Introduction
1. This is one of a series of cases which has arisen out of a fire at the
United Meat Packers Plant at Ballaghaderreen, Co. Roscommon on 7th
January 1992. As a result of the fire, meat said to be worth £22,000,000
is alleged to have been destroyed. The meat had been delivered to the
plant by the plaintiff/respondent (hereafter “the Minister” ) in his capacity
as intervention agent on behalf of the European Communities.
2. In the proceedings, the Minister claims a declaration that a contract of
insurance between the Minister as insured and the defendant (hereafter
“A. L.” ) as insurer, said to be evidenced by a letter and cover slip dated
the 28th October 1991, was a valid and binding contract of insurance
as of 7th January 1992. To the proceedings, A. L. have entered an
appearance limited to contesting the jurisdiction of the High Court to
hear and determine the Minister’s claim. A. L. sought an order in the
High Court pursuant to Order 12, Rule 26 of the Rules of the Superior
Courts, 1986, setting aside the service of the proceedings on them on the
grounds that the insurance policy (if any) upon which the Minister relies
is the subject of a clause conferring sole jurisdiction to hear disputes
between the parties upon the Tribunal de Commerce in Paris. In a written
judgment dated the 6th March 1997, the High Court (Laffoy J.) refused
the relief sought by A. L.. From that judgment and order, A. L. have now
appealed to this court.
3. Neither the High Court nor this court on the hearing of the appeal were
concerned with the substantive dispute between the Minister and A. L. as
to whether the latter are obliged to indemnify the former in respect of the
damage sustained as a result of the fire. The sole issue for determination
is as to whether the High Court has jurisdiction to hear the Minister’s
claim. However, some at least of the factual background must be referred
to, if the different contentions advanced on the hearing of the appeal are
to be understood.
4. In October 1991, Mr. David G., of DB Agencies Monaco, had discussion
with Mr. Camille H., Director General of a firm called OCAT, as to providing
transport insurance cover for 12 Irish clients (including the Minister)
involved in the beef trade. OCAT were authorised to write transport
insurance in the name of A. L.. On the 28th October 1991, pending
completion of the negotiations, Mr. H. gave Mr. G. the document called
a “cover note” together with a draft of intended special conditions to
be included in a policy which, it was envisaged, would be issued at a
later date. That policy was never issued and A. L. claimed that this was
because it was never returned signed by the Minister and that the latter
never paid any premium. It is on that basis that A. L. claim that they were
not on any risk in respect of the fire in Ballaghaderreen.
5. The cover note of October 28th, 1991 indicated that the insurance
cover was to be subject to “French Policies” , i.e. the usual general
conditions contained in such policies. The policies in question were
“(a) French marine insurance policy for cargo insurance of 30th June 1983
amended 16th February 1990;
(b) French insurance policy for ‘goods transported by land’ dated 7th
November 1990;
(c) French insurance policy for ‘goods transported by air’ dated 25th
October 1990.”
6. Article 21 of the Goods Transported by Land Policy provided that
“With the exception of those cases foreseen in Article R114-1 of the
insurance code, all litigation must be brought before the Tribunal de
Commerce of the place where the policy was written.”
7. In the High Court, Laffoy J. found that the general conditions of the
three French policies were incorporated into the cover note, including this
condition which, it is accepted, gave exclusive jurisdiction to the Tribunal
de Commerce in Paris. No appeal has been brought to this court from that
finding of the learned High Court judge.
8. The Minister also contended, however, in the High Court that,
having regard to the relevant provisions of the Brussels Convention on
Jurisdiction and the Enforcement of Judgments in Civil and Commercial
matters (hereafter “the Convention” ) the jurisdiction of the High Court
to hear the proceedings was not excluded by the clause in question. That
contention succeeded in the High Court and is the subject of the appeal
brought by A. L. to this court.
The legal framework
9. The Convention, which is given the force of law in the State by virtue
of the JURISDICTION OF COURTS AND ENFORCEMENT OF JUDGMENTS
ACT, 1998 (which consolidates earlier legislation) provides in Article 2
that, subject to the provisions of the Convention, persons domiciled in a
contracting State are to be sued in the courts of that State. SECTION 3,
however, under the heading “Jurisdiction in matters relating to insurance”
contains special provision concerning such cases and, specifically, in
Article 8 provides inter alia that
“an insurer domiciled in a Contracting State may be sued:
2. In another Contracting State, in the courts for the place where the
policy holder is domiciled ...”
10. Under Article 12, the provisions of the section may be departed
from inter alia by an agreement on jurisdiction. Under Article 12.5, this
includes an agreement
“... which relates to a contract of insurance in so far as it covers one or
more of the risks set out in Article 12a.”
11. Article 12a provides that
“The following are the risks referred to in Article 12.5:
1. Any loss of or damage to
(a) Sea going ships, installations situated offshore or on the high seas,
or aircraft, arising from perils which relate to their use for commercial
purposes;
(b) goods in transit other than passengers baggage where the transit
consists of or includes carriage by such ships or aircraft;
2. Any liability, other than for bodily injury to passengers or loss of or
damage to their baggage:
(a) arising out of the use or operation of ships, installations or aircraft
as referred to in 1(a) above in so far as the law of the Contracting State
in which such aircraft or registered does not prohibit agreements in
jurisdiction regarding insurance of such risks;
(b) for loss or damage caused by goods in transit as described in 1(b)
above;
3. Any financial loss connected with the use or operation of ships,
installations or aircraft as referred to in 1(a) above, in particular loss of
freight or charter hire;
4. Any risk or interest connected with any of those referred to in 1 to 3
above.”
12. A. L. say that the risk in respect of which the cover note was issued
was a risk or interest connected with loss or damage to goods in transit
within the meaning of Article 12a 1(b) and 4, that the contract of
insurance accordingly covered one of the risks set out in Article 12a and
that, in the result, the provisions of SECTION 3, including the provision
enabling the policy holder to sue in the courts of the Contracting State
where he is domiciled, were effectively excluded. The Minister says in
response that the contract of insurance was in essence one in respect
of the storage of the beef and was not one in respect of goods in transit
by ships or aircraft within the meaning of Article 12a 1(b) or any risk
connected with such insurance and that, accordingly, Article 12 did not
apply.
The factual background
13. Before turning to the submissions advanced in support of these
contentions, I should refer to the facts in some more detail.
14. The cover note dated 28th October 1991, which specified the nature
of the insurance (if any) in force in respect of the meat in storage in
Ballaghaderreen, stated:
“We hereby give you for the companies listed below, and with effect from
26th October 1991 (except for the storage guarantees with effect from
1st November 1991 at zero hours) the guarantee set out below, with the
description of the risks.
“We will draw up a policy of each insured on the basis of the French
Policies (which take precedence) with, on each occasion, the English
translation.”
The 12 “companies” listed as insured include the “Department of
Agriculture Limited (sic)” .
15. It should be noted that the cover note, in its opening paragraph,
appears to draw a distinction between storage and other insurances.
16. The cover note goes on to say:-
“Bearing in mind the size of the sums, we need two weeks to issue the
different policies after having taken the reinsurance agreements. We have
noticed that this period would be adequate for you because within the first
two weeks there would be no marine shipments higher than 20,000,000
FF., the air or land shipments being less than 5,000,000 FF. each.
“Accordingly, the guarantees which we are going to grant, which were
explained below, covered by the present cover note, are therefore, until
confirmation of the guarantees in excess of:
- 20,000,000 FF. Marine
- 5,000,000 FF. Land or Air.”
17. The cover note further states that
“Two sorts of guarantees are presented:
(A) Storage on all risks storage, including fire, but excluding catnat, rated
separately with
(B) transports, which are rated in the following manner, as appropriate.
Only policy no. 15.010 [O. GMBH] will not include storage cover.”
18. There follows a statement of the tariffs from Ireland to various
countries. They are divided into two categories under the headings (A)
and (B).
19. There follows a statement that
“The guarantees in A and B are understood as all risks marine insurance
the guarantees of which finish after discharging in the port area and in
respect of cargos which are either frozen or vacuum packed.”
20. There follow provisions as to “overland transport within Ireland” , in
respect of which a specific rate is to apply, and overland transport from
Ireland to any country in the EEC. In the case of one of the insured (Go.
Limited) specific rates are given for accident insurance during overland
journeys. The cover note goes on:
“As regard the marine side of this insurance, the conditions are identical
to those above.”
21. There follow various provisions dealing with the insurance, which are
of no particular significance, save for the following:-
“Storage in Ireland: goods insured All Risks on the policy conditions, thus
p. 13 bis is understood excluding catnat at a rate of 0.047% of the value
of the stock declared on the last working day of the month concerned by
the insured.”
22. Finally, the following appears towards the end of the cover note:
“DEPARTMENT OF AGRICULTURE Policy No. 15.002
There is little transport with a lot of storage.
It is agreed that a special rating agreement will be drawn up for this
business by mutual agreement between Mr. G. and Mr. H. within the next
seven days.”
23. It is, of course, not in dispute that the Minister was not in the
business of exporting beef to other countries, as the other insured were.
Clearly, this special provision in the cover note, referable exclusively to
the Minister, reflected that factual position.
24. In his affidavit sworn in these proceedings, Mr. H. said that the text of
the draft policies which would have been issued in the case of the Minister
in pursuance of the cover note would have covered the loss of goods in
transit or transported by ship, aeroplane or truck. He also says that
“the storage of the goods was limited to goods that were to be
transported or had just been transported.”
25. In an affidavit filed on behalf of the Minister, Mr. Padraig Smith,
an insurance broker, who said that he had considerable experience in
dealing with marine insurance, said that, in transport policies, it would
be assumed that cover is provided in respect of storage incidental to
transit and that frequently policies would not, because of that assumption,
refer to that storage cover. However, he said that it was also reasonably
common for a policy, describing itself as a marine or other transport
policy, to provide also for cover for storage which does not arise in
immediate connection with any particular transportation and is thus
independent of the cover for goods in transit.
Submissions of the parties
26. On behalf of A. L., Mr. Shipsey S.C. submitted that the only evidence
of the discussions which took place between the representatives of A. L.
and the Minister was to be found in the affidavit of Mr. H. and that Mr. H.
had averred that the storage of the goods was limited to goods that were
to be transported or had just been transported. He also submitted that
Mr. Smith did not indicate in his affidavit that he had any knowledge or
experience of French marine or transport insurance and that, as a result,
he was not qualified to offer any opinion on such insurance.
27. Mr. Shipsey submitted that SECTION 3 of the Convention, containing
Articles 12 and 12a, was itself an exception to the general jurisdiction
rule in the Convention, i.e. that a defendant ought to be sued where
he is domiciled. He said that these provisions in the Convention were
intended to give the policy holder, who would normally be regarded
as the significantly weaker party to contracts of insurance, a special
degree of protection, not found elsewhere in the Convention, in relation
to jurisdiction. That, he said, had been made clear by the opinion of the
Advocate General and the judgment of the court in Case 201/82 Gerling
(1983) 2503. It was in that light that the provisions of Article 12(5), as
supplemented by Article 12a, should be construed.
28. Mr. Shipsey submitted that the provisions of the Brussels Convention
in general, and Articles 12 and 12a in particular, should be given a
purposive and not a literal interpretation. He cited in this connection
the report of Professor Schlosser which, under S. 4 of the Jurisdiction
of Courts and Enforcement of Judgments Act, 1993, may be considered
by the Irish courts in interpreting any provision of the Convention:
indeed, the courts are required to give such weight to the specified
reports, including that of Professor Schlosser, as is appropriate in the
circumstances.
29. Mr. Shipsey submitted that the Schlosser Report made it clear that
Articles 12(5) and 12a were included in the Convention as a result of
strong representations from the United Kingdom whose representatives
on the Working Party urged that the concept of social protection leading
to special provisions for jurisdiction in insurance matters had no relevance
where the policy holders were large undertakings, as in this case.
30. Mr. Shipsey submitted that the wording of Article 12(5) made it clear
that the freedom of the parties to a contract of insurance to decide upon
jurisdiction applied to all contracts of insurance, insofar as they covered
“one or more” of the risks set out in Article 12a. He submitted that, giving
this expression a purposive construction, it was clear that an insured
entering into a contract which included one or more of the risks that
would be included in a marine policy would not be entitled to choose a
jurisdiction for the resolution of a dispute other than the one which had
been chosen and agreed. Mr. Shipsey said that in the present case, there
was one cover note and one contract of insurance and that this expressly
related to transport insurance, including marine and air. He said that all of
the twelve parties had been given transport insurance cover and eleven of
them were given cover for storage risks. The distinction between the two
types of guarantee mentioned in the first paragraph was merely as to the
commencement date for the cover. He said that it had not been explained
why, if the storage guarantee provided for the Minster was a “stand alone”
insurance, there was no limit to the amount of the cover.
31. As to the expression “there is little transport with a lot of storage”
used in reference to the Minister, Mr. Shipsey pointed out that eleven of
the twelve customers were given storage cover. He said that there was no
“stand alone” storage provided in the policy.
32. Mr. Shipsey submitted that, insofar as the English Court of Appeal in
Charman .v. WOC (1993) 2 Lloyds Reports 551 had held that the words
“and no other” should be implied at the end of Article 12(5), the decision
was erroneous in law and should not be followed: there was no warrant
for inserting those words in Article 12(5). He also took issue with the
finding of Staughton L.J. in the Court of Appeal that an insurance on land
based property could not be converted into an insurance within Article 12a
by the inclusion of “some trivial marine risk” .
33. Mr. Shipsey further submitted that the case for an expansive and
purposive construction of Article 12(5) and 12a had been reinforced by
the recent decision of the Court of Justice of the European Communities in
C - 412/98 Group Josi Re Insurance Company SA .v. Universal General
Insurance Company (UGIC) (unreported: judgment delivered 13th July
2000). That decision had made it clear that all exceptions to the general
rule that a defendant be sued in the courts of the place of his domicile are
to be narrowly construed.
34. Mr. Shipsey finally submitted that this was a case in which the court
should seek a preliminary ruling from the Court of Justice of the EC,
having regard to the provisions of the 1971 Luxembourg Protocol on the
Interpretation of the Brussels Convention: he cited in this context the
decision of the court in Srl Cilfit and Another .v. Ministry of Health (1982)
ECR 3415.
35. On behalf of the Minister, Ms. Mary Finlay S.C. submitted that it was
clear from the terms of Articles 12 and 12a and the Schlosser Report that,
in order to come within Article 12a, the risk covered by the insurance
must (in the context of this case) be a marine transport risk. Land
transport risks did not come within the scope of Article 12a in any way.
The findings of the learned High Court judge that the cover note provided
for a separate and distinct indemnity for storage simpliciter, that there
was no evidence that the storage cover provided for the respondent was
in any sense connected with transit by sea or air and that the transport
element of the risk was ancillary or accessory to the storage element were
clearly correct and should be upheld. Since a jurisdiction agreement had
to be limited to the risks specified in Article 12a, as the trial judge had
also correctly held, it followed inevitably that the risk covered could not
come within Article 12a having regard to the fact that a separate storage
risk was covered.
36. Ms. Finlay submitted that the findings of the High Court judge in
respect of these matters were fully borne out when all the provisions of
the cover note were read. The averment of Mr. H. that the storage was
limited to goods that were to be transported or had just been transported
was inadmissible: it was an attempt by one party to give evidence of the
intention of the parties to the cover note or, alternatively, to vary, add or
subtract from the express terms of the cover note.
37. Ms. Finlay further submitted that the decision of Hirst J. and of the
Court of Appeal in Charman to the effect that the words “and no other”
should be implied at the end of Article 12(5) was correct and should be
followed. As Staughton L.J. had pointed out, any other construction could
have the disastrous consequence that litigation would be necessary in the
case of the same or virtually the same issue in two different jurisdictions,
contrary to the purpose of the Convention as a whole or would render
Article 12(a)(4) meaningless.
38. As to the alleged necessity for a reference to the European Court, Ms.
Finlay submitted that the jurisdiction conferred upon the Court of Justice
of the EC was limited to interpretation of the Convention. In the present
case, the dispute was as to the application of the Convention. She said
that in this case the application of community law was so obvious as to
leave no scope for any reasonable doubt, citing Jarrett .v. Barclays Bank
Plc . (1997) 2 All ER 484.
Conclusions
39. In considering how Article 12(5) and 12(a) of the Convention are to
be construed and their application in any particular case, it is helpful to
refer to the report of Professor Schlosser, to which the High Court and
this court are obliged to give weight where appropriate (see s. 6(2) of
the 1998 Act). At the relevant part of his report, he refers to the United
Kingdom’s request for special rules for the insurance of large risks and
said that it was the most difficult problem for the Working Party on the
1978 Accession Convention (which dealt with the accession of Denmark,
Ireland and the United Kingdom to the Convention.) It was accepted that,
in the case of various classes of insurances in the transport industry, the
concept of social protection underlying Section 3 was not relevant where
the policy holders were powerful undertaking and, in addition, the risks
insured were highly mobile and policies tended to change hands several
times in quick succession. The problem, Professor Schlosser noted, was
one of finding a suitable demarcation line. He summed up the conclusions
of the Working Party as follows:
“The result of a consideration of all these matters is the solution which
figures in the new paragraph (5) of Article 12, as supplemented by
Article 12a: agreements on jurisdiction are in principle to be given special
treatment in marine insurance and in some sectors of aviation insurance.
In the case of insurance of transport by land alone no exceptional rules of
any kind appeared justified.”
40. It is inevitably conceded on behalf of A. L. in this case that the
insurance effected by the cover note for the benefit of the Minister was
in respect of storage. Nor was there any indication that it was storage of
“goods in transit” within the meaning of Clause 1(b) of Article 12a, that
being confined to cases where the transit consists of, or includes, carriage
by ships or aircraft.
41. A. L. are then driven to arguing that the “risk or interest” allegedly
insured in this case - in respect of the storage of the meat - was
“connected” with one of the risks referred to in paragraphs 1 to 3
inclusive of Article 12a. Again, however, the only risk or interest pointed
to is as to loss or damage to “goods in transit” within the meaning of
1(b). It is true, of course, that there was one cover note in respect of all
twelve of the bodies who are to be given insurance and that much of the
language in the cover note is directed, as one would expect, to contracts
of marine insurance. But there is not a scintilla of evidence to suggest
that at any stage the Minister was interested in obtaining marine or air
insurance and the terms of the cover note itself make it clear beyond
argument that two forms of insurance were contemplated, i.e. storage
and transport. When the cover note referred specifically to the Minister’s
policy as involving “little transport with a lot of storage” , it must have
been envisaged that such transport as there was would be by road: at
the risk of repetition, it must be emphasised again that there was not the
slightest suggestion that the Minister at any stage was seeking insurance
in respect of transport by sea or air.
42. The arguments on behalf of A. L. are based on the proposition that
there was one cover note and one contract of insurance and that the
contract related to transport insurance, including transport by air and
sea. But this disregards the fact that, while there was only one contract
document, it was envisaged that there would be twelve separate policies
and that the one relating to the Minister would be, in practical terms,
confined to storage.
43. Even if that were not so, and the Minister's contract could be regarded
as a contract of insurance which envisaged both storage insurance and
marine or air transport insurance - and it is very difficult to see how it
could be so construed - there is the further difficulty that, on any view,
the contract would then cover both risks within Article 12a and risks
outside Article 12a. In this connection, I would respectfully adopt the
reasoning of Lord Justice Staughton in the English Court of Appeal in
Charman where he took the view that the words “and no other” must be
inserted at the end of Article 12(5) explaining his conclusion as follows:-
“... Article 12a(4) makes express provision as to what additional risks or
interests may be included in the contract of insurance if it is to qualify
under Article 12a as a whole. It cannot have been the intention that yet
more risks or interests could be included, even if they were not justified
by Article 12a(4), since that would have one of two consequences: (i)
the jurisdiction clause would be valid in respect of Article 12a risks or
interests, but not for others in the same contract of insurance. This would
be a disaster. It would entail litigation of the same or nearly the same
issue in two different jurisdictions, which is contrary to the purpose of the
Convention as a whole. Alternatively, the clause would be valid for the
whole contract, even though it covered some risks or interests not within
Article 12a. Why then was paragraph (4) of Article 12a included? I realise
that paragraph (4) is said to be free standing (see Professor Schlosser,
para. 147), so that there may be a valid jurisdiction clause in a policy
which only covers paragraph (4) risks or interests. But I cannot believe
that this was the only or main interest for including that paragraph.”
44. Moreover, that case illustrates yet another difficulty in the path
of the argument on behalf of A. L.: the fact that, whatever transport
element there may have been in the contract of insurance, it was clearly
of extremely minor significance when compared with the storage element.
I would again adopt with approval the following comment by Lord Justice
Staughton in Charman:-
“I would ... say that the extra risks or interest covered by para. (4) must
not be disproportionately large compared with those covered by paras. (1)
to (3). They must not be the main or almost the main subject matter of
the contract, but a lesser part of it. The tail must not be allowed to wag
the dog, or an insurance on land based property ... be converted into an
insurance within Article 12a by the inclusion of some trivial marine risk.”
45. I am also satisfied that this is not a case in which there is any
necessity for a reference to the Court of Justice of the EC pursuant to the
1971 Protocol to the Convention. As I have indicated, the case, in my
view, can be determined by the application of Articles 12 and 12a of the
Convention to the facts of the present case without choosing between
the two constructions of Article 12(5) advanced on behalf of A. L. and the
Minister respectively. However, I am satisfied that in any event the law
was correctly stated in the Court of Appeal in Charman and is so obvious
at this stage as to leave no scope for any reasonable doubt, applying the
principles laid down by the Court of Justice of the EC in Cilfit.
46. I would dismiss the appeal and affirm the order of the High Court.