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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> ACE Insurance SA-NV v Zurich Insurance Company & Anor [2001] EWCA Civ 173 (2 February 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/173.html Cite as: [2001] 1 All ER (Comm) 802, [2001] Lloyds Rep IR 504, [2001] ILPr 41, [2001] Lloyd's Rep IR 504, [2001] 1 LLR 618, [2001] CLC 526, [2001] 1 Lloyd's Rep 618, [2001] EWCA Civ 173 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(Mr Justice Longmore)
Strand, London, WC2A 2LL Friday 2nd February 2001 |
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B e f o r e :
LORD JUSTICE RIX
and
MR JUSTICE JACOB
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ACE INSURANCE SA-NV (FORMERLY CIGNA INSURANCE COMPANY OF EUROPE SA-NV) |
Appellant/ Claimant |
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- AND - |
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(1) ZURICH INSURANCE COMPANY (2) ZURICH AMERICAN INSURANCE COMPANY |
Respondent/ Defendant |
____________________
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Iain Milligan QC and Ms Sara Masters (instructed by Diarmuid Brennan & Co) for the Respondent
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Crown Copyright ©
LORD JUSTICE RIX :
"As original and/or as original following the original in all respects including claims settlement. Full R/I clause (LM 1) NMA 1735…Service of Suit Clause NMA 1998…"
The Reinsurance Clause provided inter alia that –
"…this Contract reinsures the Reinsured's interest in payments made within the terms and conditions of the Original Policy…"
"It is agreed that in the event of the failure of the Underwriters hereon to pay any amount claimed to be due hereunder, the Underwriters hereon, at the request of the Insured (or Reinsured), will submit to the Jurisdiction of a Court of competent jurisdiction within the United States. Nothing in this Clause constitutes or should be understood to constitute a waiver of Underwriters' rights to commence an action in any Court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another Court as permitted by the laws of the United States."
"1. Subject to the following provisions of this order, there be no order on the application of [ZIC]…save that…[ZIC] be at liberty to make such further application pursuant to CPR Part 11…as it may be advised to make and as it may be entitled to make on grounds other than those set out in the said Application…"2. The Claimant have permission to add [ZAIC] as Second Defendant to this action;
"3. Without prejudice to the right of the [ZAIC] to apply…to have such permission revoked, the Claimant do have permission on a without notice basis…to serve [ZAIC] out of the jurisdiction…"
Is a stay of Ace's claim against ZIC on grounds of forum non conveniens consistent with the Lugano Convention?
"Apart from jurisdiction derived from other provisions of this Convention, a court of a Contracting State before whom a defendant enters an appearance shall have jurisdiction."
"Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the 1968 Convention [the Brussels Convention] or, as the case may be, the Lugano Convention."
The question therefore arises whether the staying of these proceedings as against ZIC would be "inconsistent" with the Lugano Convention.
"It is implicit in [section 49], in my judgment, that the court cannot stay or strike out or dismiss any proceedings on the ground of forum non conveniens or otherwise where to do so would be inconsistent with the Convention, and that covers all cases where the defendant in proceedings in England is domiciled in England and the conflict of jurisdiction is between the jurisdiction of the English court and jurisdiction of the courts of some other contracting state."The crucial question in the present case is whether the English court can stay, strike out or dismiss proceedings on the ground of forum non conveniens, where the defendant in the English proceedings is domiciled in England, but the conflict of jurisdiction is between the jurisdiction of the English court and the jurisdiction of the courts of a state which is not a contracting state, no other contracting state being involved."
"As I see it the starting point in approaching the construction of the Convention must be article 220 of the E.E.C. Treaty, since the Preamble to the Convention shows as the starting point the desire of the parties to implement that article. The object of article 220 was to secure the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals between the member states of the Community."To achieve such recognition and enforcement it was evidently decided that the contracting states should have a common basis of international jurisdiction - or jurisdiction in the international order - in the matters which fall within the scope of the Convention. But the common basis of jurisdiction envisaged does not apply worldwide since under article 4, if a defendant is not domiciled in a contracting state the jurisdiction of the courts of each contracting state is to be determined by the national law. The desideratum expressed in Professor Schlosser's report, Official Journal 1979 No. C. 59/71. p/97, para. 78, that
"A plaintiff must be sure which court has jurisdiction. He should not have to waste his time and money risking that the court may consider itself less competent than another."is thus very obviously not met where the defendant is not domiciled in a contracting state. Indeed the following passages in paragraph 78 appear to show that the Professor was only concerned in the paragraph with the protection of persons domiciled in the contracting states and with choices, which should not be on the ground of forum conveniens, between the courts of several contracting states having jurisdiction."
"Such results would, in my judgment, be contrary to the intentions of the Convention. Since the Convention is merely an agreement between the contracting states among themselves, I do not agree with Hobhouse J. that the framework of the Convention would be destroyed if there were available to the English court a discretion to refuse jurisdiction, on the ground that the courts of a non-contracting state were the appropriate forum, in a case with which no other contracting state is in any way concerned. I do not accept that article 2 has a very wide mandatory effect which Hobhouse J. would ascribe to it where the only conflict is between the courts of a single contracting state and the courts of a non-contracting state."
"Everything possible must therefore be done not only to eliminate any obstacles to the functioning of this market, but also to promote its development. From this point of view, the territory of the contracting states may be regarded as forming a single entity: it follows, for the purpose of laying down rules on jurisdiction, that a very clear distinction can be drawn between litigants who are domiciled within the Community and those who are not."
"[Those cases] have, however, provoked a critical note bearing the very considerable authority of Mr. Lawrence Collins in (1990) 106 L.Q.R. 535. I would for my part adopt his conclusion, at pp. 538-539:"When the European Court comes to consider the application of the Convention to non-contracting states, it should seek the answer in treaty interpretation, and ultimately in public international law. The Convention was intended to regulate jurisdiction as between the contracting states. Thus the Convention provides that in principle domiciliaries of a contracting state should be sued in that state, subject to important and far-reaching exceptions, and not in other contracting states. Once a court in a contracting state has jurisdiction it is entitled vis-à-vis other states, to exercise that jurisdiction and other courts cannot. But the states which were parties to the Convention had no interest in requiring a contracting state to exercise a jurisdiction where the competing jurisdiction was in a non-contracting state. The contracting states were setting up an intra-Convention mandatory system of jurisdiction. They were not regulating relations with non-contracting states."Section 49 of the Act preserves the power of the English court to stay or dismiss any proceedings before it , on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the Convention of 1968. The ultimate question, therefore, is whether the exercise of the discretionary power here in issue in the present situation, where the only alternative forum is in a non-contracting state, is inconsistent with the Convention of 1968. I conclude that it is not and accordingly accept the argument of Intercomfinanz on this point."
Stocker LJ agreed with the judgments of both Dillon LJ and Bingham LJ.
"The decision has excited considerable controversy and may no doubt be overruled or varied hereafter. But it is at present authority binding upon us for whatever the case decided. The case must be taken to have decided that, where the choice is between the exercise of jurisdiction properly conferred on the English Court and the exercise of jurisdiction by a foreign Court in a non-Contracting State, the power to stay on grounds of forum non conveniens is not excluded by the Convention."
"Where the court has construed a statute or a rule having the force of a statute its decision stands on the same footing as any other decision on a question of law, but where the court is satisfied that an earlier decision was given in ignorance of the terms of a statute or a rule having the force of a statute the position is very different. In cannot, in our opinion, be right to say that in such a case the court is entitled to disregard the statutory provision and is bound to follow a decision of its own given when that provision was not present to its mind Cases of this description are examples of decisions given per incuriam. We do not think that it would be right to say that there may not be other cases of decisions given per incuriam in which this court might properly consider itself entitled not to follow an earlier decision of its own. Such cases would obviously be of the rarest occurrence and must be dealt with in accordance with their special facts. Two classes of decisions per incuriam fall outside the scope of our enquiry, namely, those where the court has acted in ignorance of a previous decision of its own or of a court of co-ordinate jurisdiction which covers the case before it - in such a case a subsequent court must decide which of the two decisions it ought to follow; and those where it has acted in ignorance of a decision of the House of Lords which covers the point - in such a case a subsequent court is bound by the decision of the House of Lords."
"Having reviewed the arguments both ways, in a manner which calls for careful reading but cannot be fairly summarized, the authors incline to the opinion that there is in the present situation no discretion to stay on the grounds of forum non conveniens. It does not, however, appear to us that the exercise of jurisdiction to stay on grounds of forum non conveniens is subversive of the Convention regime, and in appropriate circumstances we consider that recognition of a power to stay or dismiss may promote that due administration of justice which must be the ultimate and paramount concern of all Contracting States."
"It would be even odder if an agreement to submit to the jurisdiction of the courts of a non-contracting State had to be treated as ineffective in any Convention country. That is, however, the effect of Mr Layton's argument if, as he argued, article 17 has no application because pursuant to Excess v. Allendale the Service of Suit clause was not an exclusive clause."
Forum non conveniens
The significance of English proper law
"I will say, however, that, in my view, the proper law of the reinsurance contract is English law…That does not mean that an English Court will not have regard to the law of Texas; that is because the liability reinsured is a liability under Texas law. Texas law will therefore be relevant and which ever Court decides the case will have to know or be informed of Texas law. The fact, therefore, that the proper law of the reinsurance contract is English is not of any significant weight in concluding where the case is to be tried."
The significance of the service of suit clause
"In my judgment, on the facts which now exist, it is inevitable that the discretion should be exercised in the same way as Saville J exercised it. This is not a suitable case in which, on the facts as they presently exist, to give leave to serve out of the jurisdiction. The writ was one which appears to raise bona fide arguable claims and to raise an arguable basis under Order 11 r1. But it is an action which will now be proceeding in parallel with the proceedings that have been started in the Rhode Island court. The proceedings in the Rhode Island court have been properly started as a matter of jurisdiction. That is the effect of the Service of Suit clause and no one has argued before us to the contrary. The Rhode Island court will have to consider whether in the exercise of its own jurisdiction it should stay the proceedings before it. It is suggested that it may be persuaded to do so on the basis that the United Kingdom courts are a more convenient forum than the courts of Rhode Island. It is for the judge in the Rhode Island court to determine whether he considers that is the case. If he decides that it is not the case, then the proceedings will continue in Rhode Island. The question of liability will have to be determined in Rhode Island. It is not proper or appropriate that the courts of this country should at the same time try to determine, on an Order 11 basis, the matters which, within the jurisdiction of the Rhode Island court, are being determined by that court. There, on that hypothesis, this is not a suitable case to give leave to serve out of the jurisdiction."
Conclusion
MR JUSTICE JACOB:
LORD JUSTICE KENNEDY: