Readers will recall from our Bulletin of 21 October 2016 that the "Atlantik Confidence" was found to have been scuttled in 2013 with the privity of its owners, enabling cargo underwriters (represented by HFW) to defeat owners' claim for a limitation of their liability under the Convention on Limitation of Liability for Maritime Claims 1976.

Well before that judgment, hull underwriters had, pursuant to a settlement agreement, paid the hull loss of $22 million or so, and so, fortified by the judgment, hull underwriters now reclaim their outlay from the mortgagee bank, which was assignee and loss payee of the hull claim, on the basis that the bank allegedly adopted the insured's misrepresentation that the vessel was lost by an insured peril and/or for unilateral mistake.

The bank is domiciled in the Netherlands and so it must be sued there unless an alternative is supplied by the Brussels Regulation. Underwriters issued proceedings in England, and the bank challenged the Court's jurisdiction.

Underwriters relied on an exclusive English jurisdiction clause in the insurance settlement agreement between themselves and the owners, but the bank was not a party to this, nor had it subscribed to the jurisdiction clause, and so underwriters could not rely on Article 25 of the Brussels Regulation, which recognises certain exclusive jurisdiction agreements, to sidestep the domicile rule.

Underwriters then sought to rely on Article 7(2) of the Brussels Regulation, which allows parties to sue in tort in the courts where the harmful event occurred, provided that the claim is not a "matter relating to insurance" (in relation to which, under Article 14, a policyholder, insured or beneficiary of an insurance policy must be sued

in their domicile.) The Court held that the nature of underwriters' claim for rescission of the settlement agreement was so closely connected with the question of liability under the hull policy that the claim did in fact relate to insurance. However, since the purpose of the special insurance regime in the Regulation was to favour the interests of the "weaker party" (usually the insured), and since the bank could not be described as the weaker party, the bank could not benefit from Article 14.

This paved the way for the Judge to find that underwriters' claim for damages for misrepresentation was a tort claim, and since the damage suffered by underwriters occurred in England (where the settlement agreement was signed, the settlement monies were paid to the broker, the misrepresentation was allegedly made and underwriters were allegedly induced), the English Court has jurisdiction over that claim. However, there is no jurisdiction over underwriters' claim for restitution based on mistake, since that is not tort claim (because a claim for mistake does not require a harmful event.)