This time last year we reported on the Alexandros T case when it was being heard before the Supreme Court, the original article can be found here. The issue then was whether a settlement agreement made pursuant to English law and enforceable in the English courts could prevent parties from launching related proceedings based on the same facts in the courts of another EU Member State (in this case, Greece).
Playing a shrewd semantic game on the distinction between the meaning of the "same cause of action" and "related actions" (under the Brussels Regulation), the Supreme Court decided that the defendant insurers were entitled to compensation for breach of the English settlement agreement by the claimant ship owners and managers, effectively pre-empting any decision by the Greek court going against the insurers. The insurers were also entitled to declarations that the Greek claims had been brought in breach of the English settlement agreement.
Having lost this appeal and consequently being unable to sue the insurer companies, the ship owners and managers instead attempted to sue the insurers' employees, their agents, as well as their lawyers in their individual capacities in additional Greek proceedings. The commercial court was asked whether the original settlement also protected these individuals. This new decision, from Mr Justice Flaux, could have been forgiven for betraying a degree of judicial annoyance at these rather optimistic claims, if it was not so absolutely scrupulous and logical in its reasoning.
The claimants' principal argument was that the individuals and agents facing the claims were not expressly included within the definitions of "Underwriters" in the settlement, i.e. there was an implied reservation of right for the ship owners to sue to those individuals. The Court rejected that approach.
- The settlement intended a "clean break" between the parties.
- Normal "business common sense" should apply, and not a narrow literal interpretation. Such claims would naturally result in indemnity claims from the employees and agents against the insurers, who could in turn seek indemnities from the ship owners. That made no business sense.
- English law makes clear that settlement against one tortfeasor constitutes settlement against all joint tortfeasors, and the ship owners, being professionally advised, could not rely on any of the exceptions of the joint tortfeasors rule.
- The ship owners should have insisted on an express reservation of a right to sue their opponent's employees and agents. It was unlikely that the insurers would have agreed to settle on those terms.
Mr Justice Flaux accordingly ruled the defendants were all entitled to declaratory relief that the Greek proceedings were in breach of the settlement agreements.
He accepted, too, their arguments that the wording "full and final settlement of all and any claims [the ship owners] may have under the policy" was a continuing obligation not to sue. He saw no reason why he could not award a decree of specific performance to compel the ship owners to execute such documents and do all acts necessary to effect the settlement. He insisted this would not usurp the jurisdiction of the Greek courts, but would assist them by explaining the reasoning of the English court. He added, for good measure, that the Greek court was bound to accept the reasoning of the English judgment under European law. Finally, he made sure to highlight the fact that the ship owners had failed to comply with costs orders, had reneged on undertakings made to the court, and so were in contempt of court. Damages alone would not remedy this bad behaviour.
And if anyone had any remaining doubts, he also awarded damages to the insurer's lawyers, in satisfaction of their costs incurred in the Greek proceedings, on the basis that the settlement agreement conferred a benefit on third parties under the Contracts (Rights of Third Parties) Act 1999. By falling within the definition of agents or servants of the "Underwriters", the lawyers fell into a class expressly identified in the settlement agreement.