracts and Halsbury’s, which cited a restrictive approach to implying terms to interest that had been set out nearly 200 years earlier in Page v Newman (1829) 9 B&C 378.

The Claimants appealed Burton J’s order on this point. First, they argued that, for the purposes of determining permission to serve out of the jurisdiction, the Court had to consider the pleaded cause of action, and that a single cause of action could not be bifurcated as between principal and interest. Second, they argued that the textbooks were inaccurate to rely on the historical position set out in Page v Newman (supra), and that the law as to implication of terms as to interest was now consistent with the general approach to implication of terms as summarised in Marks & Spencer [2016] AC 742 (SC).

The Court of Appeal allowed the Claimants’ appeal on both points.

However, the Court agreed with the Respondent’s submission that, on the evidence before the Court, the Claimants would not be able to demonstrate a serious issue to be tried that the test for implication of terms under the modern approach was satisfied. The Court of Appeal therefore took what it described as a “highly unusual course” at this interlocutory stage of determining the matter as if an application for strike out or summary judgment was before it; the Court held that the Claimants could not further pursue the claim to interest under an implied term.

Michael Beloff QC, Stephen Nathan QC and Daniel Cashman acted for the Claimants.

The full judgment can be read here

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