High Court considers whether there is a London market connection, in deciding the appropriate forum for a Middle Eastern maritime insurance dispute.

When an Egyptian ship owner seeks an indemnity from its United Arab Emirates-based insurer, for the constructive total loss of one of its vessels, abandoned in the vicinity of the United Arab Emirates (UAE), what connection does this claim have to the courts of England and Wales?

In Aizkir Navigation Inc v AL Wathba National Insurance Company [2011] EWHC 3940 (Comm), the claimant insured (the Claimant)’s argument that in the absence of a jurisdiction clause, disputes about its policy should be heard in England, were rejected by the High Court’s Judge Mackie QC, who ruled instead that a proper construction of the policy showed there was a jurisdiction clause in favour of the UAE. He said that even if he had erred in this judgment, the facts of the case showed that the UAE was clearly and distinctly the most appropriate forum for the dispute.

Permission had previously been given by the English courts to the Claimant to serve its claim out of the jurisdiction. The defendant insurer, Al Wathba National Insurance Company (the Defendant), brought the present application for an order setting aside this grant of permission, and an order that the English court would not exercise its jurisdiction to hear the claim, on the following grounds:

  • the proceedings were in breach of an exclusive jurisdiction clause in the policy, in favour of the UAE;
  • the UAE was clearly and distinctly the most appropriate forum for the dispute; and
  • the Claimant had brought proceedings in the UAE (this was little canvassed at the hearing and therefore not addressed in the judgment or this article).

WAS THERE A RELEVANT JURISDICTION CLAUSE?

Law

If the policy contained an exclusive jurisdiction clause in favour of either the UAE or England and Wales, there would be no argument as a matter of English law that the jurisdiction agreed in the policy would apply.

If there was a non-exclusive jurisdiction clause, Mackie J said he would only overlook it if the other jurisdiction was shown to be the natural forum for litigation and there were sufficient further reasons to condone a breaking of the contract, which, he suggested there would rarely be.

In the event that there was found to be no jurisdiction clause in the policy, Mackie J said the Claimant must prove the following, to have its dispute heard in an English court:

  • there was a serious issue to be tried;
  • a good arguable case that the claim fell within a ground of jurisdiction;
  • England was the proper place to bring the claim – Mackie J said the overall test was whether England was the most appropriate forum for the trial of the action, or whether the UAE was clearly and distinctly more appropriate than England.

Mackie J said that there was no doubt that the Claimant had met the first two tests, and the final test is addressed below.

Facts

Citing the following clause in a schedule to the policy, the Defendant argued that the policy had provided for the exclusive jurisdiction of the courts of Abu Dhabi:

“Claims: In the event of claim arising under this policy of insurance, it is agreed that it shall be settled in accordance with English law and practice and shall be so settled in Abu Dhabi (UAE).”

Applying English contractual principles to the construction of the clause – giving the words their natural and ordinary meaning, interpreting the clause as a whole and in the context of the rest of the agreement – the judge agreed with the Defendant’s submissions that the clause was similar to those often found in commercial contracts, dealing with the twin issues of choice of law and jurisdiction, suggesting it was a jurisdiction clause. He was also swayed by the position of the clause at the end of the contract, where “choice of law and forum is generally to be found”.

He was unconvinced by the Claimant’s argument that the clause related to the presentation, adjustment and settlement of ordinary insurance claims, rather than jurisdiction for disputes about the policy itself. The Claimant submitted that an earlier clause stating that “the customs and practices of Lloyd’s shall be recognised as the standard of adjustment and the settlement of any and all claims” suggested this later reference to claims and English law and practice, also related to ordinary insurance claims. The judge was not persuaded by this argument and said the earlier reference to claims and Lloyd’s may in fact be taken as evidence that the clause in question dealt with disputes and jurisdiction.

Despite citing numerous authorities where ‘settlement’ was used in the context of settling claims rather than determining disputes, the Claimant failed to convince Mackie J, who said that “it is plain that in an insurance legal context the word settlement is used to mean two things sometimes in the same context.”

Mackie J concluded that there was a jurisdiction clause in favour of Abu Dhabi.

Which Forum Was Most Appropriate – UAE or England?

This question was addressed for two purposes together:

  • Mackie J’s conclusion that the clause above related to jurisdiction, meant it would only be overlooked if England was shown to be the natural forum for litigation, and there were sufficient further reasons to condone a breaking of the contract;
  • if he had erred in concluding that the above clause was a jurisdiction clause in favour of Abu Dhabi, then it would have to be determined whether England was the proper place in which to bring the claim.

The Claimant argued that where insurance was written on the London market and governed by English law, there was a strong tendency for the court to consider England as the natural forum. However, this held little sway as Mackie J said it had not been determined that the policy was in fact a ‘London market policy’. Other than the applicable law being that of England and Wales, and the clause stating the claims were to be settled following Lloyd’s practice, he said there was no other London market connection.

He also rejected the Claimant’s submissions about the risk of an Abu Dhabi court not applying English law, as chosen by the parties, stating that he would need much more cogent evidence to convince him that a judge in another jurisdiction might act in disregard of a rule binding upon him or her to apply foreign law.

The Claimant argued that it may be deprived of justice because of the need for all policy documents and witness evidence to be translated into Arabic, and criticised the Abu Dhabi procedural rules which do not provide for automatic disclosure or cross-examination. Mackie J responded, “the absence of particular procedures and processes available within English litigation is not necessarily an indication of injustice for either party. Different courts and different jurisdictions approach the path to justice in different ways.”

Agreeing with the Defendant that all the personal connections in the case - the parties, brokers and manager - were either with 

UAE or with Egypt, Mackie J said he could see no personal and very few factual connections with England, other than the choice of English law and Lloyd’s customs and practice. Had he erred in concluding the disputed clause provided for the jurisdiction of the Abu Dhabi courts and instead addressed claims processing, he still considered it a “clear pointer” to the fact that the parties wanted the claims resolved in the UAE. He thus concluded that if he was wrong on the first point, the UAE was clearly and distinctly more appropriate as a court than England.

Conclusion

This case is an example of the difficulties that can arise in the absence of clear drafting. while courts are always keen to give effect to the intentions of the parties to a freely negotiated contract, this is only possible where those intentions are made plain. Those clauses that are commonly considered ‘boilerplate’ (such as the ‘law and jurisdiction’ clause), are of essential importance when disputes arise and inserting plain, unambiguous wording must not be overlooked at the drafting stage.