Mr. Justice POTTER: The applications
These applications by interlocutory and originating summons relate to
parallel litigation in the English Commercial Court and in the United
States District Court for the Northern District of Illinois (Eastern Division)
concerning the liabilities of various insurers, reinsurers and managing
companies in relation to a scheme of pollution or "environmental
impairment " insurance. The collective title for the large number of actions
comprising the English proceedings is "The E. EIL Actions". I shall call
the U.S. proceedings "the Illinois action". The actions in which (and/or
in connection with which) these applications are made comprise only
some of the E. EIL actions, namely the English actions in which S. C. de R
("SCOR") is involved as defendant or third party. The applications are as
follows:
(1) An interlocutory application on summons by SCOR for an injunction
in four actions brought by plaintiff reinsurers, namely 1988 Folio 3471
("The J." action), 1987 Folio 791 ("The W." action), 1988 Folio 2489 ("The
B. Re" action) and 1988 Folio 2490 ("The A./Z." action). In each case the
injunction claimed is an order that the plaintiffs (who are involved also in
the Illinois action as defendants and/or counterclaimants) be restrained
from bringing or pursuing the claims contained in or represented by their
second amended counterclaim in the Illinois action, or any similar claims,
anywhere other than in England and/or in France on the grounds that:
(a) SCOR has legitimate rights under the Civil Jurisdiction and Judgments
Acts 1982 and 1991 which are invaded and/or would be invaded by such
proceedings and such proceedings are contrary to English Statute and
European law; further or alternatively
(b) The commencement and/or prosecution of such proceedings is or
would be unconscionable and/or oppressive: and/or the interests and/or
ends of justice require that the plaintiffs be restrained from commencing
and/or prosecuting such proceedings. [I have granted leave for the
summons to be amended in two respects. First, to make clear that the
relief sought is limited to the plaintiffs' claims in Illinois "against SCOR",
that limitation not having been originally included; second, to correct
certain errors appearing in Schedule 1 to the summons which listed the
parties (called "the Schedule 1 plaintiffs") against whom the relief was
sought. The parties against whom the relief is now sought are listed in a
document headed "Schedule 3".
I also note that S. R Co. Ltd. ("S. Re") is in provisional liquidation.
The leave required to be obtained from the Companies Court for the
applications to proceed against S. Re had not been obtained at the outset
of the hearing before me, but was obtained in the course of the hearing.]
(2) An application on summons by B. Re and A./Z. (two of the plaintiffs
sought to be restrained by SCOR under (1) above) for:
1. A declaration that in the circumstances of the case the Court has no
jurisdiction over the [applicants] in respect of the relief or remedies
sought by SCOR in their summons at (1) above.
2. An order setting aside that Summons and/or service thereof [Z., as
SCOR admit, had been joined in error, as it was not a counterclaimant in
Illinois. It has been deleted from Schedule 3. It therefore does not pursue
its summons save as to costs.]
(3) An originating summons by SCOR (1993 Folio 1725) seeking to
restrain (as defendants to the summons) the plaintiffs in the J., W., B. Re
and A./Z. actions in the same terms as in (1) above.
(4) Applications on summons by B. Re and A. for declarations in the same
terms as in (2) above in respect of the originating summons in (3) above.
(5) An application on summons by Hannover Re for similar relief.
(6) Two originating summonses by SCOR in two E. EIL actions (1993 Folio
1764 and 1993 Folio 1775) for an injunction restraining syndicate 661
(Ed.) by the first summons and syndicates 231 (Je.), 605 (Ho.) and 518
(Sa.) by the second summons in similar terms to (1) above.
Pending the hearing of these applications, the position of SCOR has been
protected so far as the Illinois action is concerned pursuant to, and to the
extent of, an order of Mr. Justice Phillips dated Jan. 14, 1993 to the effect
that:
The Schedule 1 Plaintiffs be restrained until further order from
commencing and/or pursuing any application to any Court in the United
States of America or elsewhere seeking to restrain SCOR, or otherwise
seeking to restrain SCOR, from making the application set out in the...
[Summons in (1) above]...
For convenience, I shall refer to all the plaintiffs sought to be restrained
by SCOR as "the plaintiffs" save where it is necessary to identify plaintiffs
individually or separately affected by a particular aspect of this judgment.
The background …
The E. EIL actions relate to the organisation and operation of a pool
set up on the initiative of a number of companies centred in the United
Kingdom, collectively referred to as "C." in this judgment. The purpose of
the pool was to provide "pollution insurance" to American corporations,
the letters EIL standing for "E. I. L.". The scheme was "reinsurance-
led", the commercial centre of gravity reposing in a group of reinsurers.
Direct cover was written locally in the U.S. by "fronting " insurers, their
services being necessary to comply with American insurance regulations.
However, they were reinsured (usually as to 100 per cent.) by the
reinsuring members of a pool. Although the fronting companies received
and/or obtained the business, collected the initial premiums and their
commission, received any initial claims from the insured and performed
some paperwork, in general the risk-rating, underwriting and subsequent
claims handling was dealt with by the participants in the pool, being
performed on their behalf by C. or others appointed and/or delegated by
C. to act for them. The U.S. pool was originally led by two reinsurers, but
one dropped out leaving SCOR as the principal player in the pool. …
As already indicated various U.S. fronting companies were selected
by the reinsurers to carry the direct insurance with the U.S. clients.
However, the only such company to which it is necessary to refer at this
stage is International Insurance Co. ("IIC"), an Illinois company based
in Chicago which was on risk for the three policy years with which the
plaintiffs' E. EIL actions are concerned, namely 1981, 1982 and 1983. IIC
is the plaintiff in the Illinois action. In response to ICC's claims therein,
counterclaims have been filed by the Illinois defendants which give rise to
the SCOR applications before me.
As further background, it should be explained that not only did C., as
managers of the pool, select IIC as a fronting company, but it also
selected the insured and decided on what terms and at what rates their
EIL risks would be accepted. So far as the E. EIL actions are concerned,
it appears to be common ground that neither the fronting companies
nor the reinsurers played an active part in this. However, that position
is not common ground in the Illinois action, where the case being put
by the excess of loss reinsurers is that C., in selecting risks, deciding on
terms and claims handling, were acting as IIC's agents. That is one of the
principal issues before the Illinois Court.
For most of the life of the pool, IIC were reinsured 100 per cent. by
SCOR. Only in the policy year 1983 did IIC retain 7 1/2 per cent. for
its own account. In the years 1981, 1982 and 1983 the managers of
the pool provided additional capacity by arranging two layers of excess
loss reinsurance with various companies and syndicates. Although SCOR
carried 100 per cent. of the primary layer of reinsurance (save in 1983
when it carried 85 per cent.), it retained only 20 per cent. of the excess,
retroceding the remainder.
In practice the arrangements involved two chains of insurance. As to the
primary layer, the chain ran: client – IIC – SCOR – retrocessionaire –
re-retrocessionaire. For the excess layers the chain was: client – IIC –
excess layer reinsurer. So far as the primary layer insurance is concerned
there was a connection between SCOR (and hence, at further removes,
the retrocessionaires and re-retrocessionaires) and C. as managers, they
being in express contractual relations. However, there is doubt as to
whether excess of loss reinsurers were members of the full pool.
Having introduced SCOR, the E. EIL plaintiffs, C. and IIC, it is also
necessary to mention that there were also involved (as appointees or
delegates of C.) in the planning and management of the pool in the U.S.,
a group of U.S. companies called "H." and a further participant The L. A.
Inc. ("TLA"), an affiliate of IIC, which companies are also defendants or
third parties in various of the E. EIL actions.
The English actions
The relevant English actions in which SCOR is concerned are:
The J. Action: the representative plaintiffs (who are excess of loss
reinsurers on the first and/or second excess layers in the EIL programme
for the 1983 year) sue on behalf of a long list of Lloyd's syndicates and
insurance companies which include inter alios Ha. Re, the P. I. Co. of C.
("PICC ") and N. F. and M. ("N."). The defendants are C.. The claim is for
damages for breach of contract and/or breach of fiduciary duty and/or
negligence on the part of C. in their management of the EIL reinsurance
pool, including the underwriting of risks and the handling of claims. …
The Warrilow Action: …The plaintiffs, (who were retrocessionaires of
SCOR in the 1981, 1982 and/or 1983 years), sue SCOR for material
non-disclosure and/or innocent misrepresentation by SCOR in relation
to the making of the retrocession agreements for the primary layer of
insurance in 1980 and for a declaration that the retrocession endorsement
to which all but the first plaintiffs subscribed in 1983 is void for mistake.
As against C., the plaintiffs claim damages for negligence and/or breach of
fiduciary duty and/or breach of contract and/or misrepresentation and/or
non disclosure in relation to their part in the broking of the retrocessions
already mentioned and on more general grounds. H., TLA, IIC and
Sedgewicks have been joined as third parties in that action.
The B. Re Action:B. Re sue C. for damages for breach of contract and/or
breach of fiduciary duty and/or negligence in relation to their placement
of reinsurances, underwriting management and claims handling. C.
subsequently joined as third parties H., TLA, IIC, Sedgewicks and SCOR.
…
The A./Z. Action: A. Re and Z. Re sue C. on similar grounds to those in
the B. Re action above and similar third party claims have been raised by
C., making a similar claim against SCOR.
The Illinois Action
In March 1988, IIC, as primary insurer, paid U.S. $19m. in satisfaction
of a claim made by SKB for its alleged loss relating to environmental
impairment arising out of a site in Porterville, California. IIC claimed
under its EIL insurance arrangements against its reinsurers, including the
excess layer ("XOL ") reinsurance. As one of those reinsurers, SCOR paid
its share of the SKB claim, but other reinsurers refused to pay.
On Nov. 18, 1988, IIC commenced the Illinois action for reimbursement
against all of its XOL reinsurers' other than SCOR, Munich Re and N.. In
that action, IIC claimed that the circumstances of non-payment amounted
to "bad faith conduct" entitling IIC to claim punitive damages.
On Nov. 21, 1988, the XOL reinsurers sought to circumvent the Illinois
action by bringing their own action in the Commercial Court for a negative
declaration of non-liability and they obtained ex parte leave to serve IIC
out of the jurisdiction for that purpose.
On Mar. 21, 1989, the XOL reinsurers issued a motion in the Illinois action
to dismiss IIC's action for "forum non conveniens".
On June 15, 1989 (in the Commercial Court), Mr. Justice Saville, on
the application of IIC, set aside service of the XOL reinsurers' writ for a
negative declaration, on the grounds that Illinois rather than England was
the appropriate forum, following which (in September, 1989) the XOL
reinsurers withdrew their motion to dismiss in the Illinois action.
In March/April, 1990 the Illinois XOL defendants (other than N.) filed
affirmative defences and counterclaims alleging that IIC was in breach of
various conditions in the reinsurance contracts and in particular alleging
bad claims handling by ICC through C. in the same respect as in their
English actions against C.. …
In June, 1991, C. (as defendant to IIC's complaint and third party
complaint) applied for dismissal or stay of the proceedings on grounds
that there was a binding arbitration agreement with IIC.
In June, 1991, SCOR also filed a motion to stay IIC's claims pending
arbitration and, further, to dismiss the second amended supplemental
complaint on the grounds that there were proceedings in London (the E.
EIL actions) which covered the same matters (lis alibi pendens).
On Dec. 20, 1991, Magistrate Judge Weisberg: (a) granted a stay of IIC's
claims against C. pending arbitration; (b) granted a stay on a number of
IIC's claims against SCOR; but (c) ruled against SCOR's motion to dismiss
on grounds of lis alibi pendens; and (d) ruled that IIC's count alleging
SCOR's responsibility for the acts of C. should proceed in Court.
On Apr. 29, 1992 he confirmed those rulings on SCOR's motion to
reconsider.
In March, 1992 N. applied to intervene in the Illinois action.
On Mar. 14, 1992 the Illinois XOL reinsurers (save for A. and B. Re)
filed a second amended counterclaim which, inter alia, added SCOR as
a counter-defendant. In that counterclaim the Illinois XOL reinsurers
(besides remedying technical difficulties found by Magistrate Judge
Weisberg to have existed in their earlier pleading): (I) revised their case
against IIC for fraudulent underwriting (Count IV); (II) claimed against
IIC and SCOR for fraudulently failing to disclose to reinsurers in 1983
imprudent underwriting practices (Count V); (III) extended to SCOR their
claim against IIC under RICO in relation to an underwriting scheme in
1982/4 and a claims-handling scheme concerning the EIL programme in
1982 and 1983 (Counts VIII to XI). …
On June 11, 1992 A. and B. Re filed a second amended counterclaim in
similar terms.
On Dec. 30, 1992 Judge Lindberg made an order confirming his decisions
of Dec. 20, 1991 so far as SCOR was concerned.
On Jan. 25, 1993 SCOR appealed that order. …
In this case Mr. Gross, Q.C. on behalf of SCOR accepts (and it is
not in issue between the parties) that, in order to support SCOR's
application for relief, it must be demonstrated that the foreign plaintiffs,
by proceeding with their counterclaim in the Illinois action: (i) have
invaded or threatened to invade a legal or equitable right of SCOR
for the enforcement of which SCOR is amenable to the jurisdiction of
the Court; or (ii) have behaved or threatened to behave in a manner
which is unconscionable (see South Carolina Insurance Co. v. Assurantie
Maatschappij "De Zeven Provincien" N.V., [1986] 2 Lloyd's Rep. 317 at
p. 324; [1987] A.C. 24 at p. 40 per Lord Brandon) and/or which renders
pursuit of the Illinois action vexatious or oppressive so that the ends of
justice require that the foreign plaintiffs be prevented from pursuing their
counterclaim (see Societe Nationale Industrielle Aerospatiale ("SNIA") v.
Lee Kui Jak, [1987] 1 A.C. 871 at p. 896 per Lord Goff).
However, in bringing these applications SCOR faces a number of
preliminary problems in relation to the Court's jurisdiction.
First, the question whether the relief can properly be sought as an
interlocutory application within the existing E. EIL proceedings (see
SCOR's summons under (1) above) or ought properly to be sought by
way of originating summons. It is in recognition of this problem that the
plaintiffs' originating summons under (3) above was issued.
Second, if it be the position that fresh proceedings by way of originating
summons are necessary then, in relation to those plaintiffs which are
neither domiciled nor resident nor carrying on business in England,
the question arises whether, by commencing the English actions, they
have submitted to the jurisdiction of this Court for the purpose of those
originating summonses, whether they are otherwise subject to the
Court's jurisdiction, or whether they are outside the jurisdiction of the
English Court for the purposes of SCOR's application and/or for the
enforcement of an injunction which acts in personam. In this connection,
B. Re and A. Re have issued their summonses to set aside under (2) and
(4) above and Hannover Re its similar summons under (5) above, which
summonses have been issued on the basis of a reservation as to the
question of jurisdiction. I shall call those three parties collectively "the
foreign plaintiffs".
I now turn to deal with the problems raised in the context of the grounds
advanced by Mr. Gross, Q.C. on behalf of SCOR. Mr. Gross has submitted
that the Court has jurisdiction to grant the relief claimed …
The foreign plaintiffs submit that to invoke the inherent jurisdiction of
the Court to justify an interlocutory application which is not made in
connection with any issue being litigated as between SCOR and the
foreign plaintiffs, is not a necessary or proper supplement to what the
rules provide, but a means for SCOR to circumvent the requirements of
the Court in relation to the exercise of its jurisdiction over a foreign party
against whom a plaintiff asserts a substantive cause of action (cf. The
Siskina, [1978] 1 Lloyd's Rep. 1; [1979] A.C. 210).
My decision as to SCOR's grounds (1) and (2) is as follows: (1) So far as
O. 29, r. 1 is concerned, it seems to me clear that the rule contemplates
applications for interlocutory injunctions only, in actions in respect of
which a separate trial inter partes is contemplated. Reliance was placed
by Mr. Gross upon those types of case (for instance labour disputes)
where it is acknowledged and accepted by both parties and/or recognized
by the Court that the decision upon an application under O. 29, r. 1 will
decide the case. However, those cases do not assist him in showing the
Court has jurisdiction (other than by consent) to grant a final injunction
upon an interlocutory application. That is because the injunction in such
actions is in fact granted in interim form "till trial or further order", even
though no trial is expected to take place. …
I say it might be open to SCOR to do so because I accept SCOR's
submission that the wording of O. 29, r. 1 is so wide and unqualified
that, in principle, a third party may seek interlocutory relief by injunction
against a foreign plaintiff on the basis that, by suing in England, the latter
has submitted not only to the risk and incidence of a counterclaim but
also to any claim against him by a third party, providedthat leave of the
Court has been obtained or is sought pursuant to the provisions of O. 16
for the direct determination of a claim or issue as between the plaintiff
and third party. That conclusion is wider in effect than the decisions in
Derby & Co. Ltd. v. Larsson and Republic of Liberia v. Gulf Oceanic Inc.
(which concerned matters of counterclaim brought by defendants), but in
my view it is consistent with the reasoning therein (see also Union Bank
of the Middle East v. Clapham, (1981) 125 S.J. 497 (C.A.).
However, that still leaves unanswered the point taken on the rules by the
foreign plaintiffs that the remedy sought is final in form, not interlocutory,
and no claim or application for that final relief has been made by SCOR
against the plaintiffs (save by way of SCOR's originating summonses).
(2) In that respect, I accept the submission of SCOR that the Court under
its inherent jurisdiction may, in an appropriate case, permit a third party
to apply for an anti-suit injunction within the confines of an existing action
to which a foreign plaintiff is already party, thus obviating the need to
issue new proceedings by way of originating summons. I do not consider
that for that purpose it should in all cases be necessary for the third party
also to apply to the Court in the action for a question or issue to be tried
directly between the third party and the plaintiff (in this case the question
of fraud or conspiracy) in order to found the third parties right to apply in
the action. …
I am at present inclined to the opinion that an injunction has generally
been granted in such circumstances for the purpose of protecting the
English jurisdiction... In the SNIA case (at p. 893) he expressed the view
that the latter opinion was "too narrow a view" and he dealt with the
power to grant an anti-suit injunction in the wider terms of "vexation/
oppression" and "the ends of justice ", based on his review of the
authorities. It seems to me that the effect of that review was to show that
the power may properly be put on a wider basis than the Court's inherent
jurisdiction to prevent procedural injustice, being a general power of the
Court to prevent injustice to a party before it, including the power to
restrain foreign proceedings where the foreign forum is the sole, rather
than alternative, forum for the proceedings brought or threatened (cf.
British Airways Board v. Laker Airways Ltd., [1985] A.C.58 and Midland
Bank plc. v. Laker Airways Ltd. [1986] Q.B. 689;).
Nonetheless, in his seminal article "The Inherent Jurisdiction of the Court
", (1970) Current Legal Problems, I. H. Jacob included under the inherent
jurisdiction of the Court to prevent abuse of process:
...power to prevent a litigant from taking multiple...proceedings which
are frivolous, vexatious or oppressive...[including in the case of lis alibi
pendens]...summary power to stay the action in this country or to restrain
a party from further proceedings in the foreign country. Further, in
chapter 12 of Dicey and Morris on The Conflict of Laws (12th ed.), in
commenting on r. 31(1) which states:
English Courts have jurisdiction, wherever it is necessary to prevent
injustice...to restrain the institution or continuance of proceedings in
foreign Courts... the editors describe it as "an inherent jurisdiction,
reinforced by statute " (namely the Supreme Court Act, 1981 s. 49(3) and
the Civil Jurisdiction and Judgments Act 1982, s. 49).
It remains the position that, leaving aside a "sole forum" case, the
oppression relied on by the applicant in a case such as this springs from
the fact that proceedings are already before the English Court in the light
of, or in relation to which, the pursuance of the foreign suit (as opposed
to its litigation in the English proceedings) is said to be vexatious or
oppressive and the Court is invited to exercise its summary power. That
being so, it seems to me sensible and appropriate that the application
should be made in those very proceedings. I would add that, if those
proceedings are (as I consider) properly regarded as a single cause or
matter (considering of main action plus third party proceedings), then
arguments as to the precise relationship of the parties and as to whether
or not the issues before the Court yet involve a "lis " between them in
some more restricted sense, are it seems to me matters appropriate (and
important) to be considered by the Court in relation to the exercise of its
discretion whether or not to grant the relief sought and/or as going to the
terms on which relief is granted, rather than as going to the jurisdiction of
the Court, to which the respondent is already amenable by reason of his
participation as plaintiff in the action.
As it was put by Lord Justice Oliver in the Republic of Liberia case at
[1985] 1 Lloyd's Rep. at p. 544:
...by becoming a litigant within the jurisdiction, a plaintiff submits himself
to the incidents of such litigation including liability to a counterclaim
[emphasis added]. It seems to me that such incidents are not merely
those expressly provided for in the R.S.C., but extend to such powers as
the Court may see fit to exercise under its inherent jurisdiction in that
litigation.
As to the question of the form of the injunction sought, although an
application of this kind is likely in form to be for an injunction unlimited
as to time, it does not necessarily involve or operate as a final resolution
of the parties' rights in the sense in which that expression is habitually
used in civil disputes. Certainly, in a case where an anti-suit injunction
is applied for in relation to proceedings in which the issue sought to be
litigated abroad is already before the English Court for determination, the
Court would be unlikely to grant relief of a truly final nature, in that there
would be express or implied "liberty to apply" in the event of a change
of circumstances which resulted in that issue being withdrawn from the
English Court, or whereby, for any other reason, the oppression originally
complained of were relieved. Thus it seems to me that the form in which
the injunction is sought should not be determinative of the question of
whether or not the application (which is for a summary remedy) may
be made within the action or must be made by commencement of new
proceedings.
Accordingly, I conclude that, the Court has jurisdiction within the existing
actions under summons (1) in respect of the relief applied for. …
The originating summonses
Before dealing with the further problem of jurisdiction facing SCOR in
relation to the foreign plaintiffs under the originating summons in (3)
above, it is convenient to deal with the primary ground on which SCOR
asserts its right to an injunction, namely that by proceeding with their
counterclaims in the Illinois action, the foreign plaintiffs have invaded
or threatened the rights of SCOR to be sued in accordance with the
provisions of the Brussels and Lugano Conventions ("the Conventions")
as imported into English municipal law by the Civil Jurisdiction and
Judgments Act, ("CJJA") 1982 and 1991. …
As already indicated, service of the originating summonses was accepted
by the foreign plaintiffs on condition that it would not amount to a
submission to the jurisdiction relating to SCOR's application for an
injunction or otherwise.
It is not in dispute that none of the foreign plaintiffs is domiciled
or resident or carrying on business in England. Each is domiciled in
Contracting States within the meaning of the CJJA 1982 and 1991.
Consequently, by reason of art. 2 of the Conventions the foreign plaintiffs
may only be sued in the Courts of their domicile (namely Germany and
Switzerland), save in so far as they may be sued in the Courts of another
Contracting State (namely England) by virtue of the rules set out in
ss. 2 to 6 of the Conventions. In relation to service of the originating
summonses in England, SCOR rely on art. 6(1) which provides that a
person domiciled in a Contracting State may also be sued, where he is
one of a number of defendants, in the Courts of the place where any one
of them is domiciled. Mr. Gross points out that numerous plaintiffs in the
relevant actions are domiciled in England and asserts that this Court has
jurisdiction over the foreign plaintiffs as co-defendants to the originating
summonses. …
The rule laid down in Article 6(1)...applies where the actions brought
against the various defendants are related when the proceedings are
instituted, that is to say where it is expedient to hear and determine them
together in order to avoid the risk of irreconcilable judgments resulting
from separate proceedings. It is for the national Court to verify in each
individual case whether that condition is satisfied. Mr. Dehn argues that,
in a case of this kind, namely a decision whether or not to grant an
"anti-suit" injunction, the Courts will not be dealing with decisions of
substantive law but will simply be concerned with applying their own
particular national procedural laws. That being so, he submits that even if
one Court were to grant an injunction and another not, those judgments
would not be "irreconcilable" within the meaning of the Kalfelis case.
My decision in respect of SCOR's primary ground for relief is as follows.
I consider that SCOR have failed to make good their assertion that the
Court has jurisdiction to grant the anti-suit injunction claimed on the
grounds that prosecution of the Illinois proceedings is an invasion of
SCOR's right to be sued in accordance with the Treaty.
I incline to the view, as submitted for the foreign plaintiffs, that it is
not helpful to categorize commencement of suit in a jurisdiction other
than that laid down by the Convention as the invasion of a "right" of the
defendant in the traditional sense accorded to that term as a foundation
for the grant of injunctive relief. However, I am not constrained, and do
not propose to make, any further observation or finding on that aspect as
it is clear to me that, whether or not such an approach is correct, on the
authority of the decision of the Court of Appeal in Re Harrods, no breach
or invasion of such right arises in this case.
In Re Harrods the Court of Appeal decided (disapproving earlier decisions
at first instance in S. & W. Berisford plc. v. New Hampshire Insurance
Co., [1990] 1 Lloyd's Rep. 454; [1990] 2 Q.B. 631 and Arkwright Mutual
Insurance Co. v. Bryanstone Insurance Co. Ltd., [1990] 2 Lloyd's Rep. 70;
[1990] 2 Q.B. 649) that the English Court could stay an action against
a defendant domiciled in England on the grounds that the Court of a
non-Contracting State (Argentina) was the appropriate forum. It held
thats. 49 of the CJJA 1982 reserved the power of the Court to stay or
dismiss proceedings where to do so was not inconsistent with the 1968
Convention (the Lugano Convention was not yet in force). It further held
that the Convention was intended to regulate jurisdiction as between
the Contracting States and that it was not inconsistent with the letter
or spirit of the Convention to stay proceedings on the ground of "forum
non conveniens" in a case involving a conflict of jurisdiction between
the English Court and the Courts of a non-Contracting State. A similar
view as to the ambit and intention of the Convention was expressed in
a further decision of the Court of Appeal in Owens Bank Ltd. v. Fulvio
Bracco, [1992] 2 A.C. 443 per Lord Justice Parker at pp. 452B-G, 453G
and 454F. A decision of Lord Cullen in the Court of Session (Scotland)
Jeffrey Wendel v. Christopher Moran, (1992) I.L.Br. 579, shortly stated
at p. 588 is to similar effect. See also The Po, [1991] 2 Lloyd's Rep. 206
(where the point was conceded by Counsel at p. 213). …
My decision as to the applicability of art. 6(1) of the Conventions in
relation to the proceedings commenced by originating summonses is as
follows.
It seems to me plain on the face of it that in relation to the originating
summonses, many of the defendants to which are domiciled in England,
each of the foreign plaintiffs falls within the description contained in
art. 6, namely that of a person domiciled in a Contracting State who
is sued as one of a number of defendants in the Courts for the place
where a number of those other defendants are domiciled. That being so,
it also seems to me that the burden rests upon the foreign plaintiffs to
demonstrate that for some reason the words of art. 6 are either restricted
as to the type of suit referred to or, on the principles set out in the
Kalfelis case, that the actions are such that it is not expedient to hear and
determine them together.
I do not accept the assertion of the foreign plaintiffs that art. 6 should
be construed as inapplicable to proceedings for an anti-suit injunction
simpliciter. Mr. Dehn has made clear that he is not suggesting that an
anti-suit injunction is outside the scope of the Convention. He accepts
that it is "a Civil and Commercial matter" within art. 1 and to which art.
2 applies, subject to the provisions of the Convention. On that basis,
there seems to me no warrant to exclude from the provisions of art. 6
a claim for an anti-suit injunction. Even assuming that Mr. Dehn is right
in asserting that it is a form of relief peculiar to the United Kingdom of
all European States, that does not in itself seem to me to take the claim
for such relief outside art. 6, which is unrestricted in its terms and must
in my view be taken to anticipate that a defendant domiciled in one
Contracting State may face an action in another Contracting State for
a remedy which would not be available if sued in the Courts of his own
domicile. …
There is certainly nothing in the general wording of that article to suggest
that it is limited to cases in which there is an assertion of joint liability
on the part of the defendants sued or that it is otherwise inapplicable to
the situation where a number of defendants, whether jointly or severally,
are, (on the same facts) similarly liable to the remedy sought by the
plaintiff to the suit. In this connection it may be observed that the
Jenard Report on the Brussels Convention refers to the case of joint
debtors only as an example of the type of connection which may be
shown. In my view the identical nature of the relief claimed against the
various defendants to the originating summonses, arising from their
participation as plaintiffs in various E. EIL actions and based upon similar
acts of alleged unconscionable/oppressive conduct abroad in relation
to those proceedings, gives rise to a sufficiently close factual and legal
connection between them for the purposes of art. 6(1), provided it can be
demonstrated that any further requirement imposed by the Kalfelis case is
satisfied.
On that question, it should first be noted that the principal concern of
the Court in the Kalfelis case was to guard against the possibility that
might arise if a plaintiff were at liberty to utilise art. 6(1), which is itself
an exception to the "domicile" principle enshrined in art. 2, so as to call
into question the very existence of that principle. It was observed:
That possibility might arise if a plaintiff were at liberty to make a claim
against a number of defendants with the sole object of ousting the
jurisdiction of the Courts of the State where one of the defendants is
domiciled. For that purpose, there must be a connection between the
claims made against each of the defendants. There is no suggestion that
SCOR has such purpose in this case.
However, as to the necessary connection, the Court grafted on to the
wording of the rule in art. 6(1) a qualification, in terms borrowed from
the third paragraph of art. 22 of the Convention which is concerned with
"related actions" and provides that actions are deemed to be related:
Where they are so closely connected that it is expedient to hear and
determine them together to avoid the risk of irreconcilable judgments
resulting from separate proceedings.
That decision provides no detailed guidance upon the meaning of
"irreconcilable judgments" in this context or upon the practical application
of the principle as stated. It simply observes:
It is for the national Court to verify in each individual case whether that
condition is satisfied.
Neither Mr. Gross nor Mr. Dehn has produced any decision, text or
academic commentary which elucidates the meaning of the word
"irreconcilable " in this context.
…I observe that the authors of Briggs and Rees on Civil Jurisdiction and
Judgments at p. 112, having noted that a literal application of the Kalfelis
decision may be difficult, urge that a broad view be taken of its effect
and that it should be interpreted to mean that if the claims made are so
closely connected that it is expedient in the interests of justice that they
be heard together, then art. 6(1) should give the Court jurisdiction. While
that suggestion is also attractive, it seems to me an invitation to ignore
rather than to interpret, the test enunciated by the European Court which,
whatever it may mean in precise terms, plainly has a more restrictive
intention.
It seems to me that judgments may be irreconcilable (at least in the
sense of "incompatible" or "contradictory") on a number of bases;
by reason of irreconcilable findings upon the facts, or by reason of
irreconcilable legal conclusions being drawn on the basis of those facts
(which in turn may depend on different rules of substantive law in the
jurisdictions concerned), or by reason of the position that on the basis
of the same facts and despite essentially similar substantive law rules,
nonetheless differing remedies are available (or unavailable) in two
jurisdictions.
Whether or not that analysis is comprehensive, or even helpful, it is
clear that the Court in Kalfelis drew back from any similar exercise.
Furthermore, it appears to have ignored that part of the Opinion
of the Advocate General (pars. 14 and 15, p. 5575) where, having
recommended the Court to choose the "purpose related" criterion of art.
22, he also recommended the Court to refer expressly to "contradictory
decisions" in order to stress that the choice made favoured a solution of
sufficient breadth to cover, for example, two judgments in a damages
claim, one upholding the claim and the other dismissing it on grounds
relating to the characteristics of the damage. The only signpost given by
the Court was a reference to the preoccupation of the Convention with
judgments which are "incompatible" with each other (par. 11, p. 5584).
Having stated its conclusion as quoted above, it then directed the national
Court to verify in each case whether the condition of irreconcilability was
satisfied. …
In this case I consider that the English Court would have jurisdiction over
the foreign plaintiffs under the originating summonses should it prove
necessary to resort to it.
Vexation/Oppression
I now turn to the second basis upon which SCOR claims the relief sought,
namely the grounds of vexation and oppression as expounded in the
House of Lords decision in SNIA. For that purpose it is convenient to turn
to the judgment of Lord Justice Glidewell in Re Maxwell Communications
Corporation plc. (No. 2)., Barclays Bank plc. v. Homan and Others, [1992]
B.C.C. 757. In a passage at p. 773 (which I understand the parties accept
as an accurate summary of the principles to be applied in this case), Lord
Justice Glidewell after emphasising the need for caution in exercising the
jurisdiction to restrain foreign proceedings having regard to the principle
of comity (see SNIA at pp. 892E-F and 895G), said as follows:
...the principles to be derived from the judgment of the Privy Council in
Aerospatiale can be summarised as follows:
(1) if the only issue is whether an English or a foreign Court is the more
appropriate forum for the trial of an action, that question should normally
be decided by the foreign Court on the principle of forum non-conveniens,
and the English Court should not seek to interfere with that decision.
(2) However, if, exceptionally, the English Court concludes that the pursuit
of the action in the foreign Court be vexatious and oppressive and the
English Court is the natural forum, i.e. the more appropriate forum for
the trial of the action, it can properly grant an injunction preventing the
plaintiff from pursuing his action in the foreign Court.
(3) In deciding whether the action in the foreign Court is vexatious
and oppressive, account must be taken of the possible injustice to the
defendant if the injunction be not granted, and the possible injustice to
the plaintiff if it is. In other words the English Court must seek to strike a
balance.
So far as principle (1) is concerned, the current position is, of course,
that the Illinois Judge at first instance has already ruled that Illinois is the
appropriate forum to determine the issues of fraud raised by IIC against
SCOR in IIC's second amended and supplemental complaint in the Illinois
action. A decision on appeal is awaited, but I proceed upon the basis that
the ruling of the first instance Judge is unlikely to be overturned, such
matters (if they are to be raised at all) being matters of "compulsory
counterclaim" as against IIC, (that is to say counterclaims which under
Federal Rules must be heard in the same proceedings as the main action).
These IIC allegations are reflected in the second amended counterclaim of
the XOL reinsurers/plaintiffs, and it seems to me unlikely that the Illinois
Court would regard them in a different light.
So far as principles (2) and (3) are concerned, I shall now turn to
the submissions of the parties on the question of "natural forum" and
"vexation/oppression". …
Having considered the rival arguments carefully, I am satisfied that
SCOR's case on vexation and/or oppression has not been made out and
the balance of justice lies in favour of the plaintiffs, whose arguments I
broadly accept. Before referring to them in the order in which I have set
them out above, I shall state certain premises upon which I proceed. The
fraud/RICO claims
First, on the evidence and arguments before me I do not consider that
I am entitled to treat the claims in fraud or RICO as being made in bad
faith or without any foundation. Apparently, the plea against IIC (which
included an allegation against SCOR who were not immediately joined
for commercial reasons) followed the discovery of various documents
considered to justify it. Those claims have been permitted to proceed in
the U.S. Further, the only underlying document to which my attention
has been specifically drawn in this connection, appears (on the face
of it at least) to indicate that a representative of SCOR was party to
conversations with C. representatives which in the absence of satisfactory
explanation might well go to support a plea of fraud.
So far as Rico is concerned, whilst it may be that the original purpose of
that statute has across the years been developed and extended to cover
situations beyond the original aims of the statute (this case no doubt
affording an example), the plea in the Illinois action has so far survived
scrutiny or challenge in the U.S. Court and I do not consider it is open
to me to go behind that. As to policy considerations, as I have already
indicated, it appears to me that the Appellate Courts of this country have
refused to treat the 1980 Act as requiring a generally adverse approach
to remedies under foreign statutes providing for multiple damages for
any reason of policy extending wider than the plain legislative intention to
refuse to enforce, and/or to permit clawback of, any incremental element
in the damages awarded as provided in ss. 5 and 6.
Nor do I deduce, against the history of the parallel proceedings as I have
outlined them and in the light of the explanations proffered, that the
absence of a fraud plea in the English proceedings and/or the decision
not to join C. or H. in the U.S., demonstrates bad faith (as distinct from
commercial interest) in respect of the plaintiffs' plea against SCOR.
Indeed, when asked by me, in the course of the hearing, whether it was
open to me to go behind the fraud, conspiracy and RICO pleas and to
form a conclusion as to their prospects, Mr. Gross accepted that it was
not. I shall deal further below with the fraud/RICO claims in the context of
"juridical advantage". Previous E. EIL decisions
I do not consider that I can obtain any substantial guidance in this case
from the stances adopted by the advocates, or the reasons given by the
Court, in relation to the various previous decisions in the E. EIL actions.
In none of those decisions does it seem to me, bearing in mind the issues
then before the Court and the then state of proceedings on either side of
the Atlantic, that the parties deployed arguments significantly at odds or
otherwise inconsistent with their stances before me; nor (for the reasons
advanced in pars. (5) and (6) of the plaintiffs' arguments) do I consider
that the Court of Appeal made any observations of direct assistance in
relation to the issues before me. The overall approach
All the cases to which I have been referred on the principles to be applied
in relation to the grant of anti-suit injunctions, have emphasised the
need for caution in exercising a jurisdiction the effect of which is to
prohibit or interfere with foreign proceedings. It is for this reason that
the Court will only exercise its jurisdiction when satisfied that a case of
oppression has been made out. In this connection it is clear that, whilst
it is a prerequisite to any order that England be the natural forum for the
dispute, that is not enough in itself. Considerations of natural forum may
be decisive when the Court is considering whether to exercise or regulate
its own jurisdiction in relation to questions of leave to serve out of the
jurisdiction or staying its own proceedings for "forum non conveniens";
however, more is required when the effect of the order will be to prohibit
or restrict proceedings in a foreign Court. It is only by demonstrating
unconscionable "vexation and oppression" that an applicant may be
successful and, in that context, a balance must be struck as between the
legitimate interests of the parties.
In this case, SCOR plainly desires to be rid of allegations of fraud and
RICO in the U.S. which, in the case of RICO, could not and, in the case
of fraud (as SCOR believes), would not be made in England. However,
given that I am not prepared to regard those pleas as either made in bad
faith or doomed to failure, the vexation/oppression arguments reduce to
(a) the question of whether the claim in RICO is per se to be regarded as
oppressive to SCOR and (b) the question of the inconvenience and extra
expense involved for SCOR in having to be concerned in programme-wide
matters in two jurisdictions if the order is not made. As to (b) it seems
to me that SCOR's plea is gravely undermined if examination of the facts
reveals that those issues will (at least to a great extent) be explored in
any event in foreign proceedings to which SCOR will remain a party. It
seems to me plain that such is the case. The detail of the duplication
which will remain was made clear in the context of the various issues
raised in the Illinois action by Magistrate Judge Weisberg in his Opinion/
Rulings of Dec. 20, 1991, as confirmed in his further opinion of Apr. 28,
1992 on SCOR's application to reconsider. Those opinions related to the
position created by the issues arising between the XOL reinsurers and IIC
as a result of the original counterclaim. The points made on necessary
duplication are fortified rather than weakened by the filing of the second
amended counterclaim.
It is with ironic interest and some sympathy that I note that in his second
opinion Magistrate Judge Weisberg expressed:
...the hope that this elephantine dispute may be prodded away from the
lush watering hole of jurisdictional and forum squabbles and headed in
the general direction of resolution.
Finally, I observe that the authorities to which I have been referred
concerning the grant of anti-suit injunctions considered situations
where grant of the order sought would be likely to prevent any further
involvement of the applicant in the foreign proceedings; they have not
concerned the situation where (as in this case), even if the injunction is
granted, it will not be effective to end such involvement.
With that introduction, I am able to deal quite shortly with the detailed
submissions of the parties by reference to the numbered heads of the
plaintiffs' submissions. Natural forum (1), (2) and (4)
While Mr. Gross's classification of the disputes which have arisen on either
side of the Atlantic into "individual coverage disputes" and "programme
litigation" would be an attractive and logical one in principle, given
a "clean sheet" on both sides of the Atlantic, and, if maintained or
maintainable, would lead to a sensible division of labour between the
Illinois Court and the English Commercial Court, it seems to me that it is
a line which has already been breached and is incapable of restoration.
It was not a line which, as matters unfolded in England, was apt to avoid
various American parties being joined in the E. EIL actions, despite the
observation of Lord Justice Mustill (at [1992] 1 Lloyd's Rep. 570 at p.
616) that they were -
...already much pressed in litigation before their home forum...
[and]...will be even more stretched if brought to fight on another front
before a foreign Court whose jurisdiction they have never explicitly
chosen.
Similarly, it seems to me, that SCOR was obliged to cross that line when it
was joined in the Illinois action by IIC. The trigger for that was, of course,
an allegation first raised by the plaintiffs against IIC; but that is a matter
of history and its effect would not be reversed by grant of an injunction in
the terms sought. SCOR do not (and no doubt could not) seek to restrain
the plaintiffs' allegations as against IIC nor (save by an attempt in Illinois
which has proved unsuccessful) could they hope to restrain IIC's claims
against SCOR. Thus, even if they did not arise before, programme-wide
issues have now been raised in proceedings in respect of which it has at
all times been conceded that Illinois is the natural forum. The result is
that, as at the date of this application, Mr. Gross's task in arguing that
London remains the only natural forum for programme-wide disputes has
become a very difficult one.
Further, whatever may have been the position at an earlier stage,
it deprives him of any substantial argument on the basis of the
Cambridgeshire factor. It is in any event my view that, bearing in
mind the nature of the issues and SCOR's need for a legal team with
programme-wide expertise to be available in the U.S. to deal also with the
Waste Management and Cook County Chancery actions, the arbitration
issues and any other actual or potential insurers' actions in the U.S., a
factor favouring London of the special kind which existed in the Spiliada
decision, cannot be said to be present in this case. (3)
It seems to me beyond argument that, if the plaintiffs' claims in fraud
and RICO against IIC are appropriately before a U.S. Court in terms of
conspiracy and/or joint liability with SCOR, then (absent some highly
compelling contrary reason) it is not only a legitimate desire of the
plaintiffs, but also sensible and logical that SCOR's liability in respect of
those matters should be determined in the same proceedings. The issues
of fraud (programme-wide or not) have not been raised in this Court
and there is presently no obvious danger of conflicting decisions on that
issue (aliter if the injunction is granted and the issue of fraud is taken up
against SCOR in England). (5) and (6)
I accept the analysis and comments of the plaintiffs so far as the decision
of the Court of Appeal is concerned. (7)
I do not consider that the plaintiffs' claims in Illinois demonstrate
inconsistency with their claims in London or with their cooperation in
the case management of the E. EIL actions. Their interest in pursuing
fraud claims in the Illinois action rather than in London is obvious, both
for the reasons just advanced and for the perceived advantage of an
opportunity of treble damages under RICO. I doubt if concern at the
possible inconsistency of their position if forced to sue SCOR for fraud in
London, has been uppermost in the concerns of the plaintiffs; nonetheless
grant of an injunction as asked would be likely to produce such an effect
in actions which have previously been free from allegations of fraud. (8)
and (9)
I have already dealt with the question of "overlap", duplication of
proceedings and risk of inconsistent judgments. It is also clear that, even
if enjoined, SCOR will remain party to the Illinois action at the suit of IIC
and will at least have to give discovery of documents and make witnesses
avail-able for depositions in those proceedings. SCOR's involvement in the
other U.S. proceedings already referred to will also continue. This seems
to me to deprive SCOR's argument as to oppression of any real force.
There is bound to be a degree of overlap; the burden of SCOR's presence
and participation on programme-wide issues on both sides of the Atlantic
cannot be removed. (10) and (11)
SCOR argues that the claim in RICO is oppressive per se, giving as it does
a right to treble damages. The plaintiffs on the other hand argue that
that is a legitimate juridical advantage to them of which they should not
be deprived. I do not consider it necessary, nor do I propose, to make
any decision in principle on the status of RICO claims so far as English
public policy is concerned. It seems clear to me that anti-suit injunction
cases fall to be decided upon their particular circumstances. In this case
the claim in RICO is made in conjunction with a claim in common law
fraud and conspiracy which SCOR does not contend can be attacked in
principle upon policy grounds, either as to its nature or the measure of
damages normally awarded. If, as I consider, the plaintiffs should be
entitled to pursue a cause of action in fraud in the Illinois proceedings for
the reasons already canvassed, then it does not seem to me that I should
regard the addition of the RICO claim, sanctioned by the Illinois Court,
as transforming a case of "legitimate juridical advantage" into one of
unconscionable "oppression". My inclination is to regard the observations
of Mr. Justice Parker in British Airways Board v. Laker Airways Ltd., [1984]
1 Q.B. 42 as marking the limits to which an English Court would be likely
to go in refusing full recognition to the effect of claims under RICO. If
that is correct, then the plaintiffs would suffer deprivation of a legitimate
advantage, on the basis that there is no legislative equivalent to ss. 5 and
6 of the 1980 Act in France. (12) and (13)
As to the plaintiffs' complaint that these applications were made late
(January, 1993), the plaintiffs having filed their second amended
counterclaim in March 1992, I do not attach undue weight to that. That
is because the Illinois Court ruled on Mar. 24, 1992 that SCOR need
not plead to the second amended counterclaim until IIC's application
to dismiss the RICO allegation had been determined, since, if it was
successful, the plaintiffs' claims against SCOR would have fallen away.
Judge Lindberg did not confirm the adverse ruling of Magistrate Judge
Weisberg till Dec. 30, 1992, whereupon the ex-parte application was soon
brought on before Mr. Justice Phillips with a view to these applications
being heard. The reason the matter was not earlier pursued in the U.S.
is also said to have been that the plaintiffs' grounds of application on the
basis of SCOR's "rights" under the CJJA's was better heard in England
than in the U.S. It is no doubt the position that SCOR regarded their
prospects of success in England as better than in Illinois, bearing in mind
that the primary ground they asserted for grant of an injunction would
have been no more than a factor to be taken into consideration in the
U.S. That was an understandable view, although it is one which has not in
the event proved of assistance to SCOR. Nonetheless, it is the unfortunate
fact that, if the injunction sought is granted, yet further delay in the
progress of this litigation is likely to occur for the reasons mentioned by
the plaintiffs.
Finally, I do not treat the decision of Mr. Justice Saville at a much earlier
stage, when he declined jurisdiction in favour of Illinois as the natural
forum for the suit between IIC and the plaintiffs, as decisive of these
proceedings, or as rendering it "unfair" if I were to take a different view
on these applications. One of the unfortunate features of an unrolling
saga on both sides of the Atlantic, where many issues arise between
many different parties, is that the perspective of the Court is likely to
differ according to the nature of the application before it from time to
time. Nonetheless, the decision of Mr. Justice Saville undoubtedly affected
the course of the proceedings and the manner in which the plaintiffs have
regulated their conduct since.
In the situation which presently exists I do not consider that the ends of
justice require, or that it would otherwise be appropriate, to grant SCOR
the relief which it seeks.
In the light of my decision, it appears (subject to questions of costs)
that none of the parties is entitled to an order in the terms sought in
the individual summonses. However, I will hear argument from the
parties upon the final forms of order which I should make, including the
appropriate order in respect of the ex-parte injunction granted by Mr.
Justice Phillips on Jan. 14, 1993, should any appeal be contemplated.