11
Jul
22
Articles, Travel & Cross Border Claims
The Weekly Roundup: The Arty Edition

The team deals with two cases on jurisdictional matters this week; inconsistent choice of jurisdiction clauses, and the operation of the Italian Torpedo. But we were also interested to read that the family of a tourist allegedly kidnapped and murdered whilst on holiday in Mexico is to sue the tour operator and hotelier which supplied the holiday. The foundation of the claim seems to be a combination of the assertion that the hotel served the holidaymaker so much alcohol that he became highly intoxicated, and the lack of operational security cameras in the area. It will be interesting to see what the US courts make of the case, particularly on the question of causation, but for now it is sufficient to note that claims founded on lack of security within hotels seem to be on the increase of late, on both sides of the Atlantic and beyond.

 

The Art of the Deal: Court Appeal Gives Guidance on Inconsistent Choice of Jurisdiction Clauses

In AIG Europe SA v John Wood Group Plc [2022] EWCA Civ 781, the Court of Appeal considered the application of a “primary policy jurisdiction clause” under various insurance contracts.

Background

The Claimant insurers had applied for an anti-suit injunction restraining the Defendants from pursuing proceedings in Canada under the contracts, which at first instance Jacobs J had granted. The insurance contracts in question were policies of excess liability insurance forming part of an “insurance tower” covering losses up to £130 million, made up of a primary liability policy, together with further excess layers. Each excess policy was in a standard form “Market Reform Contract” format. One of the sections in such contracts particularised the parties’ choice of law and jurisdiction.

Each excess policy at issue in the case contained two potentially conflicting clauses.  The primary policy choice of law and jurisdiction clause (the “PPJC”) provided for disputes to be subject to “the same law and the same jurisdiction as the primary policy”, despite the fact that the primary policy itself did not specify any choice of law or jurisdiction. Later terms of the excess policies expressly provided for English law and jurisdiction, which posed at least the potential for conflict in the construction of the excess policies.

The Claimant insurers’ application for the anti-suit injunction had been based on the English jurisdiction clauses in the excess policies. The Defendants argued that the applicable clause was the earlier PPJC clause from the Risk Details section, which had not specified English jurisdiction. As a consequence, the Defendants argued that there was no basis on which they should be prevented from issuing proceedings in Canada.

The Decision

Upholding the first instance decision of Jacobs J, Males LJ held that simply because the primary policy contained no clause dealing with law an jurisdiction (it was unnecessary to reiterate the now trite principles for construing contracts, set out in Wood v Capita [2017] UKSC 24), the PPJC had no application and there was therefore no conflict between the PPJC and the later clauses to be resolved. As such, there was no reason why the later clauses (providing for English jurisdiction) should not be given effect. That was clear from the language and the context of the PPJC, and was consistent with the approach of a hypothetical “reasonable policyholder”. It would be “hopelessly uncertain” and “thoroughly uncommercial” to construe the PPJC as applying where there is no express choice of law and jurisdiction in the primary policy.

Citing a number of principles identified by Christopher Clarke LJ in Compania Sud Americana v Hin-Pro [2015] EWCA Civ 401, Males LJ held that the choice of jurisdiction was exclusive, such exclusivity being consistent with the mandatory “shall” in the exclusive jurisdiction clause, and also in accordance with commercial sense.

Whilst not a point in issue, Males LJ further commented obiter that when parties have agreed an exclusive jurisdiction clause, judicial comity between states is best served by giving effect to the parties’ agreement, such that an English court could not be prevented from examining the content of such a contract, although the consideration may be different where there has been a delay in bringing an anti-suit injunction which has led a claimant to incur time, effort and expense to be incurred in foreign proceedings.

Analysis

The decision is important for cross-border insurance claims, and will be welcomed by the majority of insurers who choose to include English exclusive jurisdiction and applicable law clauses to their policies. Whilst obiter, the court’s dicta on the significance of promptness/delay in bringing anti-suit injunctions will also be an extremely important consideration for parties aware of potential and imminent cross-jurisdiction claims.

About the Author

Called in 2011, prior to pupillage Conor Kennedy spent two years working with a leading insurance law firm, gaining experience across regulatory, employment, leisure, travel and public sector teams. He has a varied civil practice and is accredited for Direct Access instruction, but has a particular interest and expertise in claims involving fundamental dishonesty.

 

The Art of the Italian Torpedo

As travel practitioners are aware, it is not uncommon for parties to attempt to seize jurisdiction of other courts in international disputes, before proceedings are issued in England and Wales (i.e. the Italian Torpedo). If an international court is first seized of proceedings, it can result in English and Welsh courts declining jurisdiction, such that a claimant cannot pursue their claim in England and Wales.

In Simon v Taché [2022] EWHC 1674 (Comm), His Honour Judge Cawson QC had to consider whether the English court had been seized before the Belgian courts, and consequently, whether an application to serve proceedings out of the jurisdiction should have been granted on paper.

Background

The Claimant described herself as a French national, who had resided in England since March 2009. The individual Defendants were Belgian nationals, who at all times had been domiciled and resident in Belgium. Of note was that the individual Defendants had incorporated a Belgian company, known as ‘Twig’, which was also a Defendant in proceedings.

The Claimant was introduced to the individual Defendants, and therefore to Twig, by a Belgian business acquaintance of the individual Defendants in Paris. Whilst both parties appeared to accept that consultancy services were provided to the Claimant, there was a dispute as to whether the services were provided by the individual Defendants and/or Twig. The Claimant’s position was that the services were provided pursuant to a contract of agency, where all the Defendants (including the individual Defendants) assumed contractual, tortious, and fiduciary duties to her. At some point, a dispute arose between the parties as to the purchase of two particular artworks, resulting in the Defendants refusing to accept any further assignments from the Claimant.

In October 2020, the Defendants commenced proceedings against the Claimant in Brussels (“the Belgian proceedings”) alleging that she had undertaken acts of harassment and defamation. The Claimant filed submissions in response, where she disputed the Belgian court’s jurisdiction. Of note in her submissions was the fact that the Claimant stated that a contractual relationship of agency was formed between herself and the Defendants. She also indicated her intention to commence proceedings in England.

On 30th March 2021, the Claimant made a without notice application seeking to serve the Defendants in Belgium pursuant to CPR r6.36-6.38. This application was made before the Claim Form was issued, but the same claim number was given. That same day, HHJ Pelling QC dealt with that application on paper and granted the order without a hearing. The order was sent to the Claimant’s solicitors and included a note from HHJ Pelling QC that the issues that arose were “sufficiently different from those in the proceedings in Belgium to justify the commencement of these proceedings”.

On 3rd May 2021, prior to the Claim Form being issued, the Defendants filed expanded submissions in the Belgium Proceedings. It was the Defendants’ case that these expanded submissions amounted to a negative declaration in respect of the claims that the Claimant made in the present proceedings.

The Claim Form was filed on 10th May 2021 and was served with other relevant documentation on the Defendants on 11th June 2021.

The Defendants proceeded to challenge jurisdiction and made an application dated 30th July 2021 to that effect to the English court (“the Jurisdiction Application”). The Defendants argued that the English court should decline to hear the proceedings on a proper application of Articles 29 and/or 30 of Brussels Recast. They further argued that the Claimant was unable to show that:

  • she had a good arguable case for service out of the jurisdiction (as per paragraph 3.1 of CPR PD 6B);
  • she had a reasonable prospect of success against them;
  • England was the appropriate forum to hear the claim.

Prior to the application being heard, both parties had filed further submissions in the Belgian Proceedings, where the Defendants’ submissions were amended to read: “The court declares that the claimants did not fail in their obligations in their relationship with Ms Simon and they and they are not liable to Ms Simon”.

On 22nd October 2021, the Belgian court dismissed the Defendants’ claim. Although the Belgian court had considered that it had jurisdiction and that the Claimant had committed misconduct, there was insufficient evidence of loss, causing the claim to fail. The Belgian court also declined to rule on the Defendant’s claim for a negative declaration, because the allegations were before the English courts. It was common ground between the experts in the English proceedings that the Belgian court’s reasoning was deficient, because it failed to engage with the question of whether the Belgian courts were seized of the Defendants’ claim for a negative declaration before the English courts, and as to whether Articles 29/30 of Brussels Recast were engaged. Both parties subsequently appealed and cross-appealed to the Court of Appeal in Brussels, where all of the issues before the Belgian court at first instance would be revisited. There was no formal evidence before the English court as to how long that appeal would take to be heard.

The applications in the English proceedings came before HHJ Cawson QC, who sat as a Judge of the High Court. There remained a further dispute as to the parties as to the law of the contractual relationship, namely whether it was governed by English or Belgian law. Further, there was some dispute between the parties as to whether the Claimant was truly a resident in England at the time the alleged contract was formed.

Judgment

HHJ Cawson QC found that the English court became seised of the proceedings on 10th May 2021, when the Claim Form was issued. He further found that the Belgian court became seised of the same cause of action on 3rd May 2021, on the lodging by the Defendants of the 3rd May submissions. Consequently, HHJ Cawson QC stated that he was bound by the provisions of Article 29 to stay the English proceedings until such time as the jurisdiction of the Belgian court was established, and to declare that if jurisdiction was so established, then the court would decline jurisdiction. There was therefore no need to consider Article 30.

HHJ Cawson QC was also not persuaded that the Claimant had a good arguable case that Article 6 of Rome I applied. He did not consider the evidence supported the case that the Defendants directed their commercial or professional activities to the UK. He also found it “highly significant” that the Claimant was introduced to the Defendants by a Belgian national who had interests in the Belgian art world, and that the relationship was initially taken forward at a meeting in Paris. HHJ Cawson QC noted that it was difficult to see how the contractual relationship could have fallen within the scope of activities directed to the UK, if the genesis of the relationship was an introduction effected by a Belgian individual outside the UK.

HHJ Cawson QC did not consider that the Claimant had a good arguable case that the relevant contact was governed by English law. He also did not consider that England was the appropriate forum to hear the claim. He considered that numerous features in the claim were significantly more closely connected to Belgium, including that:

  • the contract was likely to be governed by Belgian law;
  • no loss had been suffered in England;
  • the Claimant was not domiciled or resident in England for tax purposes when the contract was formed;
  • the Defendants understood that the Claimant was not a resident in England at all material times;
  • the Defendants had always been resident in Belgium;
  • all services were provided from, and payments received in, Belgium;
  • no artworks were delivered in Belgium.

HHJ Cawson QC also considered that questions of practicality also favoured Belgium, such as the fact that both parties would require translators if the proceedings were in England.

As such, he concluded that permission to serve out of the jurisdiction should not have been granted.

Comment

This case demonstrates the numerous problems a claimant can face when international courts are first seised. The Claimant placed herself in some immediate difficulty by making submissions to the Belgian court about issues she wished to litigate in the English court. This opened the door to the Defendants to expand their submissions and amend the Belgian law proceedings, prior to the issue of the Claim Form. That said, it appears the Claimant was likely to face some difficulty in establishing forum in any event.

About the author

Ranked by the Legal 500 2021 and 2022 as a Rising Star, Dominique Smith was called in 2016 and has a busy practice in travel law. She undertakes work for both Claimants and Defendants in package travel claims, contractual disputes, and other related claims. Dominique has a particular interest in cross-border clinical negligence claims and regularly appears in the Coroners’ Courts.

 

…And Finally…

It’s (just about) not too late to sign up for Sarah Prager and Rob Horner’s webinar at 12 pm on 14th July; if you want to know How To Get the Most Out of Your Part 36 Offer; the link to register for the webinar is here.  Judging by the number of registrants and questions we’ve received so far, it should be a lively session with some knotty issues under discussion.

Written by or involving: Conor Kennedy, Dominique Smith

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