With the European Court of Justice's (ECJ) decision in the case of Allianz SPA v West Tankers pending, a decision which will have major implications on EU national courts' jurisdiction in relation to arbitration clauses (click here to read the previous blog on this case), the High Court has ruled that it does enjoy jurisdiction under Council Regulation (EC) No. 44/2001 (Regulation) in an insurance and arbitration related matter.

Claim

Youell v La Reunion Aerienne [2008] EWHC 2493 (Comm) was a preliminary application by the Defendants, French market insurers, for an order that the High Court had no jurisdiction to hear the Claimants' claim.

The Claimants, English market insurers, and the Defendants were co-insurers. The relevant policy was French, and French law was the proper law of the policy. It contained an arbitration clause which stated that, in the event of disagreement or dispute, the parties should appoint an arbitrator in Paris. The Claimants sought declaratory relief in the High Court confirming that they were under no liability to the French Defendants. The Defendants did not, in reliance on the arbitration clause, apply for a stay of the proceedings under s. 9 of the Arbitration Act 1996. Instead, they sought an order that the Court simply had no jurisdiction to hear the claim for declaratory relief.

Article 5.1(a) – place of performance

The English Claimants argued that the Court had jurisdiction under Article 5.1(a) of the Regulation to hear the claim. This provision applies to matters relating to a contract and states that the court for the place of performance of the contractual obligation in question has jurisdiction.

The French Defendants denied the applicability of Article 5.1(a) to the dispute. They argued that both the presence of an arbitration clause and the fact that the dispute related to an insurance policy put the dispute outside of Article 5.1(a), due to the application respectively of Article 1.2(d) and Article 8 – the special regimes for arbitration clauses and insurance contracts.

Article 1.2(d) - arbitration

The Court held that Article 5.1(a) applied to confer itself with jurisdiction, notwithstanding the special regimes. Article 1.2(d) did not deprive the Court of jurisdiction because, as Advocate General Kokott said in her Opinion in Allianz SPA v West Tankers, the existence of an arbitration clause did not put the contract outside of the scope of the Regulation.

Article 8 – insurance contracts

Article 8 did not deprive the court of jurisdiction because the special regime for insurance was meant to protect the weaker party to an insurance contract, not equally weighted insurance companies. The Court held, following GIE Reunion Europeenne v Zurich Espana Case C-77/04, that the special regime for insurance did not apply to proceedings between co-insurers (by the same logic the special regime does not apply to disputes between reinsurer and reinsured – UGIC v Group Josi Reinsurance Company).

Equally, after the insured under the policy had assigned its rights against the English Claimants to the French Defendants, the French Defendants did not thereby gain access to the special regime for insurance established for the protection of insureds. Partly by analogy with Shearson Lehman Hutton v TVB Case C-89/91, which involved a consumer assigning its rights to a company with the result that the company could no longer rely on the special regime under the Regulation for consumers, the Court held that the ECJ was "most unlikely to regard as falling within [the special regime for insurance] a claim by one co-insurer against another brought by the former as assignee of the insured's rights against the latter."

Thus where the parties to a claim are co-insurers, Article 5.1(a), rather than any of the special regimes under the Regulation, will apply to jurisdictional disputes.