Mr. Justice Cooke:
Background
1. Between April 2002 and July 2003 the fifteenth Defendant L held the
duty free, logo and gift shop concessions on five cruise ships owned and/
or operated by companies in the F Group. L needed employers' liability
cover in respect of its employees who would staff the shops on the ships
and, as part of the negotiation of a Retail Concession Agreement with F,
F ultimately agreed to obtain insurance cover for L on F's P & I cover with
the Claimant C.
2. The process for agreeing the inclusion of L on the C's cover was
essentially left to F and its brokers P. The C maintains that what was
agreed between P and the C's managers T on 8th/9th May 2002 was that
L would be insured as a "Joint Entrant" on the F covers with the C. It is
accepted for the purposes of the current application that there is a triable
issue as to whether L is bound by an Agreement concluded by P and T. T
that it should be insured as a Joint Entrant, on the basis that there is a
triable issue as to the actual authority of F and P to bind L in respect of P
& I cover.
3. The C's rules provide for English jurisdiction by rule 32.1 which reads
as follows: -
"Disputes and differences
The Member hereby submits to the jurisdiction of the High Court of
Justice of England in respect of any action brought by the C to recover
any sums which the C may consider to be due to it from a Member.
Without prejudice to the foregoing the C shall be entitled to commence
and maintain any action to recover any sums which the C may consider to
be due to it from a Member in any jurisdiction."
4. The C claims that L is liable to it in respect of premiums and calls for
the 2002/2003 and 2003/2004 C years in respect of ships entered with
the C by F. Since L is a Cypriot company, service of the claim form was
effected on it in Cyprus. The claim form contained a certificate stating
that the English Court had power under Council Regulation (EC) number
44/2001 of 22nd December 2000 ("the Jurisdiction Regulation"), because
L was a party to an agreement conferring jurisdiction to which Article 23
of that Regulation applied.
5. Following service, L issued an application seeking a declaration that
the Court had no jurisdiction over it or alternatively that the Court should
not exercise jurisdiction over it and that service of the claim form upon it
should be set aside.
The issues
6. A number of distinct arguments were raised by L in support of its
application and its primary position that it had not entered into an
Agreement, let alone one enforceable under the Jurisdiction Regulation,
that the English Court should have jurisdiction over it in relation to the
disputes between it and the C. The first of these arguments was an issue
of construction of the C Rules. The further matters for determination arise
in the context of arguments as to the applicability and requirements of
Articles 23 and 12- 14 of the Jurisdiction Regulation.
The C Rules
7. The relevant parts of the Rules read as follows: -
"Applicant means any person seeking to enter a ship on his own or
another's behalf or on whose behalf an application is made.
Entered Ship means a ship which has been entered in the C for any of the
risks enumerated herein in the manner provided under these Rules.
Entered Tonnage means the tonnage on the basis of which a ship is
entered for insurance in the C; and Entered Ton refers to the unit of such
tonnage.
Member means every owner or other person who becomes and is for the
time being a Member of the C and more particularly of the Protection and
Indemnity Class of the C as hereinafter provided and as provided in the
Bye-Laws.
Owner includes an owner, owners in partnership, owners holding separate
shares in severalty, a part owner, and a trustee, mortgagee, charterer,
operator or manager, builder, insurer or reinsurer who enters a chip in the
C or who is a Principal Assured, Joint Entrant or a Co-assured.
Insurance
2.1 These Rules, which are subject to the Act and the Bye-Laws, contain
the terms upon which the Protection and Indemnity Class of the C
conducts its business. The Protection and Indemnity insurance given by
the C shall be in accordance with these Rules.
Governing Law
2.2 These Rules and any contract of insurance between the C and a
Member or any other person claiming under these Rules shall be governed
by and construed in accordance with English Law. In particular they are
subject to and incorporate the provisions of the Marine Insurance Act,
1906, of the United Kingdom and any statutory modifications thereof
except insofar as such Act or modification may have been excluded by
these Rules or by any term of such contract.
Entry
4.1 The Managers may in their discretion, and without giving any reason,
refuse any application for the entry of a ship in the C whether or not the
applicant is already a Member of the C.
4.2 Each person whose entry has been accepted under the Rules agrees
with the C for himself, his heirs, executors, administrators, assigns and
successors that both he and they and each and all of them are bound
by and will observe and perform the obligations under these Rules. Each
such person shall furnish the C with an address for the service of notices.
In the case of a Member the address shall be deemed to be the address
appearing in the Register of Members.
4.3 The Managers shall be at liberty to accept entries from those not
already Members. If an application is accepted such person shall become
a Member unless the Managers in their discretion decide that he is not
to be a Member. Whenever the Managers accept an entry by way of
reinsurance, they may in their discretion decide that the insurer reinsured
by the C or person insured by such an insurer or both shall become a
Member or that neither of them shall become a Member and the Managers
may accept the application on either such basis.
4.4 Where a person whose entry has been accepted under the Rules
has not become a Member of the, he shall have the same rights and
obligations under these Rules (but not under the Bye-Laws) as though he
were a Member, and all such rights and obligations shall apply to him.
Application for entry
6.1 Every applicant shall apply for an entry in such manner and form as
the Managers may from time to time require.
6.3 An applicant warrants on his own behalf and on behalf of any other
person entitled under these Rules that he has furnished all material
particulars and information and that all such particulars and information
are, so far as he knew or could with reasonable diligence ascertain, true
and complete, and will remain so throughout the period of insurance.
The particulars and information so furnished shall, if the entry of the
relevant ship be accepted, be deemed to form the basis of the contract of
insurance between the Member or applicant and the C.
6.4 Before any application for entry is accepted by the Managers, the
Managers shall agree in writing the terms and conditions that will apply
to the entry if the application is accepted, including (without prejudice to
the generality of the foregoing) the contribution to be paid to the C, the
commencement of cover, and the terms and conditions on which the ship
is to be accepted.
Certificates of entry
7.1 As soon as reasonably practicable after the acceptance of an
application for entry of a ship for insurance in the C, the Managers shall
issue to the Member in respect of such a ship a Certificate of Entry in
such form as they may from time to time determine but so that such
Certificate of Entry shall state the date of the commencement of the
period of insurance and the terms and conditions (other than the sums
payable to the C) on which the vessel has been accepted for insurance.
Joint Entrants
8.1.1 The Managers may accept an application from a Member for another
person or persons to become a Joint Entrant in respect of that Member's
entry. In such a case, the Managers may agree that none, one or more
such persons may become Members of the C. Each Joint Entrant shall
have an independent right of recovery from the C in respect of any
liabilities, costs or expenses arising out of a particular casualty or event.
8.1.2 In the event that the application is accepted by the Managers, the
Member who has made the application shall be designated the Principal
Assured and shall be the person who is deemed irrevocably to have full
power and authority to act in the name of and/or on behalf of all the Joint
Entrants, and neither the C nor the Managers, their servants or agents,
shall be liable in any other manner whatsoever to any Joint Entrant in the
event that the Member did not, in fact, have such power and authority.
8.1.3 Unless otherwise agreed in writing with the Managers, the Member
and all Joint Entrants shall be jointly and severally liable to pay all
amounts due to the C in respect of such entry.
8.1.5 In relation to any such application from a Member for any person
or persons to become a Joint Entrant the Member and each Joint Entrant
warrants that the Joint Entrant is, in relation to the entered ship, either: -
(i) interested in the operation, management or manning of an insured
ship; or
(ii) the holding company or the beneficial owner of the person identified
in the Certificate of Entry as the Principal Assured or of any person
interested in the operation, management or manning of the entered ship;
or
(iii) a mortgagee of the entered ship: or
(iv) the charterer of the entered ship.
PROVIDED ALWAYS THAT in relation to Rules 8.1 and/or 8.2:
(i) The receipt by the Member or any one Joint Entrant or Co-assured
of any sums paid by the C in respect of such an entry shall be sufficient
discharge by the C for the same;
…………….
Group Entries
8.3.1 The managers may accept any entry on the basis that the ship is
part of a Group Rating Agreement and assess contributions accordingly.
8.3.2 One person shall be designated Group Principal and any
communication from or on behalf of the C to the Group Principal shall be
deemed to be within the knowledge of all members, Joint Entrants and
Co-assureds in the Group, and any communication from and action taken
by the Group Principal shall be deemed conclusively to be made with the
full approval of any and all Members, Joint Entrants and Co-assureds
within that Group.
…………….
16.2.2 Any limits on the cover provided by the C and set out in a
Member's Certificate of Entry or these Rules shall apply in the aggregate
to the Member, and all Joint Entrants, Co-assureds, affiliated or associated
companies or other persons, as if the ship had been entered by the
Member only."
Principles of construction
8. I was referred to the decision of Rix LJ in Ocarini Marine Limited v
Marcard Stein [1994] 2 Lloyd's Rep. 524 and in particular to the passage
at page 529 where he said this in relation to a contract governed by
English Law as the C Rules are in the present case: -
"I approach the construction of these clauses applying English canons of
construction, as I am required to do. ……. In applying canons of English
construction to the relevant clauses, I think I am entitled to bear in mind,
and I do, that the formal requirements of art. 17 of the Convention have
been interpreted to mean that consent has to be clearly and precisely
shown, and that any jurisdiction agreed for the purpose of art. 17 may
be a derogation from the general rule contained in art. 2. In the case of
genuine ambiguity or uncertainty as to the correct construction of such
a jurisdiction clause I therefore consider that the English Court should
resolve such ambiguity or uncertainty in favour of a construction which
leaves the underlying jurisdiction required by art. 2 untouched."
9. This is the approach which I adopt in relation to the C Rules, looking in
particular at Rule 32 in the context of the other Rules.
Construction of the Rules
10. In essence, L maintained that Rule 32.1 could only be construed as
a jurisdiction agreement to which the Member agreed and that this had
no application to a Joint Entrant. The first sentence of Rule 32.1 expressly
referred to the Member as the person submitting to the jurisdiction of the
English Court whilst the second sentence had to be read in the light of
the first. The first sentence provided for the submission to the jurisdiction
of the English Court by the Member whist the second sentence gave the
C a liberty to pursue claims against the Member in other jurisdictions.
That second sentence referred to "any action to recover any sums which
the C may consider to be due to it from a Member" which must, in the
context, refer to claims against the Member in respect of sums due
from it as opposed to claims against anyone else in respect of sums
due from a Member (whether or not due also from that other person).
Mr. Stephen Kenny went on to argue for L that Joint Entrants were not
Members of the C and that the C Rules constantly drew a distinction
between Members on the one hand and Joint Entrants on the other. A
third category was that of Co-assured to which the Rules also referred.
Against this background therefore, Rule 32 had no application whatsoever
to anyone other than Members. Thus, if L was, as alleged, a Joint Entrant,
there was no jurisdiction agreement within the meaning of Article 23 of
the Jurisdiction Regulation, simply as a matter of construction of the C
Rules.
11. The C maintained that a Joint Entrant did become a Member, as a
person whose application for entry was accepted under Rules 4.2 and 4.3.
Alternatively, even if a Joint Entrant did not become a Member, by the
terms of Rule 4.4, as "a person whose entry has been accepted under the
Rules" the Joint Entrant was liable as if he were a Member with all the
obligations set out in the Rules applying. On either basis the terms of Rule
32 were directly applicable to a Joint Entrant.
12. Rule 4 is a general Rule dealing with entries whereas Rule 8
specifically deals with Joint Entrants as their subject matters shows,
though the headings are not to be used in interpreting the Rules.
Nonetheless the two Rules are related and the two have to be read in the
light of one another and the rest of the Rules.
13. Ships are entered in the C by "applicants" who may or may not be
"Members" and who may or may not become Members as Rules 4.1
and 4.3 reveal. When dealing with entries generally, the norm is that an
applicant becomes a Member under Rule 4.3 unless the Managers decide
otherwise.
14. "Applicants" as defined, include not only the person making
the application but those on whose behalf the application is made.
Applications are made in such manner and form as the C's Managers from
time to time require (Rule 6.1). Information supplied in the application is
warranted to be true and is the basis of the contract of insurance.
15. Joint entries are possible on the application of a Member under
Rule 8.1. Such an application is expressly made "for" the potential
Joint Entrant to become a Joint Entrant (Rule 8.1.1, rule 8.1.5) and if
successful, the Member becomes the Principal Assured who acts on behalf
of all Joint Entrants (Rule 8.1.2). The application constitutes a warranty
by the Member and the potential Joint Entrant that, in relation to the
entered ship, the Joint Entrant is interested in the operation, management
or manning of that ship or has some other relationship falling within Rule
8.1.5.
16. There is in my judgment no doubt that it is not only the owner of
a ship who can be an applicant for entry of a ship in the C and who
may thereupon become a Member under Rule 4.3, but also those on
whose behalf such an application is made, as the definition of "applicant"
shows. Moreover "owners", as defined, includes not only actual owners,
charterers operators or managers who enter the ship, but also those
who are Principal Assureds, Joint Entrants or Co-assureds. Since the
warranty is given as to the interest of the Joint Entrant in the operation,
management or running of the entered ship, any Joint Entrant is
warranted to fall into this category.
17. Whilst it is correct that the Rules draw a clear distinction between
"Members", "Joint Entrants" and "Co-assureds" as sub paragraphs i – vi
of the proviso to Rules 8.1 and 8.2 makes clear (as do other provisions),
Rule 16.2.2 shows that the cover limits apply in the aggregate to these
categories together (with associated companies etc) "as if the ship had
been entered by the Member only". The inference is that a ship can be
entered for others as well as Members, but the words used elsewhere in
the Rules in relation to Joint Entrants and Group Entries show that it is
these categories to which these words in Rule 16 refer, as opposed to Co-
assureds, affiliated companies and others.
18. The words "Joint Entrants" and the terms of Rules 16.2.2 and
8.1.2 cast light upon the wording of Rule 8.1.1. That Rule refers to an
"application from a Member for another person to become a Joint Entrant
in respect of that Member's entry" and provides that none, one or more
of such persons can become Members. In my judgment it is plain that a
Joint Entrant, just as much as a Member, is someone whose "entry of a
ship" in the C can be accepted under Rule 4.2 and 4.3, notwithstanding
the reference to "that Members entry" in Rule 8.1.1. The Member may
have already entered the ship as his entry, but the "Joint Entrant" is so
described because he becomes an additional insured in respect of an
entered ship so that it is entered for him as well as the Member. Thus
he also is, under the terms of Rule 8.1.3, to be liable for that entry. The
Member makes the application for the potential Joint Entrant who then
becomes a Joint Entrant, if accepted, with that Member, in respect of the
entry of that ship. It is truly a joint entry. The very words "Joint Entrants"
import the entering of a ship by that person as well as the Member. The
Joint Entrant can then either become a Member or not under the terms of
Rule 8.1.1 which are directly applicable. If there is a variation in the terms
of entry as a result of a Member's application for another to be a Joint
Entrant, an endorsement is to be issued which shows the terms of such
variation and the date from which it is to be effective. A Joint Entrant who
is included in cover in this way, then becomes someone who has entered
the ship jointly with the Member from that point onwards and is "a person
whose entry has been accepted under the Rules".
19. Rule 4.3 is a general Rule applicable to entries which provides that
an entrant becomes a Member unless the Managers in their discretion
otherwise decide but Rule 8.1.1 is the specific Rule dealing with joint
entries and requires a decision by the Managers as to whether or not
the Joint Entrant is to be a Member. The Rule distinguishes between
Joint Entrants on the one hand and Co Assureds on the other and makes
provision for Group Rating Agreements, where the entry is specifically
accepted on that basis. Whereas Co-assureds do not join in the entry,
Joint Entrants do.
20. Here it is plain that the decision was made by the C that L should
not be a Member but should remain in the category of Joint Entrant.
The terms of the Certificates show that the C registered F as the only
"Member" and registered L as a "Joint Entrant". The Certificates also
show that F were the Principal Assured and the Group Principal under the
Group Rating Agreement with whom all communications could be made
on behalf of the Joint Entrants (Rule 8.3.2). The Certificates were then
sent to F in accordance with Rules 7.1, 7.2 and 8.1.2.
21. In such circumstances, if L is a Joint Entrant accepted as such, but
not as a Member, it is nonetheless bound by the Rules in accordance with
Rule 4.2 and/or Rule 4.4, as "a person whose entry has been accepted
under the Rules". It therefore matters not that L as a Joint Entrant is not
a Member and is not treated as such. The Joint Entrant is not only liable
under Rule 8.1.3 but, being bound by the Rules by virtue of Rules 4.2
and/or 4.4, it is equally bound by the terms of Rule 32 just as if it was a
Member.
22. It follows therefore that although Rule 32.1 refers to the Member
submitting to the jurisdiction of the English Court in respect of any action
brought by the Club to recover any sums which the Club may consider
to be due to it from a Member, the terms of that Rule apply with equal
force to L as a person whose entry has been accepted under the Rules
as a "Joint Entrant", as though it were a Member. Rule 4.4 therefore
concludes the matter against L as a matter of construction of the Rules
which is an unsurprising result given that the underlying intention of the
jurisdiction clause must have been to provide for a common jurisdiction
in respect of claims against all of those who might be responsible to the C
for premium.
Article 23 of the Jurisdiction Regulation
23. "Article 23
1. If the parties, one or more of who is domiciled in a Member State,
have agreed that a court or the courts of a Member State are to have
jurisdiction to settle any disputes which have arisen or which may arise in
connection with a particular legal relationship, that court or those courts
shall have jurisdiction. Such jurisdiction shall be exclusive unless the
parties have agreed otherwise. Such an agreement conferring jurisdiction
shall be either:
(a) in writing or evidenced in writing; or
(b) in a form which accords with practices which the parties have
established between themselves; or
(c) in international trade or commerce, in form which accords with a
usage of which the parties are or ought to have been aware and which
in such trade or commerce is widely known to, and regularly observed
by, parties to contracts of the type involved in the particular trade or
commerce concerned.
2. Any communication by electronic means which provides a durable
record of the agreement shall be equivalent to "writing"."
24. The C contends that it can rely upon Article 23.1(a), (b) and (c).
It contends that the agreement to jurisdiction is evidenced in writing
by exchanges betweenP, acting as agents for F and L on the one hand,
and T, acting as agents for the C on the other, where it is accepted
that there are triable issues on the question of actual authority. Those
exchanges referred to endorsements and Certificates of Entry which in
turn referred to the C Rules which contained Rule 32. The C also says that
the jurisdiction agreement was in a form which accorded with the practice
established between T and P and in a form which accords with a usage
in international trade or commerce of which P and F were aware and, if
necessary, it contends that this was a practice of which L were or ought
to have been aware. The practice of a mutual ship owner's insurance
company issuing Certificates, Endorsements and Rules which govern the
terms of cover and include a jurisdiction clause is, in the C's submission,
widely known and regularly observed and it is well-known that all the
major C have English jurisdiction clauses in relation to the cover they
provide.
25. L draws attention to the decision in Prifti v Musini [2004] Lloyd's Rep.
IR 528 at 533 (paragraph 14) as showing that the staring point for Article
23 is not the "formal requirements" set out in subparagraphs (a), (b) and
(c) but: -
"The decision of the European Court in Salotti v RUWA Polstereimaschinen
GmbH [1976] ECR 1831 in which it was said that "Article 17 [of the
Brussels Convention] imposes on the Court before which the matter is
brought the duty of examining, first, whether the clause was conferring
jurisdiction upon it was in fact the subject of a consensus between the
parties, which must be clearly and precisely demonstrated."
26. The formal requirements identified in subparagraphs (a), (b) and
(c) are designed to ensure and to help the Court to be satisfied that
consensus between the parties is in fact established but it is said that
consensus, rather than compliance with those requirements remains
the touchstone. Compliance with one of the formal requirements is a
necessary but, in L' submission, not a sufficient condition for a jurisdiction
agreement to be effective for the purposes of Article 23. There must
be evidence of a "meeting of the minds" or actual genuine consensus
where consensus is a reality and not something which is deemed. Because
Article 23 involves derogation from the ordinary principles of jurisdiction
set out in Articles 2, 5 and 6 of the Jurisdiction Regulation, the formal
requirements will be strictly construed and, as established in a series of
European Court authorities, the fact of consensus must be clearly and
precisely shown.
27. For the purpose of the decision which I have to make, L again referred
to the decision of Andrew Smith J in Prifti v Musini and what he there
described as "the flexible test of good arguable case". For the purposes
of the determination I have to make, I am prepared to accept, without
deciding, that where there are issues of fact between the parties, which
will not be the subject of determination at trial, but fall for decision
now in the Court's decision whether or not to exercise jurisdiction, it
is for the C to show that it is highly likely to succeed on the balance of
probabilities in establishing a jurisdiction agreement which complies with
the requirements of Article 23. (See Evialis v SIAT [2003] EWHC 863,
[2003] Lloyd's Rep. 377 at paragraphs 70-71 and the decision in Glencore
International AG v Metro Trading International Inc. [1992] 2 Lloyd's Rep.
632 at page 642).
The exchanges between the parties
28. As part of the arrangements under negotiation between F and L, the
latter required insurance cover in respect of its employees on board F's
ships. Independent employers' liability cover for L appeared uneconomic
so F approached Pwith a view to adding L to F' cover with the C. T had
previously, on 20th March 2002 sent P Certificates of Entry in respect
of F's entries from 20th February 2002 of various vessels including the
Bolero, Azur, Flamenco, Mistral and European Vision. Those Certificates
made reference to the C Bye-laws and Rules as governing the terms of
the covers.
29. A draft of the Retail Concession Agreement was sent by F to P on 17th
April 2002. The insurance and security clause was essentially deleted and
wording appeared which said: "draft text pending decision from C and H".
One of the extant paragraphs stated that it was vital for the successful
conclusion of the agreement that F arranged for L to be named as co-
assured on its P & I cover without L being liable to pay premiums and
requested that the clause be adjusted to reflect that.
30. On 17th April also, P e-mailed F with the terms upon which it was
prepared to add L as a Co-Assured to F's cover, including payment of
premium at US$2,000 per person per annum or pro rata. Notes on
P's copy of that e-mail indicate that a P representative held telephone
conversations with T on 18th April and with Fl thereafter in which two
options were spelt out, namely insurance for L on a co-assured basis
with payment of premium or alternatively cover for L as a Joint Assured
without additional premium but with no waiver of liability for premiums as
a Joint Assured. By an e-mail of 19th April, P confirmed with T, following
their telephone conversation that they had advised F of the two options
and were awaiting F's response as to the course that they wished to
adopt.
31. It is common ground that a telephone conversation took place on
19th April between Mr. B of P and Ms. U of L in the absence of M. S of
F, who was out of the office. There was a dispute as to the terms of this
conversation but the background material lends some credence to the
C's case that Mr. B informed Ms. U of the options and that she told him
that L had decided to chose the second option, namely that it be named
as Joint Assured without additional premium but with joint responsibility
with F for the premium payable in accordance with the C Rules. The C's
case is reinforced by an e-mail of 19th April from Ms. U to Mr. B in which
she referred to that telephone conversation and "your verbal confirmation
that the C has accepted L as Joint Assured on the F cover". The e-mail
then gave details of the nationalities of the employees on the "European
Stars" and indicated that information would be given about the crew on
the other five vessels as soon as they were known. Ms. U signed herself
off as a member of the Chartering, Insurance & Legal Department. There
are 2 sets of manuscript notes on P's copy of that email, apparently made
by Mr B, which appear to record the fact that Ms C also had a telephone
conversation with Ms B on an unspecified date – a conversation to which
the C's solicitor makes reference as one in which the two options were
explained to Ms. U- with wording which states " she has already advised
that can be done".
32. Also on 19th April, however, Ms. U's superior sent a fax from LC
Insurance & Legal Department to F with "our final proposal for the
insurance arrangements for the duty free concessions on board F vessels".
This referred to an agreement already reached with F's P & I Brokers that
L were to be added as Joint Assured on the P&I cover of F, "without being
liable for any premiums (to be arranged commercially between F C and
L and noted by the P & I C)". L contends that this is inconsistent with
any agreement of the kind suggested by the C, since if there had been
such agreement, there would have been no further negotiation and none
requiring the C to note that L were not to be liable for premium.
33. L accepts that there was a conversation between Ms. U and Mr. B on
19th April but it is said that she did not have authority herself to agree to
the insurance of L as a Joint Entrant and would not have understood the
distinction between Joint Entrants and Co-Assured under the Rules even if
the terms had been mentioned to her, which they were not.
34. Once Ms. S of F was back in the office on 22nd April, she requested
that all communications concerning insurance be directed to her and that
there be no direct contact between P and L. Thereafter on 1st May F e-
mailed P stating that F had agreed to name L as Joint Assured on their
P&I policy for the Azur, Flamenco, Mistral, European Vision and European
Stars. The e-mail continued: -
"L understands that the C will not waive their responsibility for the
premiums, despite any commercial arrangements which may have
been agreed between F and L" (with regard to responsibility for those
premiums).
P then forwarded that e-mail to T on May 2nd as F's instructions but
adding the words: -
"We need to name L as Joint in all the F entries which please confirm you
are doing."
35. Details were then provided by L to F and by F to P of the nationalities
of the employees on board European Vision, Flamenco and Azur with
the comments that details for the European Stars had already been
provided, whilst a breakdown would be sent for a further two vessels
shortly thereafter. Also on 8th May P sent that message on to T and asked
the latter to "kindly confirm cover for the relevant personnel by adding L
as Joint Assured in all F vessels entries".
36. On 9th May T then sent an e-mail to P in the following terms: -
" L Concessions – A/C F
Further to previous correspondence we can confirm we are amending
the Certificates of Entry for the F Fleet (ex Bolero) to name L as a Joint
Entrant as requested.
Endorsements to be issued in due course and we thank you for your kind
assistance".
37. At that date, there were in existence Certificates of Entry in respect
of the vessels referred to in paragraph 28 of this judgment which referred
expressly to cover "in accordance with the Bye-Laws and the Rules from
time to time in force". Although there were delays and inaccuracies in
draft endorsements and Certificates of Entry issued thereafter, each
of the Certificates referred to Entry on the terms and conditions of the
Certificate and in accordance with the Rules of the C.
38. On 9th May 2002 P confirmed to F that the C had confirmed that
they would by endorsement name L as Joint Assureds, as requested, on
the F Fleet vessels and cover their staff for death, injury and illness as if
they were F's crew and as per the C's Rules and subject to the vessels'
terms of entry. The letter stated that P awaited the usual Joint Assured
letter duly signed by L. Notwithstanding that reference it is clear that the
acceptance of cover of L as a joint assured was unconditional and did not
depend upon completion of a Joint Entrant letter.
39. Much later, on 3rd February 2003, Ms. S of F e-mailed P to say that
she had been asked by L to produce confirmation of the existence of L
cover by the C as Joint Assureds on the P & I policy. She pointed out that
on some Certificates L were only named as Co-assureds and not on all
the vessels. She asked for some documentation to confirm the position.
P stated in reply that L was named as Joint Assured in the Certificates
of Entry for the European Stars and the European Vision and that it had
asked the C to issue endorsements for the remaining vessels, whilst
asking for the usual Joint Entrant letter. By a fax of 11th February, P sent
endorsements noting the addition of L into the Joint Entrant clause of the
P & I Certificates of Entry for the vessels Flamenco, Azur and European
Stars as from April 18th 2002 but referring to those endorsements as
being "in draft format" with official endorsements to be sent out upon
receipt of the relevant Joint-entrant letter. As a p.s. to the fax, the author
stated her assumption that the joint assurance was requested only for P
& I and asked for confirmation. No reply appears in the documents before
the Court.
40. The Certificates in their final form were issued by the C on various
dates between May 2002 and June 2003, as set out on a schedule
produced by Mr. Bright for the C which is attached to this judgment.
Separate Certificates were produced in relation to P & I cover and Defence
cover, the contracts being separate and governed by different Rules, both
of which included a jurisdiction clause in similar form. The European Star's
Certificates for 2002/2003 referred to L as Co-assured whilst the other
Certificates in respect of other vessels referred to them as Joint Entrants.
All those Certificates certified that the named ship was entered in the C
on the terms and conditions contained in the Certificate and in accordance
with the Bye-Laws and the Rules of the C, naming the Member and the
Joint Entrants and the Co-assureds in their distinct categories. All those
Certificates were sent by T to P but only one of those Certificates, the P
& I Certificate of Entry for the European Vision dated 1st August 2002
was passed to L. This occurred on 4th February 2003, when F referred to
the Certificates for other vessels which had "unfortunately" been issued
without naming L as a Joint Assured although it was said that the C
had confirmed that L was in fact so entered. A promise was made that
endorsements would be forwarded as soon as possible.
41. It is clear beyond any shadow of doubt that, whatever the exact
formulation of the test, the C has a "good arguable case" that P agreed
that L should be added as a Joint Entrant to the F P & I cover on the
terms of the C Rules. The request for confirmation of cover on 8th May
and the response on 9th May from T which confirmed that Certificates
of Entry were to be amended as appropriate and endorsements were
to be issued, against the background of the P e-mail to T of 2nd
May, constitutes an agreement in writing to this effect. By referring
to the Certificates of Entry which themselves refer to the C Rules in
circumstances where there were existing Certificates and the contents of
the C Rules were well known to P, including the jurisdiction clause, the
agreement to the jurisdiction clause was made in writing or at least was
evidenced in writing for the purposes of Article 23. The actual consensus
between T and P cannot be doubted, both being well aware of the C Rules
and jurisdiction clause so that not only is Article 23.1(a) satisfied but also
consensus has been clearly and precisely demonstrated, if the position of
T and P (both of whom were agents) is relevant.
42. The decision of the European Court in Salotti (ibid) by reference to
the second question set out at paragraphs 11 and 12 of the judgment
shows that it is sufficient if the parties expressly refer in the contract
to a prior document in writing in which reference is made to general
conditions which include a clause conferring jurisdiction. That amounts
to an express reference and not an "indirect" or "implied" reference to
an earlier document and there is no question of any uncertainty which
would vitiate reliance upon the jurisdiction clause. In paragraph 12 of
the judgment the Court held that the jurisdiction clause would be valid
in such circumstances if the express reference could be checked by a
party exercising reasonable care and if the general conditions including
the clause conferring jurisdiction were in fact communicated to the other
contracting party. In the present case none of this can be doubted so far
as P is concerned.
43. So far as Article 23.1(b) and (c) are concerned, if insurance is
considered a matter of international trade or commerce, the issuing
by a Mutual Insurance Company of endorsements to Certificates and
of Certificates of insurance which refer in terms to the C Rules (which
themselves contain the relevant jurisdiction clause) constitutes an
agreement in a form which accords with a usage of which P were well
aware and which is widely known and regularly observed by parties to
contracts of mutual insurance with a C. Although it was suggested in
argument that liability cover was not a matter of international trade or
commerce, it was accepted that shipping and other forms of insurance
fell into this category so that bills of lading and other insurances might
be covered by this subparagraph. (Article 23.1(c) developed out of the
decision regarding bills of lading in the Tilly Russ [1984] ECR 2417).
44. In my judgment, insurance, including liability insurance in respect
of maritime matters is a matter of international trade or commerce. It is
so closely allied to the trading and shipping of goods that it is part and
parcel of international trade and the price of goods is regularly expressed
by reference to it – in terms such as "C & F" or "CIF". P & I insurance is
so intimately connected with the carriage of goods and commerce that
it forms part of it for the purposes of Article 23, whether or not there is
urgency in concluding contracts, which L suggested was the rationale
for the subparagraph. Since the cover here is akin to crew cover and
involved the joint entry of L on a much wider form of cover for F, the
usage in question is one which relates to C covers as a whole and, in my
judgment is undoubtedly one which is well recognised in international
trade or commerce and is certainly one of which, on the evidence, P was
well aware. Whilst there is no direct evidence of L' actual knowledge, the
Legal Insurance and Chartering Department of a LC operator must also be
expected to be aware of such a practice.
45. The agreement to the jurisdiction, as between P and T, falls within
Article 23.1(b) inasmuch as the form of the agreement was constituted
by the written exchanges between the parties including the e-mail
and fax of the 8th and 9th May by reference to the endorsements and
Certificates of Entry, and thereby to the C Rules. There was little direct
evidence on this, but I have no doubt that P and T deal with each other so
regularly by way of correspondence in relation to C entries, by reference
to certificates which refer to the C Rules, that this must be the case.
To agree jurisdiction in this way on behalf of principals must, for P, be
commonplace.
46. Likewise the conclusion of the Agreement on jurisdiction in
correspondence by reference to endorsements, Certificates and C Rules is
a format for reaching agreement in the context of P & I Insurance which
is widely recognised and must have been known not only to P but to the
senior personnel in the LC Insurance Department, even if not known to
Ms. U, about whose knowledge on this point there is no direct evidence.
I consider therefore that Article 23.1 (c) is satisfied inasmuch as P, F and
L itself were or ought to have been aware of the usage that jurisdiction
agreements are to be found in C Rules which govern C P & I cover granted
in correspondence by reference to Certificates or endorsements.
47. L maintained that the question of consensus had to be considered as
between L itself and the C and not by reference to any dealings through
its agents, although for these purposes it conceded that P and F were
arguably its agents.
48. L' argument on this aspect of the dispute was based upon the many
statements which appear in the European authorities to the effect that
there must be precision and clarity in relation to the issue of consensus.
The consensus must be real as the decisions demonstrate. It was said
that the requirements of Article 23 must be strictly construed since
the purpose of the Article is to ensure that the parties have "actually
consented" to such a clause and where the authorities have referred to
prior courses of dealing, they have done so by reference to the course of
dealing between the parties concerned, not their agents. Equally, in the
context of Article 23.1(c) the decision in Mains Schiffahrts-Genossenschaft
v Les Gravieres Rhenanes [1997] ECR 1-911 refers at paragraphs 16
and 24 to practices in the trade or commerce in question, of which the
parties are or ought to have been aware, as well as to commercial or
trade relations between themselves, without any reference to knowledge
or dealings of agents. Stress was once again put upon the need for real
consent and the presumption of consensus under Article 23.1(c) where
the parties had the necessary knowledge or constructive knowledge.
49. In I P Metal v Ruote [1994] 2 Lloyd's Rep. 560 at 566, Saville LJ
stated that "the question of consensus is simply a question as to whether
or not the parties concerned truly consented or agreed to a special
jurisdiction clause to govern any disputes between them".
50. I was referred also to the decision of the European Court in Trasporti
Castelletti v Hugo Trumpy SpA [1999] ECR 1-1597 and in particular
to paragraphs 49-51 of the judgment where the Court held that the
validity of a jurisdiction clause could be assessed only in the light of
considerations connected with the requirements laid down by the relevant
Article. Any further review of the validity of the Clause and of the
intention of the party which inserted it had to be excluded and substantive
rules of liability applicable in the chosen Court were not to affect the
validity of the clause. From this, it was initially argued that there could
be no enquiry into the scope of an agent's authority under local law in
deciding whether or not there had been any agreement or consensus on
the part of the principal, through the agent to the jurisdiction clause.
51. On this basis L said that, for Article 23 purposes, a claimant
would have to show consensus on the part of the defendant himself
to the jurisdiction clause and not on the part of any agent whom he
had instructed. The whole point of Article 23 was to impose formal
requirements that only made sense as "guarantees" of consensus if the
relevant consensus was that of the parties themselves.
52. None of the authorities cited to me contain any discussion of the
position of agents in this context. Agency or its equivalent is a concept
known in many jurisdictions although the national rules in relation
to it vary. Where parties deal regularly through agents, it is hard to
see how the agency can simply be ignored. L was disposed to accept
that if a principal specifically authorised its agent to agree to English
jurisdiction or to agree to any jurisdiction the agent wished, this would
be effective to show consensus on the part of the principal. It would not
however be sufficient in L' submission, for the principal simply to give the
agent general authority to enter into a contract without making specific
reference to jurisdiction and in such circumstances any jurisdiction clause
to which the agent agreed would not bind the principal.
53. The effect of L' argument is to negate the concept of agency, at
least in a large number of situations and thus to override principles of
national law in relation to it. The whole basis of agency in English law
and elsewhere is that, if the agent has actual or ostensible authority
to conclude a contract on behalf of the principal, then the principal is
bound. As a matter of principle and logic, if the agent specially agrees
a jurisdiction clause, and it is within his actual or ostensible authority to
do so, that ought to bind the principal. The agent stands in the shoes
of the principal. If this was not recognised, a person dealing with a fully
authorised agent would still have to enquire behind the agency, to ensure
that there was a specific agreement by the principal to the jurisdiction
clause. I consider that this cannot be right.
54. Moreover, I do not consider that paragraphs 49 – 51 of the Trasporti
decision requires a different result. Those paragraphs are not aimed at
questions of agency but at the application of substantive rules of liability
relating to agreement by an individual to a jurisdiction clause, which
are not to be taken into account, as compared with the requirements
of the Convention or the Jurisdiction Regulation, as it now is. These
paragraphs were not, in my judgment, in any way intended to derogate
from the application of principles of agency in establishing consensus,
where the agent could bind the principal as a matter of national law. In
such circumstances it must be the agent's consensus that is relevant. In
The Tilly Russ, the Main Schiffahrts decision and some of the insurance
authorities cited to me, the business was plainly transacted between one
or more agent for the parties. At no point however does this seem to
have given rise to argument, although on the facts it may not have made
any difference. Insurance and reinsurance and shipping almost invariably
involve the use of agents in agreeing to contracts in standard form
which regularly include jurisdiction clauses. If the agent has appropriate
authority to bind the principal, the principal has put the agent in the
position where the agent's consensus is that of the principal and no
further enquiry beyond the agent's consensus is therefore required.
55. Provided therefore that there is actual authority or ostensible
authority on the part of the agent, the issue is whether or not the
requirements of Article 23 are satisfied, as between the agent and the
third party. For the reasons already given, I am satisfied that they are, as
between T (acting for the C) and P (acting for F and L).
56. There is evidence as set out earlier in this judgment that Ms. U on
19th April 2002 agreed with Mr. B of P that L should become a Joint
Assured, jointly liable for premium with F, rather than becoming a Co-
assured for which no additional premium was required. Whilst a finding as
to what was said will depend upon oral evidence as to the conversation,
there is documentation which supports the C's case as to the terms of the
conversation. It is in my judgment highly likely that the C will succeed in
showing that direct authority was given to P by L to conclude insurance
with the C on the basis that L was to be a Joint Entrant. It is also highly
likely that a factual inquiry will show that F was given full authority on the
part of L to conclude insurances through P with the C on that basis and
otherwise on such terms as F considered appropriate since, as between
F and L, it was F who would pay the premium under what was to become
the Retail Concession Agreement.
57. With the high likelihood of a finding of actual agency, on the part of
F and P for L, it is also highly likely that, on any factual inquiry, a court
would conclude on the balance of probabilities that the requirements
of Article 23.1 were satisfied. On any view of the criterion therefore, in
my judgment, the C have established a good arguable case as to the
applicability of Article 23 in respect of the insurances concluded by P with
T where L was named as Joint Entrant.
Articles 12 – 14 of the Jurisdiction Regulation
58. Article 12
1. Without prejudice to Article 11(3), an insurer may bring proceedings
only in the courts of the Member State in which the defendant is
domiciled, irrespective of whether he is the policyholder, the insured or a
beneficiary.
………………….
Article 13
The provisions of this Section may be departed from only by an
agreement:
2. which allows the policyholder, the insured or a beneficiary to bring
proceedings in courts other than those indicated in this section, or
………………….
5. which relates to a contract of insurance insofar as it covers one or more
of the risks set out in Article 14.
Article 14
The following are the risks referred to in Article 13(5):
1. any loss of or damage to:
(a) seagoing ships, installations situated offshore or on the high seas,
or aircraft, arising from perils which relate to their use for commercial
purposes;
(b) goods in transit other than passengers' baggage where the transit
consists of or includes carriage by such ships or aircraft;
2. any liability, other than for bodily injury to passengers or loss of or
damage to their baggage:
(a) arising out of the use or operation of ships, installations or aircraft
as referred to in point 1(a) insofar as, in respect of the latter, the law of
the Member State in which such aircraft are registered does not prohibit
agreements on jurisdiction regarding insurance of such risks;
(b) for loss or damage caused by goods in transit as described in point
1(b);
3. any financial loss connected with the use or operation of ships,
installations or aircraft as referred to in point 1(a), in particular loss of
freight or charter-hire;
4. any risk or interest connected with any of those referred to in points 1
to 3."
59. Under the Jurisdiction Regulation, an insurer is obliged to bring
proceedings in the insured's state of domicile unless an effective
agreement conferring jurisdiction on the Courts of another Member State,
of a type permitted by Article 13 has been concluded. The only type
of jurisdiction agreement permitted by Article 13 which is potentially
applicable here is that set out in Article 13.5 namely an agreement "which
relates to a contract to insurance insofar as it covers one or more of the
risks set out in Article 14". There is no doubt that the cover taken out
by F was cover for types of risks which fall within Article 14 but it is said
that, in the case of L, its insurance cover was protection in respect of
its potential liabilities arising from employment of staff to man its duty
free and gift shops, as the C well knew. These are said to be ordinary
employers' liability risks and therefore not to fall within Article 14 at all.
60. It follows from my earlier finding that L were Joint Entrants and from
the terms of the Certificates and the C Rules, that L was insured on the
same terms as F. Although it may not have required cover in respect of
other risks, the insurance was a joint insurance in respect of a multiplicity
of risks, the vast majority of which fell within Article 14. Where, as in
Charman v WOC [1993] 2 Lloyd's Rep. 551, the insured is someone of
sufficient economic power to be in the class of people who obtain cover
which falls within Article 14, it does not matter if there are some elements
of the cover which do not fall exactly within the terms of that Article
but which are in some way connected with the subject matter of Marine
Insurance. In this case it is said that L is not in the same class of persons
as F and because the underlying policy of the Article is one of social
protection, the wording of the Article should not be construed widely.
61. L is a Cypriot company but it is part of the LC Group which, on the
material available to the Court, both owns and manages ships. At the
current date it appears to own and/or manage ten such ships. In April
2002, whilst not owning as many ships as this, it was undoubtedly in
business as an owner or manager of cruise ships, owning some five
ships and managing two others. It was the chartering, insurance and
legal department of LC that appears to have dealt with the insurance
issue for L. Whilst therefore L is not a ship owner, it is not right to see
it as a vulnerable company without negotiating leverage which requires
extensive protection by the Courts in the context of acceptance of a
jurisdiction agreement.
62. The cover actually obtained by L, which it required in respect of
its shop personnel is that given under Rule 20.1.1 and/or 20.2, 20.4,
20.5, 20.6, 20.7 and 20.8. For this purpose the shop personnel must
fall to be treated as seamen which, as defined in the C Rules includes
any person engaged or employed in any capacity in connection with the
business of any entered ship as part of the ship's complement, including
supernumeraries. The risks covered included liability for death, injury
or illness of such persons under Rule 20.1.1 or 20.2, liability for such
matters arising from collision or arising out of the carriage of cargo,
repatriation, crew substitute expenses, loss of effects and shipwreck
unemployment indemnity. In my judgment the liability cover is in respect
of liability arising out of the use or operation of ships or risks of financial
loss connected with such use or operation, even though L did not itself
operate the ship. The types of risks covered were specifically maritime
risks and it was for this purpose that L required the cover, as opposed to
its ordinary land based risks. Risk of financial loss arising in these matters
is connected with the use and operation of ships and therefore falls within
Article 14.3 or Article 14.4.
63. Moreover, the covers sought and obtained were joint covers for F and
L (amongst many others). The cover given to L cannot be seen in isolation
– it was a combined cover where the totality of risks covered were plainly
those which fell within Article 14. The fact that one or more of the Joint
Entrants only actually needed a small part of the cover cannot affect the
nature of the jurisdiction agreement in respect of the entirety of the risks
for which indemnity was given to many parties.
64. In my judgment therefore, the liabilities for which L specifically
sought cover, quite apart from the wide risks covered by the Joint Entry
with F, were liabilities arising out of the use or operation of ships or
related to financial loss connected with the use or operation of ships or
constituted risks or interests connected with these two classes of risk.
In these circumstances a jurisdiction agreement in respect of L' cover
was one which was permissible under Articles 12 – 14, provided that the
requirements of Article 23 were also satisfied, as I have found they were.
Defence cover
65. L contends that there is no triable issue in relation to the claim
against it for Defence cover. Whatever may be the position with regard to
P & I cover, the terms of the written exchanges between the parties show,
in L' submission that there never was any request for Defence cover. In
the e-mail of 1st May 2002 from F to P referred to in paragraph 34 of this
judgment, F expressly referred to the naming of L on its P & I policy for
the five ships there referred to. That e-mail was then forwarded by F by T
on 2nd May with the superscription: -
"Here follows the self explanatory message from F with their instructions
in respect of the above. ……. We need to name L as Joint in all the F
entries would you please confirm you are doing."
66. The reference to "all the F entries" in the e-mail of May 2nd could
not have conveyed a need for Defence cover since the instructions to
which reference was made expressly referred to P&I cover. Nor could the
exchanges on 8th and 9th May 2002 upon which the C rely as constituting
the contract change that position. A reference to "all F's vessels entries"
in the e-mail of 8th May from P to T could objectively only be read in the
light of the previous exchanges which refer specifically to the P&I policy.
The confirmation from T that they were amending the Certificates of Entry
"to name L as a Joint Entrant as requested" is not therefore capable of
constituting an acceptance by the C of L for Defence cover. No request
had been made for it so that no acceptance could be given.
67. The C also rely upon application forms completed by F or P which later
sought P&I and Defence cover together and listed L as a Joint Entrant.
Such forms appear in the bundle in respect of the Caribe, the European
Stars, and the European Vision. Of course, F needed such cover for itself
and perhaps for other Joint Entrants listed, but such forms were not
signed by L and copies of the Certificates issued were never forwarded
to them. Moreover, the application form itself at note five referred to
the need for any Joint Entrant to confirm the requirement for cover by
signing the application form where indicated. Whereas, in the context of
P&I cover, there is material to support the C's position that F and P were
expressly authorised to obtain such cover, there is no suggestion on the
evidence anywhere of any such authority in relation to Defence cover. In
circumstance where there is no evidence of L holding out F or P to T as its
agent with authority to conclude Defence cover on its behalf, there is no
basis for an argument of ostensible authority in relation to the application
forms.
68. It is noteworthy also that a fax of 11th February 2003 from P to F
which enclosed draft endorsements showing the addition of L into the
Joint Entrant clause of the P & I Certificates referred to P's assumption
that cover was only requested for P & I. In these circumstances, there is
no basis for any allegation of ostensible or actual authority on the part
of F or P to agree insurance for Defence risks: nor is there any evidence
of agreement between P and T to the inclusion of L for such risks in
the exchanges up to 9th May 2002: nor do the application forms and
Certificates change that position. There is therefore no case against L in
respect of Defence cover on the terms of the C Rules, which include a
jurisdiction clause in the same terms as that to be found in Rule 32 of the
P & I Rules.
69. L' applications therefore fail, save in respect of the Defence cover
issue and the 2001/2002 entries, the latter of which was conceded before
the hearing. Issues relating to costs may arise however by virtue of
the late evidence from the C and this limited success and although my
preliminary view is that the C should have an order for costs in its favour
on the standard basis, I await the submissions of the parties before
making any decision on this or as to the proportion recoverable.