Process agents: an introduction and recent developments
Summary of a recent development
The August 2025 High Court ruling in Regera SARL v Cohen & Ors has challenged the position regarding the enforceability of unilateral process agent appointment clauses, finding that these clauses can be deemed unfair under consumer protection laws in certain circumstances.
This contrasts from previous decisions, like that in Banco San Juan Internacional, Inc. v Petroleos De Venezuela, S.A, where courts have expressed reluctance to challenge the validity of similar agent appointment clauses in cross-border finance disputes.
The role of process agents in finance transactions
A process agent is a party appointed to receive legal documents on behalf of another party in a specific jurisdiction. Process agents are often used in cross-border financing transactions, when one or both parties are domiciled overseas, to provide an address for service in the event of dispute in the country where legal proceedings would be commenced.
The appointment of process agents is important in international finance transactions. Their appointment means parties to a contract can help ensure:
- legal documents (including court summons) can be served on an overseas party within a required timeframe,
- disputes about whether service has occurred in accordance with permissible methods of service are avoided, and
- efficiency and certainty of service on the overseas party.
The legal basis for service of legal proceedings via a process agent is under Rule 6.11 of the Civil Procedure Rules (‘’CPR’’), which requires the process agent be expressly authorised in writing to accept service.
English courts focus on the desired or intended terms of process agent appointment clauses. The appropriate construction of the appointment of process agent and replacement process agent is important.
Regera SARL v Cohen & Ors (Regera)
Background
Regera S.À R.L (‘’Lender’’) entered into a facility agreement under English Law with Andrew Valmorbida (‘‘Borrower’’) in June 2021. Three individuals (‘’Defendants’’), two of whom were Australian nationals based in the United States, gave personal guarantees in relation to the amount due by the Borrower under the facility agreement.
The facility agreement contained a process agent clause, which enabled documents to be served on the Defendants through an English company. The nominated process agent under the facility agreement was Areval UK Properties Ltd. Under the facility agreement, the Borrower had a right to appoint a new process agent ‘to ‘immediately (and in any event within five days of [an inability to act])’. In the event of a failure to do so, the Lender had the right to unilaterally appoint a new process agent.
Areval UK Properties Ltd was dissolved on 13 June 2023, and the Borrower did not exercise their right to appoint. The Lender therefore sought to appoint Law Debenture Corporate Services Limited (“Law Debenture”) on 31 July 2024. The Lender purported to inform the Defendants of the appointment by serving notice by email and to the addresses specified in the facility agreement. Subsequent confirmation of delivery at one such address was confirmed by the US Postal Service on 8 October 2024.
The Borrower defaulted on the loan, and the Lender sought to enforce the personal guarantees. They did so by attempting to serve proceedings on the Defendants via the newly appointed process agent, Law Debenture, on 7 August 2024. The Defendants purportedly received notice of proceedings on 13 September 2024.
The Lender entered a default judgment against the Defendants on 2 September 2024, as no acknowledgment of service had been filed or defence had been served. The Defendants sought to set aside the judgments in default, on the basis that the service on Law Debenture was invalid.
Findings
The key issue which the court considered was as to whether service of the claim form on Law Debenture was valid under CPR 6.11. In reaching its conclusion, the court examined whether the clause regarding the unilateral appointment of a process agent by the Lender was fair by considering provisions in the Consumer Rights Act 2015 (‘’CRA’’).
The court found that the clause was unfair under s 62 CRA for a number of reasons, including:
- there was no obligation to notify the Guarantors of the newly appointed process agent;
- there was a significant imbalance of the Borrower’s and the Guarantors’ legal rights and obligations, and
- as the Defendants were not aware of proceedings until after the default judgments were entered.
As a result, service on Law Debenture was deemed invalid due to the clause being unfair. This resulted in the judgments in default being set aside.
How have process agent clauses been treated in other instances?
The facts in Regera are similar but can be distinguished from those in previous case of Banco San Juan Internacional, Inc. v Petroleos De Venezuela, S.A [2020] EWHC 2145 (Comm). This case concerned a facility agreement between the Puerto Rican-based lender, Banco San Juan Internacional, Inc (‘’BSJ’’) and the Venezuelan-based borrower, Petroleos De Venezuela, S.A (‘’PDV’’).
The facility agreement had a similar process agent clause, whereby PDV was under an obligation to appoint a process agent within a fixed period of time if the agent’s appointment lapsed. In the event of a failure to do so, BSJ had a right to unilaterally appoint a new process agent.
The original agent’s appointment lapsed, and PDV failed to appoint a new agent, so BSJ unilaterally appointed a new agent. PDV and BSJ ended up in dispute, leading to BSJ serving proceedings on the newly appointed process agent. PDV failed to acknowledge serve of proceedings, and BSJ applied for summary judgment. PDV argued it was unfair that the process agent was imposed upon them and that this was not authorised under the facility agreement due to their lack of approval so proceedings had not been properly served in accordance with CPR 6.11.
The court disagreed in this instance and allowed the claim to proceed, finding the clause was fair as:
- both parties were sophisticated commercial parties with relatively equal bargaining power, outside the scope of the CRA;
- the clause was mutually agreed and commercially standard; and
- PSV only had to comply with comply with its contractual obligations if they did not want a process agent to be chosen by BSJ.
This can be distinguished from Regera primarily due to the nature of the parties involved. Whereas Banco San Juan involved commercial parties with similar bargaining power who mutually agreed the clause, Regera concerned both an individual borrower and personal guarantors who were unlikely to have had the same leverage over the commercial negotiations as sophisticated industry players. This afforded the Defendants in Regera protections under the CRA which did not apply to the parties in Banco San Juan.
Key takeaways
(a) Courts are more reluctant to intervene in commercial agreements between sophisticated parties of similar bargaining power, especially in the absence of a legislative framework like the CRA imposing statutory standards of fairness. This means corporate borrowers and lenders should carefully consider the implications of process agent clause drafting, to avoid unintended legal ramifications that are unlikely to be mitigated by a court’s intervention.
(b) Authorisation of a process agent in the event of unilateral appointment is derived from the mutually agreed clause in the agreement between the parties, not subsequent consent or notice. Neither party should expect to be informed of or consent to the appointment of an alternative process agent unless there are specific obligations under the finance document imposing a duty to do so. A notification or consent obligation in relation to an alternate appointment of a process agent should be considered at the outset of contracting, as opposed to retrospectively.
(c) In circumstances where lenders transact with retail borrowers or guarantors, a unilateral right in favour of a lender has a high risk of being perceived as an imbalance of rights in the absence of other evidence to ‘level the playing field’. This means lenders should be especially careful, as in an event of dispute, the onus will fall to them to prove that that this is not the case.
For further information, please contact Jeremy Ladyman, partner, Irwin Mitchell
