1. Introduction
These applications arise from a claim made by E. SA (“E.”), a French
company, against four Italian insurance companies (“the insurers”) under
an insurance contract. There are proceedings between the same parties in
both England and Italy.
2. In this country, the claimants are E., who assert that the contract
of insurance provides for English jurisdiction. They seek an indemnity
(or damages) under the contract of insurance, declarations about the
jurisdiction provisions of the contract and damages for their breach, and
injunctions in respect of proceedings brought by the insurers in Italy.
3. The insurers contend that the contract provides for Italian jurisdiction.
In the Italian proceedings, they seek orders declaring that nothing is
due from them under the contact of insurance, or restricting the loss in
respect of which they are liable. In this judgment I shall use the term
“non-liability declarations” to include declarations limiting the insurers’
liability as well as declarations absolving them from liability altogether.
4. Section 3 of the Brussels Regulation
This is a matter relating to insurance, and so questions of jurisdiction
are determined in accordance with chapter II, section 3 of the Council
Regulation (EC) No 44/2001 (the “Brussels Regulation”). …
5. The effect of these provisions is that, subject to any effective
jurisdiction agreement, E.’ claim for an indemnity under the contract of
insurance could have been brought either in Italy (being the Member
State in which the Insurers are domiciled) or in France (being the
Member State in which E. is domiciled): see article 9(1). A claim by the
underwriters against E. could have been brought only in France: article
12(1).
6. Background
In May 2000 E. purchased on CIF terms a consignment of cotton pellets
from A. Spa, a company incorporated in Italy. The contract between A.
and E. incorporated the terms of GAFTA 100, the provisions of which
include at clause 19 a requirement that the sellers provide insurance
and that, “The insurance to be effected with first class underwriters and/
or companies who are domiciled or carrying on business in the United
Kingdom or, who, for the purpose of any legal proceedings, accept a
British domicile and provide an address for service of process in London…”
7. The goods were shipped on 21 September 2000 on board the vessel
“Irene” for carriage from Abidjan to Rouen. Upon discharge at Rouen on
23 October 2000, the goods were found to be damaged. Proceedings were
brought in France against the Owners of the vessel, and E. were awarded
damages in the sum of E407,508.32. The Owners have not appealed
against that award, and their time for appealing expired on 7 March 2003.
8. The amount in dispute between the parties is modest because of E.’s
success in the French proceedings. The litigation here and in Italy is about
the costs of the proceedings and some costs in the French proceedings,
amounting, as I was told, to some E45,000. Nevertheless, the parties
wished to proceed to a hearing in order to determine in which jurisdiction
the claim should be determined. Mr S Morris QC represented E., and Mr S
Males QC and Mr. M. Ashcroft represented the insurers.
9. The insurance
The goods were insured by the defendants under an open cover (no
31799) originally issued on 17 December 1992 to A. by the defendant
insurers, or in the case of M. SpA, by their predecessor, S. SpA of Naples.
It provided cover in respect of cotton seed in bulk carried by sea, road or
rail. A certificate dated 26 September 2000 was issued in respect of the
cargo on the “Irene”. Both the open cover and the certificate were signed
on the insurers’ behalf by A. S. T. F. S R L (“F.”), an insurance broker
incorporated and carrying on business in Italy.
10. The open cover was written in Italian, but the translation of the
relevant provisions produced by E. in these proceedings was not
materially disputed. It was on an Italian form, Polizza Italiana di
Assicurazione Merci Trasportate (Edizione 1983). It comprised a front
page and signature page specific to the cover, General Conditions,
certain Special Agreements, attached Institute Clauses and a number of
appendices issued over the years. …..
12. The General Conditions stated in article 1 that:
“The insurance is provided on the basis of the present General Conditions,
supplemented, for the purposes of the scope and duration of the cover
and subject to Italian law remaining applicable, by the clauses cited on
the front page and specified hereinafter, which the contracting party
declares that it is familiar with”.
There followed a list of clauses, which, I was told, were mainly clauses
commonly used in the Italian insurance market. The exception in the list
was “Institute clauses as specified on the front page”. In fact no Institute
clauses were specified on the front page.
13. Throughout the General Conditions there were references to Italian
law. Two examples will suffice to illustrate this: A. were to declare the
“name of the vessel for the purposes of Article 523 of the Navigation
Code”: Article 2. In the event of a claim A. or the person insured were
under various obligations, and there was provision that if they were not
complied with “Article 1915 and 1918 of the Civil Code will be applicable”.
The Italian focus of the insurance was also reflected in the requirement
that if a loss occurred where the insurers did not have loss adjusters or
experts “the intervention must be requested of some other loss adjuster
or qualified expert or of the Italian consulate…”.
14. At article 16, under the heading “The Competent Court”, the General
Conditions provided as follows: “The competent court, at the choice of
the plaintiff, is exclusively that of the court office of the place in which
is located the head office of the insurer or the agency which is in charge
of the policy or in whose offices the contract was concluded”. A. were
specifically to approve this provision “for the purposes of Articles 1341
and 1342 of the Civil Code”, and A. provided their signature accordingly.
15. The Special Agreements contained by way of introduction before the
numbered articles a statement that, “These Special Agreements have
priority, in the event of discrepancy, over the above General Conditions.”
Article 2 was headed “Cover conditions” and read:
“The cover is provided under the General Conditions given above plus the
attached clauses: …
16. The certificate relating to the cargo on the “Irene” was on a form
printed in Italian, with an English translation subscribed to the Italian
text. It certified insurance “under policy No 31799”. Its printed terms
included the following: “Cover is subject to the following conditions,
Known to the parties: Polizza Italiana di Assicurazione Merci Trasporte
(Ed 1983) integrated as follows: classification clause in force – institute
radioactive contamination exclusion clause ed 1.10.90 – Computer
millennium clause (cargo) (JC 98/024) – CARGO ISM ENDORSEMENT (JC
98/019)”. …
17. It is to be observed that some of these clauses are not in line with the
open cover. Most importantly, the certificate contained the provision about
an “address for legal proceedings” (to which I shall refer as “the service
clause”). ….
18. Copies of all the Institute clauses (in English) referred to in the
Special Agreements (subject to the discrepancy about the version of the
classification clause) were appended to the open cover, and all include a
clause headed Law and Practice which provides, “This insurance is subject
to English law and practice”.
19. Legal Proceedings
….E. promptly informed the insurers of the cargo damage when it
was discovered on 23 October 2000. On 26 October 2000 E. issued
proceedings in the court at Rouen seeking appointment of a court expert
to investigate it. Proceedings were brought in Rouen against the owners
of the “Irene” on 6 November 2000. The expert’s report to the court was
delivered on 19 September 2001. He assessed the loss to be something of
the order of 2.25m. French Francs. This enabled E. to quantify their claim
under the contract of insurance. By a letter dated 25 October 2001 E.
presented their claim to the insurers in the sum of F Fr. 2,278,530.26. By
a letter dated 14 March 2002 E. informed the first defendant, as leading
insurer, that failing settlement of the claim by 22 March 2002, they would
bring proceedings in London and serve them at W.K. Webster & Co. in
London. However they did not do so. As far as the evidence before me
goes, there was no further correspondence between the parties before the
insurers brought the Italian proceedings about 3 months later.
20. On about 21 June 2002 the insurers brought their proceedings dated
14 June 2002 before the Tribunale di Genova, and they were served on E.
in France on or about 27 June 2002. In their summons the insurers stated
that “The Court of Genoa has jurisdiction and territorial authority within
the sense of Article 16 of the General Conditions of the Policy number
31799”. They sought the following relief:
(i) a ruling that E.’ claim under the contract of insurance is time-barred
under a one year time limit laid down by Article 547 of the Italian code of
navigation;
(ii) a ruling that damage to the cargo was caused by inherent vice, and
thus was not covered by the policy; and
(iii) a ruling that, because E. failed to mitigate the loss, any claim for
liability should be reduced accordingly.
21. In their defence, which was filed on 23 December 2002, E. challenged
the jurisdiction of the Tribunale di Genova. …
22. The proceedings in this court were brought on 20 December 2002,
after the insurers had brought the Italian proceedings but before E. had
filed their defence in which they made their jurisdictional challenge. In
them E. seek both an indemnity arising from the cargo damage and
interest (claims to which I shall refer as “the indemnity claims”) and relief
related to their contention that the English court and not the Italian court
should determine the indemnity claims (“the jurisdiction claims”).
23. The applications
The applications before me are:
(i) an application by E. for an interim injunction that the insurers be
restrained from prosecuting the Italian proceedings, and from bringing
any proceedings in relation to this dispute other than in England, and that
they take steps to have the Italian proceedings adjourned generally.
(ii) an application by the insurers for a determination that the Court has
no jurisdiction to try the claim, or alternatively that the proceedings be
stayed.
The contract of insurance between the insurers and E.
24. The parties are in dispute about what jurisdiction clauses were
incorporated into the agreement between them. This dispute has given
rise to issues about whether the contract of insurance is contained in
the open cover as well as the certificate, and what law governs this
question and the contract of insurance generally. Although the parties
to the dispute are the insurers and E., and not A., the original assured,
it is common ground that this does not affect the questions that I have
to decide. Neither party contends that the position of E. with regard to
whether there is a binding and effective jurisdiction agreement differs
from that of A.. …
The contract of insurance between A. and the insurers: English law
25. E. submit that under English law the contract of insurance is contained
in the certificate and only those terms of the open cover that are properly
incorporated into it are terms of the contract of insurance. This is the
basis for their argument that the terms of the contract of insurance
included the service clause but not article 16 of the General Conditions.
… 36 …I consider that the proper approach to identifying the contract of
insurance is to consider both documents as potentially expressing the
parties’ intention as to the terms upon which the insurance was effected.
I do not consider that, in the absence of express words so providing, it
is proper to approach the question on the basis that the certificate is the
only contractual document determining the terms of the insurance and to
have regard to the terms of the open cover only to the extent that they
have been incorporated into the certificate. However, in determining the
terms of the insurance contract by interpreting the two documents, it is
likely that the certificate will be given more weight, since, being directed
to the specific risk, it is likely to prevail over more general terms. …
37. The governing law of the contract of insurance
However, as I have stated, the insurers say that the contract of insurance
is governed by the law of Italy, and that the English law on these
questions is not in point. The law applicable to the contract is to be
determined under the provisions at section 94B(1) and part 1 of Schedule
3A of the Insurance Companies Act 1982. That is because the contract
constituted “general business”, which includes insurance of goods in
transit. It covered risks situated in a member state, Italy, that being
where the policyholder, A., had their establishment when the contract
was entered into: section 96A(3)(d)(ii). Paragraph 1(1) of schedule 3A
provided:
“Where the policy holder has his habitual residence or central
administration within the territory of the member State where the risk
is situated, the law applicable to the contract is the law of that member
State.
However, where the law of that member State so allows, the parties may
choose the law of another country.”
38. Accordingly, Italian law would be applicable to the contract unless the
parties chose the law of another country. Paragraph 2 of the Schedule
provides that any such choice must “be expressed or demonstrated with
reasonable certainty by the terms of the contract or the circumstances
of the case”. The essential question, therefore, is whether there was so
expressed or demonstrated a choice of English law by the parties, that
is to say by A. and the insurers. In my judgment, that question is to be
determined in accordance with the law of Italy, the law which would be
applicable to the contract in the absence of an express choice of law: see
Dicey and Morris The Conflict of Laws (13th Ed.) at para 32-101. However,
I would have reached the same conclusion whether I determined the
question by the law of England or that of Italy. …
42. …However that may be, I do not consider that the reference to the
Institute clauses in the certificate evinces the parties’ intention to choose
an English governing clause for the contract of insurance as a whole, still
less does it express or demonstrate a choice “with reasonable certainty”. I
conclude that the contract of insurance was governed by Italian law, and
E. have not shown a good arguable case that it was not.
43. Italian Law
Both parties adduced evidence of Italian law. E. relied upon Avv Carlo
Cigolini, who has written two opinions that have been put in evidence.
The insurers put before me the advice of two Italian lawyers, Avv Corrado
Bregante and Professor Sergio La China. All three were qualified to
give evidence of Italian law, Mr. Cigolini and Bregante being practising
lawyers and Prof. La China being the Professor of Civil Procedure and
Administration Law in the Faculty of Law at the University of Genoa. …
45. Thus, the evidence of Italian law properly went to three questions,
namely (i) what were the proper principles of construction to be applied
upon any questions of interpretation determined by the governing law;
(ii) what documents comprised the contract of insurance, if Italian law is
to be applied in considering this question; and (iii) how would the Italian
courts regard an anti-suit injunction issued by this court so as to prohibit
the insurers from pursuing the Italian proceedings.
46. Italian law: principles of contractual construction …
Italian law: the documents comprising the contract of insurance
49. Mr Bregante’s evidence is that Italian law would regard the certificate
as an extension or application of the open cover and would not regard it
as a separate contract. At least in the case of a “mandatory” or obligatory
open cover such as this one, he says that the contract of insurance
includes all terms and conditions of the cover and of the certificate of
insurance. He states that the insurers’ liability to a holder of the certificate
is determined by the certificate and “the terms contained, incorporated or
referred to in the certificate of insurance (and obviously of the open cover
incorporated therein)”. …
51. I see no significant dispute between the expert witnesses on this
point. The court will look at the open cover and the certificate, and form a
view, as a matter of interpretation of the certificate, whether the parties
agreed that the terms of the open cover, or some of them, should not
apply to a particular contract of insurance.
How Italian courts would regard an anti-suit injunction against the
insurers?
….58. Whatever may be the position when the English court makes an
anti-suit injunction in such clear cases as Continental Bank v Aeakos
[1994] 1 WLR 588, The “Angelic Grace”, (cit sup) and The “Ivan
Zagubanski”, (cit sup), I accept, on the basis of the evidence adduced by
the insurers, that there is a real risk that the Italian courts would regard
an anti-suit injunction such as those sought by E. as an affront to the
proper ambit of their jurisdiction.
Does the English court have jurisdiction over E.’ proceedings?
59. E. argue that the service clause in the certificate is an agreement that
the English court should have jurisdiction in respect of their proceedings
against the insurers. If there is such an agreement, it would relate to a
contract of insurance covering goods in transit, and so fall within article
13(5) of the Brussels Regulation: see article 14(1)(b); and accordingly it
would not be deprived of legal force by article 23(5). There is no dispute
that any such agreement would comply with the formalities of article 23.
The dispute is whether there was any such agreement.
60. The question whether there was an agreement under article 23 is to
be determined by community law, and not by the governing law of the
contract of insurance: Powell Duffryn plc v Petereit, [1992] ECR 1-1745.
It is well established that article 17 of the Brussels Convention imposes
on the court the duty of examining “whether the clause conferring
jurisdiction upon it was in fact the subject of a consensus between the
parties, which must be clearly and precisely demonstrated”: Estasis
Salotti di Clozani Aimo e Gianmario Colzani v RUWA Polstereimaschinen
GmbH, [1976] ECR 1831 at para 7. Hence the approach of Saville LJ
in the Credit Suisse Financial Products case (cit sup) to which I have
referred. However, while the court will apply autonomous community law
in order to decide whether article 23 of the Regulation is satisfied, in so
far as the court needs to interpret the contract between the parties in
order to do so, the court will, I take it, interpret it in accordance with its
governing law.
61. I consider that it is highly likely that the service clause was
incorporated into the contract between E. and the insurers. Indeed, I do
not understand the insurers to dispute this. The question is whether, on
its true construction, it provided for English jurisdiction for proceedings
such as those brought by E.. My consideration of this question is not
affected by the issue about the governing law of the contract, there being
no evidence of relevant principles of interpretation under Italian law.
62. In interpreting the service clause, I can have in mind as part of the
background against which the certificate was issued that the insurance
related to goods sold under a contract upon the terms of GAFTA 100,
including clause 19 of those terms. This was at one point challenged by
the insurers…. It is part of the background known to, or presumed to be
known to, both the parties. As for the insurers’ knowledge of this, their
evidence was that they had no recollection of being aware before the
certificate was issued that the underlying contract was subject to GAFTA
terms, and that they assumed that the service clause was requested by A.
“for the purpose of its documentary credit”. However, whether or not that
is so, the insurers do not dispute E.’ evidence that F. were informed that
the sale was subject to GAFTA terms. F.’s knowledge is to be attributed to
the insurers for this purpose …
63. There is no dispute that the service clause provides an address for
the service of proceedings upon the insurers, and not an address for
the service of proceedings on the assured or holder of the certificate. E.’
submission is that the service clause permits them to bring proceedings
in England against the insurers. When they opened their case, they also
argued that it provided for the English court to have exclusive jurisdiction.
I should consider three questions about the service clause: (i) whether it
entitles E. to sue the insurers in England; (ii) whether it is in any sense an
exclusive jurisdiction clause; and (iii) whether it applies to proceedings for
non-liability declarations brought by the insurers against E.. …
66. A literal reading of the service clause does, at first blush, lend some
support to the insurers’ submission, but there are two possible responses
to this point. First, the insurers’ argument assumes that the words “in
UK” qualify the word “address”. The words can read as qualifying “legal
proceedings”, and this interpretation might be suggested both by their
position and by the fact that as a qualification to “address” they would be
tautologous. Thus, it can be argued that the wording of the service clause
itself suggests that the parties contemplated proceedings in the United
Kingdom. …
68. I turn to the suggestion that the service clause is properly interpreted
as conferring exclusive jurisdiction on the English courts in respect of
claims against the insurers because the GAFTA clause contemplated
that the insurers should accept a British domicile. There are a number
of answers to this. First, in this respect the service clause itself does
not reflect the GAFTA terms. Secondly, under the Brussels Regulation
jurisdiction does not depend solely on the insurers’ domicile. Thirdly, for
these purposes a corporation can have its seat, and so its domicile, in
more than one Member State: section 42 of the Civil Jurisdiction and
Judgments Act, 1982. I do not accept that the service clause confers any
exclusive jurisdiction on the English courts. I add that Mr Morris accepted
(and was right to accept) that when article 23 of the Brussels Regulation
provides that, “Such jurisdiction shall be exclusive unless the parties have
agreed otherwise”, it contemplates that the parties’ agreement might be
either express or a matter of implication or inference. …
The insurers’ application for a determination that the English court has no
jurisdiction to hear E.’ claim.
70. The burden is upon E. to show a good arguable case that the court
has such jurisdiction to hear their claim: Canada Trust Co v Stolzenberg
(No 2), [1998] 1 WLR 547, [2002] 1 AC 1. The term “good arguable
case” is flexible, and I do not find it altogether easy to discern from the
authorities quite what it connotes where, as here, the question is whether
there is an effective jurisdiction clause (or that one has been clearly and
precisely demonstrated). …
71. It follows from my conclusion about the meaning of the service clause
that I consider that E. have shown a good arguable case (in the sense
that I have described) that the English court has jurisdiction under article
23 of the Brussels Regulation to hear their claim, and I reject the insurers’
application for an order declaring that the court has no jurisdiction, and
that the claim form and its service be set aside.
The insurers’ application for a stay
72. The insurers’ alternative application is that the proceedings should be
stayed under article 27 on the basis that the English court was seised of
these proceedings (in the terms of article 30 of the Regulation) after the
Italian court was seised of the Italian proceedings. …
73. There is no dispute that the English and Italian proceedings are
between the same parties. However, in response to this application E.
raise three arguments that the insurers should not be granted a stay:
i) that the proceedings in England do not involve the same cause of action
(within the meaning of article 27) as the Italian proceedings.
ii) That, even if the English and Italian proceedings involve the same
cause of action (so that, the Italian court being first seised, prima
facie article 27 would apply), no order should be made because of the
jurisdiction provision in the service clause.
iii) That, even if the English and Italian proceedings involve the same
cause of action and proceedings in Italy were brought first (so that prima
facie article 27 would apply), no order should be made in view of the
“quasi-exclusive” regime established in respect of matters concerning
insurance and in view of article 35 of the Brussels Regulation.
Does the contract of insurance contain an effective provision for Italian
jurisdiction?
…76. As I see it, the question whether the parties to the contract of
insurance reached a consensus that there should be Italian jurisdiction
with sufficient clarity and precision to satisfy article 23 turns upon two
main questions: what does clause 16 of the General Conditions mean?
And was the clause a term of the contract of insurance? …
78. I have already concluded that E. have established a good arguable
case that it is a principle of Italian law that jurisdiction agreements can
be incorporated into contracts from another document only by specific
reference and not by general reference. I am sceptical as to whether this
principle assists E. in this case. The argument that clause 16 consensually
confers jurisdiction of the Italian courts is not really one that it was
incorporated into the certificate, but that the parties, having agreed upon
Italian jurisdiction in the open cover, did not evince in the certificate an
intention to set that agreement aside. …
79. If this approach is adopted, E. are able to argue that, if it is right
to interpret the service clause as an agreement that the insurers may
be sued in England, the terms of the certificate are inconsistent with a
provision for exclusive Italian jurisdiction, and that the parties therefore
cannot have intended that clause 16 should be a term in the contract of
the insurance of this cargo. This argument undoubtedly has force as far
as it goes, but I do not consider it goes far enough to answer the insurers’
contention.….
80. I bear in mind that the insurers must, in order to establish that they
can rely upon article 23 of the Brussels Regulation because of the parties’
agreement, demonstrate the agreement with the required precision and
clarity. Nevertheless, my own tentative conclusion is that the insurers
are able to do so, and, if it were necessary, I would be driven to conclude
that E. do not have a good arguable case that the Italian proceedings
contravene the Brussels Regulation. However, for the reasons that I have
explained, I have been reluctant to embark upon this enquiry which
the Italian courts are better able to conduct, and am able to base my
conclusions on these applications on other grounds.
Do these proceedings involve the same cause of action as the Italian
proceedings?
81. The insurers’ argument that the English and the Italian proceedings
involve the same cause of action is simple. They refer to the judgment
of Rix J in Glencore International A.G. v Shell International Trading and
Shipping Co. Ltd., [1999] 2 Lloyds LR 692. …
84. In each of these cases the only relief sought by the claimant in
the English proceedings was to give effect to a jurisdiction clause, and
there was no claim for substantive relief in the underlying dispute. In
the Continental Bank case, the Bank claimed an injunction against the
defendants to prevent them from pursuing Greek proceedings. At first
instance Gatehouse J said that in his judgment “the defendants’ action
in the Athens court and the plaintiff’s action in this court do not involve
the same causes of action for the purpose of article 21, as interpreted in
Gubisch Maschinenfabrik KG v Palumbo (Case 144/86) [1987] ECR 4861.”
The Court of Appeal did not consider this point, deciding the case on the
basis of the jurisdiction clause.
88. However, I do not consider that it would be right for me to treat these
three first instance decisions as wrong. The question is whether they
apply in this case. In none of these three cases did the claimant seek any
relief in the English proceedings other than declarations and injunctions
concerning the proper forum for the resolution of the underlying claim.
No relief was sought in respect of the underlying claim. The insurers
submit that it is a significant distinction from these cases that here E. are
seeking an indemnity for their loss. They cite Dicey and Morris (cit sup) at
para 12-058, where the view is expressed that where the English court is
seised with only a claim for a final anti-suit injunction and no other relief
on the merits of the claim, it is improbable that the two causes of action
are the same, “but where the injunction is sought within the context of
proceedings for substantive relief, the application of article 21 may be
inescapable”.
89. …I do accept the insurers’ submission, that if the proper approach is
to look at the English proceeding as a whole, to ask what is the central
or essential issue and to consider whether that is the same as that in the
Italian proceedings, the issue in both proceedings is the insurers’ liability
in respect of the cargo damage. I therefore reject E.’ first argument
against a stay of these proceedings.
If the English and Italian proceedings involve the same cause of action,
should a stay be refused because of the service clause?
90. E. contend that, even if the English and Italian proceedings involve
the same cause of action, nevertheless no order should be made under
article 27 (or 28) because of the jurisdiction clause whereby the parties
agreed English jurisdiction. They rely upon Continental Bank v Aeakos (cit
sup), in which the Court of Appeal concluded that since the English court
had jurisdiction by reason of the parties’ agreement upon jurisdiction, the
Greek court, though first seised, did not have jurisdiction, and that it was
open to the English court to restrain proceedings in Greece by an anti-suit
injunction.
91. The decision in Continental Bank is controversial: Toepfer v Cargill,
[1998] 1 Ll L R 379 at p.386, Briggs and Rees on Civil Jurisdiction and
Judgments (3rd Ed.) at para 2.197. Not least of the criticisms is that no
mention is made in the judgment of the decision of the European Court
in Overseas Union Insurance Ltd v New Hampshire Insurance Co, [1992]
QB 434, which, as is observed by Briggs and Rees, “makes evaluation of
the reasoning rather problematic”. However, Continental Bank is binding
upon me and unless it can properly be distinguished, I must apply it in
this case. Mr Males seeks to distinguish it on two grounds: firstly because
the governing regime in this case is the Brussels Regulation and not the
Brussels Convention; and secondly because, he submits, on the facts of
this case Continental Bank does not apply. …
The reasoning of the Court of Appeal in Continental Bank was that effect
should be given to the parties’ choice of jurisdiction. At p.596H-597B
Steyn LJ said this:
“If [the defendants’] submission is correct, it follows that a party will be
able to override an exclusive jurisdiction agreement which is governed
by article 17, by pre-emptively suing in the courts of another contracting
state. The courts of the latter state which ex hypothesi have been
deprived of jurisdiction would then have been ‘the court first seised’. The
chosen court of the party would then be obliged to decline jurisdiction or,
if the jurisdiction of the other court is contested, to stay its proceedings.
In this way a party who is in breach of the contract will be able to set
at naught an exclusive jurisdiction agreement which is the product of
the free will of the parties. The principle of the autonomy of the parties,
enshrined in article 17, cannot countenance such a conclusion’. …
96. I reject the submission that the fact that this case is governed by the
Regulation and not the Convention is a proper basis for distinguishing
this case from Continental Bank, which therefore I regard as a binding
precedent upon me in this case. Certainly its authority is such that I
decline not to follow it.
97. Mr Males’ alternative submission is that this case is to be
distinguished on its facts from Continental Bank, and other cases in which
Continental Bank has been applied. There are three distinctions: (i) that
the service clause is not an agreement for exclusive jurisdiction and does
not prohibit the Italian proceedings; (ii) that the contract is not governed
by English law; and (iii) that there is not a clear breach of the choice of
forum clause.
98. The first point is based upon the interpretation of the service clause
that I accept. I have concluded that it does not apply to proceedings by
the insurers for non-liability declarations, and that it does not provide
for the exclusive jurisdiction of the English court. The appropriate forum
for the insurers’ proceedings for non-liability declarations was, when
they brought the proceedings, either Italy, if article 16 of the General
Conditions is effective and applicable to provide for Italian jurisdiction, or
France under article 12 of the Brussels Regulation. (They could now bring
a counterclaim in these proceedings under article 12(2), but Mr Morris did
not rely upon this provision.)
99. Undeniably, it would be an extension of the decision in Continental
Bank to apply it in these circumstances. However, the basis of the decision
was respect for the parties’ autonomy, and E. submit that, assuming
that the parties did not agree that the Italian courts should decide such
claims as those in the Italian proceedings, the Court should respect the
parties’ autonomy by rejecting the insurers’ application for a stay of these
proceedings. I have already expressed the tentative conclusion that the
assumption is wrong, but even assuming it to be correct, I reject E.’
submission.
100. Their argument is this: if the Italian jurisdiction provision is not valid
and effective, it is a breach of the contract of insurance for the insurers
to frustrate E.’ right, conferred by the service clause, to sue the insurers
in this country by bringing proceedings which they are not entitled,
under the Regulation, to bring. Mr Morris argues that the jurisdiction of
the English court is exclusive, not in the sense that it is the only court
that can properly hear the dispute about the indemnity claims (E. being
entitled to sue in France or Italy, and the insurers being entitled to sue in
France), but in the sense that the agreement conferred upon E. the right
to sue the insurers in England and that the implication is that the insurers
would not defeat that right by suing E. in an illegitimate jurisdiction. …
102. I cannot accept E.’ argument that the insurers are in breach of
an implied terms of the contract of insurance in bringing the Italian
proceedings. The right that the parties agreed to confer upon E. was
always subject to the possibility that the insurers would bring proceedings
against them for non-liability declarations in another jurisdiction. The
most that E. could properly have expected is that if the insurers did bring
proceedings in another Member State, the machinery of the Brussels
Regulation, and in particular articles 27 and 28, would be available
to ensure that the proceedings were not brought illegitimately. The
starting point of the Regulation is that the court first seised should decide
whether it has jurisdiction over the dispute, and if so should proceed to
adjudicate it. I decline to infer that the parties intended to go further and
contemplated that the English courts should intervene outside the regime
of the Regulation.
103. I add that E.’ submission was, as I have said, based upon the Sabah
Shipyard case in which the parties’ contract was governed by English
law, and was argued on the basis of English law about the implication of
contractual terms. This argument had not been foreshadowed when the
evidence of Italian law was prepared, and is not dealt with by the Italian
lawyers. Since I have concluded that the contract of insurance is governed
by Italian law, I should, in these circumstances, have felt uncomfortable
about refusing a stay on the basis of a term that English law would imply,
but in view of my conclusion about the position under English law, this
difficulty does not arise. …
Should no order be made in view of the “quasi-exclusive” regime?
105. Mr Morris’ third argument is that the claims in these proceedings
are governed by the special jurisdictional rules for insurance in part II,
section 3 of the Brussels Regulation, and that, just as with cases under
the exclusive jurisdiction of article 22, so too in cases that fall under the
“quasi-exclusive jurisdiction”, articles 27 and 28 are inapplicable. Both
where there is exclusive jurisdiction and where there is “quasi-exclusive
jurisdiction” under section 3 (and, in the case of consumer contracts,
under section 4 of part II of the Regulation), a judgment is not to be
recognised if it conflicts with the governing jurisdiction provisions, in
contrast with the general rule under the Regulation that the jurisdiction
of the court of the Member State of origin may not be reviewed: article
35. Therefore, it is submitted, it cannot be said in these cases that it
is objectionable in principle for the court second seised to examine the
jurisdiction of the court first seised. The Regulation contemplates that
it should do so, and accordingly the English court should not decline
jurisdiction or stay these proceedings. At least it should not do so without
first examining the jurisdiction of the Italian court to entertain the Italian
proceedings and being satisfied that the Italian proceedings comply with
section 3.
106. The term “quasi-exclusive” that Mr Morris uses in advancing this
argument is that of Briggs and Rees (cit sup) at para 2-197. In Overseas
Union Insurance Ltd v New Hampshire Insurance Co, [1992] QB 434,
the European Court, responding to the second and third questions,
which concerned whether under article 21 of the Convention the court
second seised was in all circumstances obliged to stay its proceedings
as an alternative to declining jurisdiction, or whether it might examine
the jurisdiction of the court first seised, gave the answer that the only
alternative to declining jurisdiction for the court second seised was to stay
its proceedings “without prejudice to the case where the court second
seised has exclusive jurisdiction under the Convention and in particular
under article 16 thereof”:. …
108. I do not find support for this argument in the Overseas Union case.
First, in its answer to the second and third questions, the European
Court left open in cases of exclusive jurisdiction the question of the court
second seised examining the jurisdiction of the court first seised when
considering an application under article 21 of the Convention (or article
27 of the Regulation). It did not decide that even in cases of exclusive
jurisdiction the court second seised should or might do so.
109. Secondly, the exception was left open only in cases of “exclusive”
jurisdiction. The Court recognised that under the Convention (like the
Regulation) the court in a contracting state will review the jurisdiction
of another contracting state not only in cases of exclusive jurisdiction
but also in cases of “special” jurisdiction (which I understand to include
cases of insurance contracts), and stated that these cases, which are
exhaustively stated at articles 28 and 34, are limited to the stage of
recognition or enforcement. There is nothing in the judgment to suggest
that the exception in the case of special jurisdictions arises at an earlier
stage of the proceedings. The case was not concerned with the stage of
recognition or enforcement, and so was not concerned with whether the
case was one of special jurisdiction. …
111. It is suggested that, if the court second seised is to review the
jurisdiction of the court first seised at the stage of recognition or
enforcement, there can be no objection to it reviewing it earlier. I cannot
accept that. After all, the freedom of review at the recognition stage is
limited by article 35(2): “In its examination of the grounds of jurisdiction
referred to in [article 35(1), which provides that a judgment shall not be
recognised if it conflicts with, inter alia, section 3], the court or authority
applied to shall be bound by the findings of fact on which the court of the
Member State of origin based its jurisdiction”.
112. It is also significant that, whereas the Regulation expressly provides
for the possibility of actions coming within the exclusive jurisdiction of
several courts (article 29: “Where actions come within the exclusive
jurisdiction of several courts, any court other than the court first seised
shall decline jurisdiction in favour of that court”), it does not deal
specifically with cases within the special jurisdiction of several courts. The
inference to be drawn, it seems to me, is that this situation is governed
by articles 27 and 28.
113. No English authority has been drawn to my attention in which E.’
submission that article 27 does not apply to cases of special jurisdiction
was considered, but if the argument is sound, it was overlooked in such
cases as Denby v Hellenic Mediterranean Lines Co Ltd, [1994] 1 Ll L R
320 and Tradigrain SA v SIAT SpA, (cit sup). More significantly, Mr Males
argues that if the submission is sound, the point was overlooked in the
Overseas Union case. The court described as “redundant” the fourth
question, which was directed to whether it made a difference that the
contract was one of reinsurance of a quota share and whether such a
reinsurance was within section 3. I accept Mr Males’ submission that the
implication is that the court did not consider that the fact that a contract
is governed by the section 3 regime is a passport for the court seised
second to examine the jurisdiction of the court first seised.
114. I reject E.’ argument that because the claim is governed by section
3, a stay should not be ordered under article 27.
115. I conclude that none of the three arguments adduced by E. against a
stay of their indemnity claims is sound.
Should the court stay only the indemnity claims?
116. However, E. have a further argument. They submit that, even if
their indemnity claims are to be stayed under article 27, their jurisdiction
claims should not be. They say that in these proceedings they pursue
more than one cause of action within the meaning of the term in article
27, and that their jurisdiction claims, which do not involve the same
cause of action as any claim in the Italian proceedings, comprise anything
between one and four separate causes of action. This is because these
claims have do not have the same “cause” and “objet” as the indemnity
claims. Mr Morris developed his submission about the causes of action in
these proceedings as follows:
i). The claims for damages for breach of the English jurisdiction clause
and for declarations that the contract of insurance incorporated an English
jurisdiction clause by which the insurers agree to submit all disputes to
the English court and not article 16 of the General Conditions and that
the Italian proceedings are pursued in breach of the English jurisdiction
clause (paragraphs 3(a), 3(b)(i) and 5 of the claim form) constitute a
cause of action, the “cause” being the existence of the English jurisdiction
clause and the “objet” being to found a claim for damages for breach of
the jurisdiction clause, and perhaps to create an issue estoppel that might
prevent recognition of an Italian judgment.
ii). The claim for a declaration that the pursuit of the Italian proceedings
constitutes a breach of the Brussels Regulation (paragraph 3(b)(ii) of the
claim form) constitutes a cause of action, the “cause” being the bringing
of proceedings in Italy rather than in France in breach of article 12 of the
Brussels Regulation, and the “objet” being to create an issue estoppel that
might prevent the recognition of an Italian judgment.
iii). The claim for a declaration that the pursuit of the Italian proceedings
is vexatious and/or oppressive and/or otherwise unconscionable and/
or an abuse of the process (paragraph 3(b)(iii) of the claim form) is a
cause of action, the “cause”, being the insurers’ conduct in bringing the
Italian proceedings and the “objet” being to create a basis for the non-
recognition of an Italian judgment
iv). The injunctions (paragraph 4 of the claim form) are a cause of action,
the ‘cause’ being the bringing of the Italian proceedings in breach of
E.’ rights and the ‘objet’ being an order to prevent the insurers from
continuing the Italian proceedings.
117. I agree that, if the proper approach to article 27 is to distinguish
different claims within proceedings so as to identify distinct causes of
action, it is natural to adopt as the criterion for doing so that of whether
claims have the same “cause” and “objet”, the criterion from other
language versions of the Regulation for whether the proceedings in
two jurisdictions involve the same cause of action. However, Mr Morris’
submission demonstrates the complications that will frequently arise if
fragmentation of this kind is permitted. I am unable to accept that this is
what article 27 requires. …
119. The insurers submit that in any event, if I were to conclude that
the indemnity claims but not the jurisdiction claims should be stayed
under article 27, I should stay the jurisdiction claims under article 28. It
is convenient to consider this submission before E.’ argument that the
jurisdiction claims should not be stayed under article 27.
120. Article 28 of the Regulation provides that where “related actions” are
pending in the courts of different Member States, any court other than the
court first seised may stay its proceedings. Article 28(3) provides that,
“For the purpose of this Article, 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”.
121. Mr Morris argued that the jurisdiction claims in the English
proceedings are not related to claims in the Italian proceedings. He cited
the judgment of Mance J in Toepfer v Molino (cit sup) at p.513-514. In
that case, Mance J was considering Toepfer’s claims under an originating
summons for a final injunction and declaratory relief and Molino’s
applications under articles 21 and 22 of the Brussels Convention. In
this case, although E. claims a final injunction in the proceedings, their
application before me is for an interlocutory injunction. …
124. Turning to the three reasons that Mance J gave in Toepfer v Molino, it
is to be noted that the first applied only to the claims for injunctive relief,
the fourth of the jurisdictional causes of action that Mr Morris tentatively
identified. The same is true of Mance J’s second reason. Moreover, if in
this case no injunctive relief is granted, there seems to me to remain
a risk of inconsistent judgments, inconsistency for example as to the
governing law of the contract of insurance. As for Mance J’s third reason,
even if the judgment in the Italian proceedings is not recognised in
England, it does not promote the good administration of justice that
inconsistent judgments are reached. Moreover if they are inconsistent on
questions of fact, the inconsistency would outflank article 35(2).
125. I conclude that these proceedings and the Italian proceedings are
“related actions” within the meaning of the term in article 28.
126. I revert to the question whether E. are correct in their submission
that the jurisdiction claims are to be separated from the indemnity claims
for the purposes of article 27, and that, even if the indemnity claim is
stayed, the jurisdiction claims should not be. This raises the following
issues: (i) whether in applying article 27 the court should consider
separately different causes of action in the proceedings; (ii) if so, whether
the jurisdiction claims constitute “causes of action” within the meaning of
article 27; and (iii) if so, whether the Italian proceedings involve the same
cause(s) of action as jurisdiction claims in these proceedings.
127. In the English version of the Regulation, the provisions of articles
27 and 28 refer to “actions” and “proceedings”, and on the face of it
do not contemplate parts of actions or proceedings being stayed. I
acknowledge that in The Tatry, [1999] QB 515 at paras 34-36, it was held
that proceedings might be stayed against some parties and allowed to
continue against others. It is to be noted, however, that the European
Court described the fragmenting of proceedings even to this extent
as a “disadvantage”, and there is nothing to suggest that the Court
contemplated further fragmentation of the kind that E. seek. I consider
that this would be contrary to both the wording and the purpose of the
Brussels Regulation, for the reasons explained by Saville LJ in The “Happy
Fellow”, [1998] 1 Ll L R 13 at pp.17/18:
“…article 21 [of the Convention] is concerned with proceedings and article
22 with actions. The questions are whether the proceedings involve the
same cause or object or whether the actions are related. It is thus a
misreading of the Convention to ask which Court is first seised of issues
which are or might be raised within the proceedings or actions. If such
were the case, then the articles would achieve precisely the opposite of
their intended purpose, which is to achieve the proper administration
of justice within the Community, since the Courts of one country would
have to decline jurisdiction in respect of some issues and the Courts of
another country in respect of others, a recipe not merely calculated to
produce irreconcilable judgments but also to encourage the multiplicity of
proceedings in different countries of the Community”. …
129. I add that in Grupo Torras v SA v Al-Sabah, [1995] 1 Ll L R 374
at p.419, which Mance J decided before the judgment of the European
Court in The Tatry (cit sup) and his own decision in Toepfer v Molino
(cit sup), he said that articles 21 and 22 of the Convention required “an
overall comparison between competing or related proceedings in different
States”, and referred to “the undesirable practical implications…in tending
to split up litigation between different States and causing inappropriate
complexity”. He did not exclude the possibility that “an action might in
exceptional circumstances fall to be regarded as containing separate
proceedings...; or that nominally separate proceedings might in
some circumstances fall to be regarded as if they were a single set of
proceedings”. But it is clear that he thought that would be the proper
approach only in unusual circumstances.
130. I reject Mr Morris’ submission that in a case such as this it is
right to look at separate causes of action within the proceedings when
determining an application under article 27. Like Mance J, I do not rule
out entirely the possibility that in unusual circumstances this might be
proper. But there are no features of this case that justify it.
131. Having reached this conclusion, I do not propose to consider
the question whether in any event it is impermissible to characterise
a jurisdictional dispute such as this as a “cause of action” within the
meaning of the term in the Regulation. However, the facts of this case
perhaps reinforce the reservations about this expressed by Phillips LJ in
Toepfer v Cargill, (cit sup) which I have already set out.
132. The insurers have another answer to this argument. E.’ argument
is based upon the premise that the Italian court became seised of the
jurisdiction issues after these proceedings were brought. This depends
upon whether it is right to say that the Italian courts became seised of
proceedings involving the jurisdictional causes of action only when E. filed
their defence on 23 December 2002 and challenged the jurisdiction of the
Tribunale di Genova.
133. I shall assume in favour of E. that, if the court were to embark upon
an examination of the application of article 27 to different causes of action
within a set of proceedings, it would not take for all the causes of action
a single date of first seisure of a set of proceedings, although, as Moore-
Bick J observed in Glencore International AG v Metro Trading International
Inc, (cit sup) at p.637, that course has much to commend it in terms of
practical consequences. However, Brooke LJ in Fox v Taher, [1997] I L
Pr 441 accepted the submission that “the answer to the question “when
did the relevant lis between the relevant parties become definitively
pending?” will depend upon which lis one is asking about”. This view was
not espoused by the majority of the Court of Appeal (Morritt and Leggatt
LJJ). However, I was not addressed upon these authorities, and I shall, as
I say, assume in favour of E. that this is the approach to be adopted.
134. When, then, did the Italian court become seised of the proceedings
involving the jurisdictional cause(s) of action? In their summons the
insurers asserted the jurisdiction of the Tribunale di Genova on the basis
of article 16 of the General Conditions of the Policy. Mr Morris says that
this is no more than the equivalent of the statement that is to be made
under CPR 6.19(3) and the Practice direction dealing with Service out of
the Jurisdiction para 1.3. That may be so: there is no evidence of Italian
law dealing with the point. But it does not seem to me to follow that,
when the Italian proceedings were issued, the Italian court was not seised
of proceedings involving the jurisdiction claims. …If it is asked when the
Italian court became seised of proceedings involving the jurisdictional
questions, I consider that it did so when the Italian proceedings were
brought in June 2002.
135. For these reasons I consider that E. have no answer to the insurers
application for a stay of the jurisdiction claims under article 27 of the
Brussels Regulation. Had I not so concluded, I would have ordered a stay
under article 28, considering these proceedings, including the jurisdiction
claims, and the Italian proceedings to be related actions. I order that
these proceedings be stayed.
Should the insurers be restrained by an injunction from pursuing the
Italian proceedings?
136. In Turner v Grovit (cit sup), the House of Lords referred to the
European Court of Justice the question whether it is inconsistent with the
Brussels Convention for the courts of this country to grant restraining
orders against defendants who are threatening to commence or continue
legal proceedings in another Convention country where the defendants
are acting in bad faith with the intent and purpose of frustrating or
obstructing proceedings properly brought before the English courts. The
European Court has yet to determine this reference. I must proceed
on the basis of the law as I understand it presently to be. It was
authoritatively described by Lord Hobhouse in his speech in Turner v
Grovit, in which the following principles are stated:
i) “The power to make the order is dependent upon there being wrongful
conduct of the party to be restrained of which the applicant is entitled to
complain and has a legitimate interest in seeking to prevent”: at para. 24.
ii) “Under English law, a person has no right not to be sued in a particular
forum, domestic or foreign, unless there is some specific factor which
gives him that right. A contractual arbitration or exclusive jurisdiction
clause will provide such a ground for seeking to invoke the right to
enforce the clause. The applicant does not have to show that the
contractual forum is more appropriate than any other: the contractual
agreement does that for him. Similarly, where… there has been clearly
unconscionable conduct on the part of the party sought to be restrained,
this conduct is a sufficiently strong element to support the affected party’s
application for an order to restrain such conduct”: at para. 25.
iii) Where the applicant “is relying upon conduct of the other person which
is unconscionable for some non-contractual reason, English law requires
that the legitimate interest [of the applicant in making his application for
a restraining order] must be the existence of proceedings in this country
which need to be protected by the grant of a restraining order”: at para.
27. …
138. For reasons that I have explained, I do not consider that E. have
a case that the insurers are in breach of the contract of insurance
in bringing and pursuing the Italian proceedings that is sufficiently
sustainable to justify an interim injunction.
139. I have also concluded that, on the evidence before me, E. have
not shown a good arguable case that the Italian proceedings are not
brought in accordance with the Brussels Regulation, or that France would
be the only proper forum for such proceedings. However, whether or not
this argument is correct depends upon the interpretation of the Italian
contract of insurance and even if I had reached a different conclusion
about this, I should not have made an interim injunction. I can state my
reasons briefly:
i) First, the suggested justification for the injunction is not a need to
protect a right to be sued or to sue in this country, but a right to be sued
in France. Of course, the answer to this question has an impact on the
English proceedings, but that is true of any question where a court seised
before the English court has to decide whether proceedings are properly
brought before it. The English court has no sufficient interest in protecting
any right that E. might have to be sued in France rather than Italy to
protect it with injunctive relief.
ii) Secondly, the right that E. assert and seek to protect is a right arising
under the Regulation. The Regulation itself provides a machinery for
protecting the rights that it confers, and for determining the court that is
to give effect to those rights and to enforce the corresponding obligations.
I recognise, as Mr Morris emphasised, that the Brussels Regulation
is directly applicable, and so creates rights and obligations between
individuals under the EC Treaty, but this does not seem to me to justify
granting injunctive relief outwith the machinery of the Regulation in order
to enforce any rights that it confers.
iii) In any case, the question whether the Italian proceedings are justified
by article 16 of the General Conditions raises a question about the
interpretation of an Italian contract that seems to me to be of some
difficulty. It is appropriate that the Italian court, rather than this court,
should determine it. In these circumstances, I should not exercise my
discretion to grant an injunction.
iv) I have, for reasons that I have explained, concluded that there is a
real risk that the Italian courts would regard it as an affront for an English
court to make an injunction in a case such as this, and for that reason
too, I should have been disinclined to exercise my discretion in E.’ favour.
140. However, E. put forward other reasons that the Italian proceedings
are vexatious or oppressive or unconscionable, and so should be
restrained. First, they rely on the fact that the insurers brought the
Italian proceedings without responding to E.’ letter before action of 14
March 2002 and without sending a letter before action of their own. E.
say that there is no good reason that the insurers could not simply have
defended the English proceedings. Accordingly Mr Morris submits that
the only purpose of the insurers’ conduct was to bring it about that the
Italian court was first seised, and so to deprive the English court of the
jurisdiction that it was agreed by the parties that it should have. However,
this argument, as it seems to me, loses much of its force when it is
recognised that the insurers, warned of impending English proceedings,
did not rush to anticipate them by issuing a summons in Italy. They
waited three months after the letter before action before bringing the
Italian proceedings. E.’ delay in following up their letter before action is
unexplained, but the chronology of events belies the suggestion that the
insurers were intent upon frustrating E.’ wish to sue in England. I do not
doubt that the insurers prefer to litigate in Italy for tactical purposes. That
is not inherently improper, and I see nothing oppressive or unconscionable
in the way that the insurers went about doing so. …
142. I therefore do not consider that E. have an arguable case that
the insurers’ conduct is unconscionable in the sense explained by Lord
Hobhouse. E. have not demonstrated a basis upon which I could properly
make an injunction. Even if they had done so, I should not have exercised
my discretion in their favour for the reasons that I have stated.
Conclusion
143. I therefore order that there be a stay of these proceedings. E.’
application is dismissed.