In Youell & Ors v La Reunion Aerienne & Ors – Lawtel 11.3.09 the Appellant French insurers appealed against a decision that the court had jurisdiction under the Brussels Regulation (44/2001) to determine a claim of the Respondent English insurers. Both the French and English policies were treated as being governed by French law. The French insurers settled a third party claim on the English insurers' behalf, relying on an alleged irrevocable authority of the Respondent to conclude claims settlements on the Respondent's behalf. The Respondent maintained that the settlement was reached without any authority and without their knowledge or involvement and declined to pay. The Appellant purported to commence arbitration in Paris in accordance with a Paris arbitration clause in the French policy as a means of pursuing the contribution claim against the Respondent. However, the Respondent issued a claim in England for a declaration of non-liability to the Appellant under a contract, the existence of which the Appellant asserted but the Respondent denied.
The judge at first instance held that art.5(1)(a) of the Regulation was applicable notwithstanding that the Respondent was denying he existence of the contract and that art.1(2)(d) did not oust the jurisdiction of a court under art.5(1) merely because the contract to which the claim related contained an arbitration clause.
The Court of Appeal held that the judge at first instance had been entitled to so hold. The mere fact that the claim was the subject of an arbitration agreement did not deprive the court, which could otherwise determine the substance of the claim, of its jurisdiction. It was the nature of the claim which was critical. The principle claim by the Appellant was a debt claim based on an indemnity arising from an alleged mandate given by the Respondent to the Appellant. There was a subsidiary claim for damages arising from an alleged breach of the policy. There could be no doubt that those claims were not covered by the arbitration exclusion.
The mere fact that the Respondent's claims were the mirror image of claims which were being asserted by the Appellant in the French arbitration to which the Respondent apparently had not agreed did not make them claims to which the exclusion applied.
The rights which the Respondent sought to protect were the rights not to be sued on a claim which was denied. It did not matter that the Appellant pursued that claim in arbitration.