2015 saw some interesting judgments dealing with jurisdictional questions of relevance to the insurance market. In this article we look at two of these.
Where will we be sued? Jurisdictional uncertainty for insurers and insureds
In Mapfre and another v Keefe, the Court of Appeal considered whether the English court had jurisdiction over a direct action against the Spanish defendant’s liability insurer; and whether the Spanish insured defendant could be joined to this direct action. The claimant (Mr Keefe) was severely injured by the spike of a dislodged parasol whilst staying in a hotel in Tenerife.
The general rule under the Brussels Regulation (now Recast Brussels Regulation) is that a defendant should be sued where it is domiciled or where the harm occurred (in this case, Spain). However, as an exception, where the defendant is insured by an EU insurer the claimant may be entitled to bring a direct claim against the insurer in the claimant’s domicile (in this case, England).
The court held that when the claimant is domiciled in England, the substantive law governing the insurance contract or tort will instruct whether the English court can hear a direct action against a liability insurer. If the law of the relevant EU member state permits direct actions against insurers, then the English court will have jurisdiction to hear the claim. Further, provided the law of the relevant member state allows the insured to be joined to the proceedings against the insurer, the English courts can hear the case against both parties.
It is clear then that insurer and insured defendants in the EU risk facing proceedings in the claimant’s place of domicile in situations where the substantive law of the EU member state governing the insurance contract permits direct actions against insurers. This case is significant because it confirms that third parties may be able to bring direct actions in England against EU liability insurers and even join the insured to the proceedings. Further, it reduces the certainty of English jurisdiction for defendants whose headquarters are in the UK. For insured parties, the case removes the protection of the general principle that defendants should be sued in the country in which they are based. Where the claim relates to insurance, it may be possible to bring the claim in another jurisdiction, even if the claim does not specifically relate to a policy dispute.
Permission has been granted to appeal to the Supreme Court.
Courts reluctant to grant anti-arbitration injunction where overseas arbitration is on-going
In this case, AmTrust v Trust Risk Group, the parties had entered into two agreements at different times. One agreement was subject to English law and jurisdiction and the later agreement was governed by Italian law and subject to Italian arbitration. When a dispute arose between the parties, the question was whether the dispute was governed by English or Italian law. The claimant wanted the dispute to be heard by the English courts and so applied to the English court for an anti-arbitration injunction to halt on-going arbitration proceedings between the parties in Italy.
While the English court has the power to grant an anti-arbitration injunction under the Senior Courts Act 1981, in this instance it declined to exercise this power. It held instead that it was for the Italian arbitration tribunal to decide whether the dispute was subject to English or Italian jurisdiction. The court held that there was good reason for the separate agreements to have different governing law and jurisdiction clauses. The reasons for this were that the agreements were entered into at different times and, more importantly, they covered distinct aspects of the parties’ relationship.
The AmTrust judgment establishes that the court is willing to accept that parties may have intended for separate agreements to have different law and jurisdiction clauses. It highlights the importance of being clear on which law and jurisdiction clause governs which part of the relationship between two parties. It also shows that the English court will hesitate to grant an anti-arbitration injunction to halt arbitration proceedings that are on-going overseas.
In today’s global insurance market, it is not unusual for parties to enter into multiple agreements with each other. Parties should seek to include identical law and jurisdiction clauses when entering into multiple agreements with the same party. This will ensure certainty in relation to where disputes will be heard irrespective of the type of dispute that arises.