Court of Appeal interprets settlement agreements and insurance policy following commencement of proceedings overseas

http://www.bailii.org/ew/cases/EWCA/Civ/2014/1010.html

This case has been previously reported in Weekly Updates 46/11, 46/12 and 40/13. The insured’s  claim for damages when its insurers refused to pay failed in English court proceedings. The parties  then entered into two settlement agreements which provided for English law and jurisdiction and  contained an indemnity agreement, whereby the insured agreed to indemnify the insurers against any claim brought by the insured’s companies. Three years after the settlement, the insured commenced  proceedings in Greece against the insurers, seeking compensation for loss of hire and loss of opportunity. The insurers commenced proceedings in England alleging a  breach of the settlement agreements and/or exclusive jurisdiction clauses in the policy and  settlement agreements. The  judge granted summary judgment against the insured.  The insured  appealed and the Supreme Court eventually held that the English proceedings did not have to be  stayed under Regulation 44/2001. The Court of Appeal therefore considered the rest of the insured’s  appeal in this case.

It was held that although there was a slight mismatch between the settlement provision and the  indemnity provision in the settlement agreements, it was obviously the parties’ intention that the  two clauses “should march together”. Also, fine distinctions between words like “under” or “in  relation to” in arbitration agreements should no longer be made since the House of Lords decision  in Fiona Trust v Privalov (see Weekly Update 40/07) and “Jurisdiction clauses are very similar to  arbitration clauses (and, of course, appear in the Settlement Agreements with which this court is  concerned); settlement clauses are analogous to both arbitration and jurisdiction clauses and  should likewise be given a sensible commercial meaning”. The parties had clearly intended a full  and final settlement of all claims in relation to the insured’s loss.

The claims brought in Greece therefore fell within the exclusive jurisdiction clauses contained  both in the settlement agreements and the original policy. The fact that the claims being brought  in Greece would not have been permissible under English law was “nothing to the point”.

Given the breaches of the exclusive jurisdiction clauses, the Court of Appeal held that the judge  at first instance had been correct to award damages (to be assessed), irrespective of whether the  insured succeeds in its claim  in Greece. Nor was it too early to invoke the indemnity agreement:  insurers have already incurred and are continuing to incur considerable expense as a result of the proceedings which have been wrongly brought in Greece.