1) Amlin Corporate Member Ltd (on its own behalf and on behalf of all other members of Syndicate 2001 at Lloyd's in relation to policy reference B0738MC000720B) (Respondents/Claimants) 2) Talbot 2002 Underwriting Capital Ltd (on its own behalf and on behalf of all other members of Syndicate 1183 at Lloyd's in relation to policy reference B0738MC000720B and Others v Oriental Assurance Corporation (Appellant/ Defendant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Rimer,Lord Justice Tomlinson |
| Judgment Date | 17 October 2012 |
| Neutral Citation | [2012] EWCA Civ 1341 |
| Docket Number | Case No: A3/2012/0460 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 October 2012 |
[2012] EWCA Civ 1341
The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Rimer
and
The Right Honourable Lord Justice Tomlinson
Case No: A3/2012/0460
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE ANDREW SMITH
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Roger ter Haar QC (instructed by Browne Jacobson LLP) for the Appellant
Mr Peter MacDonald Eggers QC (instructed by Norton Rose LLP) for the Respondent
Hearing dates: 5 th October 2012
Introduction
This is an appeal from Andrew Smith J in a reinsurance dispute between English reinsurers and a Philippine insurer. He declined to order a stay of proceedings brought by reinsurers in England to establish that they are not liable under their contract of reinsurance.
The Facts
On 21 st June 2008, the vessel "Princess of the Stars", a roll-on roll-off passenger cargo vessel ("the vessel") was lost, after she capsized off the coast of San Fernando, Romblon, in the Philippine Islands. The casualty occurred because the vessel sailed into the midst of typhoon "Frank". Tragically, the lives of more than 500 passengers and crew (including that of the master) were lost. We were not surprised to be told that the casualty caused enormous distress and anger in the Philippines.
The vessel had departed from Manila during the previous evening on 20 th June 2008. It is said that the vessel departed upon her voyage, as the typhoon approached, after public storm warnings had been issued by the Philippine Atmospheric, Geophysical and Astronomical Services Administration with respect to the port of departure, the port of destination and the route along which the vessel sailed.
In at least 40 separate proceedings commenced in the Philippines, the owners of cargoes carried on board the vessel have made claims against the vessel's shipowner, Sulpicio Lines Inc ("Sulpicio"), for the loss of the cargoes. The value of each of the known individual cargo claims ranges from PHP 200,000 (approximately, £3,000) to PHP 8.8 million (approximately, £130,000); the average claim is PHP 3 million (approximately, £45,000).
The cargo claimants have also made claims in a number of actions in the Philippines directly against Sulpicio's cargo liability insurer, the appellant in this action ("Oriental").
Oriental had issued a marine cargo liability policy no. H05CD3787/R02 ("the original policy") in favour of Sulpicio by which Oriental agreed to indemnify Sulpicio "for all sums which the insured [Sulpicio] shall become legally obligated to pay as damages for loss or damage of merchandise or goods under his custody". The policy period under the Original Policy was from 31 st December 2007 to 31 st December 2008. The vessel was one of a number of scheduled vessels under the Original Policy insured within the Philippines. The limit in respect of the vessel was PHP500,000,000.00 (approximately £7.5 million) "any one loss at any one occurrence/event" in excess of a deductible of PHP1,500,000.00 (approximately £22,500).
The Original Policy contained a Typhoon Warranty in effectively the same terms as the Typhoon Warranty in the Reinsurance Contract, as set out below. It is under this policy that Sulpicio has claimed an entitlement to an indemnity in respect of its liability to the cargo claimants.
Oriental made a reinsurance contract with the respondents ("the reinsurers") in respect of the Original Policy. By policy no. B073MC000720B ("the Reinsurance Contract"), the Reinsurers agreed to indemnify Oriental in respect of its insurance of Sulpicio under the Original Policy for the period from 31 st December 2007 to 31 st December 2008, subject to an annual aggregate limit of PHP450,000,000 (approximately £6.7 million) "covering all vessels", excess of PHP50,000,000 (approximately, £750,000) "any one accident or occurrence each vessel each section inclusive of original policy deductible of PHP2,500,000 (approximately, £37,500) any one accident or occurrence each vessel.
The Reinsurance Contract incorporated the conditions of the Original Policy and included a follow settlements clause:
"To follow all terms, conditions and settlements of the original policy issued by the Reinsured to the Insured, for the period specified herein, in respect of sums and interests hereby reinsured …"
The Reinsurance Contract contained the Typhoon Warranty already mentioned in these words:—
"Notwithstanding anything contained in this policy or clauses attached hereto, it is expressly warranted that the carrying vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port nor when her destination or intended route may be within the possible path of the typhoon or storm announced at the port of sailing, port of destination or any intervening point. Violation of this warranty shall render this policy void."
In addition, the Reinsurance Contract contained an English law and jurisdiction clause as follows:—
"This Reinsurance shall be governed by and construed in accordance with the law of England and Wales and each party agrees to submit to the exclusive jurisdiction of the Courts of England and Wales."
The Proceedings in England
On 22 nd November 2010, the reinsurers issued a claim form seeking declarations that they are not liable to indemnify Oriental under the terms of the Reinsurance Contract with respect to the casualty and any liability associated with the casualty on the grounds that:
i) there was a breach of the Typhoon Warranty in the Reinsurance Contract so that the Reinsurance Contract is void, alternatively the Reinsurers are discharged from liability.
ii) Oriental is not liable under the Original Policy to indemnify Sulpicio by reason of a similar breach of the Typhoon Warranty in the Original Policy.
The claim form was served on Oriental at its offices in the Philippines on 5 th May 2011, pursuant to permission granted by Mr Justice Beatson on 7 th December 2010, if it were needed.
Oriental has now applied for an order that the action be stayed, as a matter of case management, because – it is argued – the action is "premature and should be stayed pending the outcome of various cargo claims presently before the Philippine Courts".
On 17 th February 2012, Andrew Smith J dismissed Oriental's application for a case management stay. He held that a stay of the kind applied for should only be granted in rare and compelling circumstances, which were not present. He rejected Oriental's argument that the reinsurers would be bound by any factual findings made by the Philippine Courts pursuant to the follow settlements clause. He also rejected Oriental's argument that, assuming that the Original Policy and the Reinsurance Contract were back-to-back, the natural expectation of the parties was that any claim under the Reinsurance Contract will be resolved after the corresponding claim(s) under the Original Policy are determined.
He further held (1) that, although there was a risk of inconsistent decisions in the Philippines and in England, that risk resulted from the choice of the exclusive English jurisdiction which the parties had expressly agreed would govern the Reinsurance Contract, (2) that any evidence which might be of relevance to the claim under the Reinsurance Contract was likely to emerge before the trial of this action (currently fixed, we have been told, to take place in June 2013), (3) that, if the stay were granted, the delay in the English proceedings pending the completion of the proceedings in the Philippines would be substantial and of legitimate concern to the reinsurers.
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