International Litigants – The Value of Irish Advice on Local Legal Procedures

The High Court has recently delivered judgment in a case involving an international litigant which misinterpreted Irish legal procedures with potentially damaging consequences. In DRM Contract Administration v Proton Technologies [2021] IEHC 554 the defendant was a Swiss company against which a claim for defamation was brought. The Swiss defendant regarded the claim against it as untenable on the basis that, as a mere conduit for the transmission of data, it should not be liable for the defamatory content of any emails sent via its service, effectively the immunities for intermediary service providers under the Directive on Electronic Commerce (2000/31/EC).

Stance taken by Swiss Company

When it received the proceedings, the Swiss company discussed internally the option of engaging Irish legal representation, but decided not to do so. It decided not to contest the proceedings on the basis that in Switzerland the claim would be rejected by a judge even if it was not contested due to the way in which the Swiss legal system operates – effectively a local judge would have examined the merit of the claim even if the defendant was not represented and the company believed wrongly that the same procedure would apply in Ireland and that the claim would therefore be dismissed. However, the procedure in Ireland is very different, and rather than the scenario the Swiss company envisaged instead the plaintiff applied for and was granted judgment in default of appearance by the Irish High Court due to the fact that the Swiss company did not engage with the proceedings.

The Swiss company subsequently applied to set aside that judgment to allow it substantively defend the proceedings and this judgment was delivered on foot of that application.

Decision

The judgment of the High Court addresses the basis on which a default judgment of this type can be subsequently set aside by the Court.  Very different considerations are applied depending on whether the judgment was regularly obtained (i.e. all procedures were properly followed by the plaintiff) or irregularly obtained (some procedural irregularity was allowed to occur). The High Court found that in this instance, the judgment had been obtained irregularly due to a technical error in the way the proceedings were served on the Swiss company.

On that basis, the High Court ultimately set aside the default judgment obtained against the Swiss company. However, even in doing so it noted its dissatisfaction with the way in which the Swiss company had dealt with the matter – “[a] party who makes a deliberate and conscious decision simply to disregard proceedings has no right to expect to be shown indulgence if judgment is entered against them in default of appearance”.

It is also notable that the Court set aside the default judgment only on the basis that the plaintiff be paid the costs of earlier court applications as those arose as a result of the defendant’s failure to engage with the proceedings earlier. The Court also outlined its intention to award the costs of this application to set aside against the defendant on the basis of its ‘litigation conduct’ to date.

Conclusion

The events described by this judgment are a cautionary tale for international companies who are involved in foreign litigation. Due to an incorrect assumption that Irish procedures would be the same as those in Switzerland, the Swiss company had judgment entered against it. Had it taken local advice in a timely way this would not have occurred. Although it ultimately succeeded in having the judgment set aside, this was only due to a technical error in service and the strength of the defence which it was able to demonstrate. Other foreign companies which could not point to similar considerations may find it even more difficult to set aside a default judgment of this type. Also, even though the default judgment was set aside which will allow the Swiss company substantively defend the case,  substantial costs were awarded against it. Again, this outcome would have been avoided by obtaining local Irish advice when the legal claim was first received.

If you are a foreign company involved in legal claims in Ireland and require advice, or if you have any queries or questions about this decision, please contact Robbie Slattery [email protected] at Hayes solicitors LLP.