Ace European Ltd and Others v Howden Group Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Field |
| Judgment Date | 17 September 2012 |
| Neutral Citation | [2012] EWHC 2427 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 September 2012 |
| Docket Number | Case No: 2011 Folio 1118 |
[2012] EWHC 2427 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Rolls Building
London EC4 1NL
Mr Justice Field
Case No: 2011 Folio 1118
Harry Motavu QC and Craig Morrison (instructed by Reynolds Porter Chamberlain LLP) for the Claimants
Richard Jacobs QC (instructed by Covington & Burling LLP) for the Defendants
Hearing dates: 26 & 27 June 2012
This is an application by the Second Defendant ("HNA") to set aside the order I made dated 28 September 2011 granting permission to the Claimants to serve the Claim Form and Particulars of Claim on HNA out of the jurisdiction.
The Claimants or their predecessors in title are insurance companies which subscribed to various layers of an excess public and products liability insurance programme in favour of the First Defendant ("Howden Group") and its subsidiary companies during the years 1995 to 2002 ("the Howden Insurance Programme"). During these years the Howden Insurance Programme was arranged in layers which provided vertical cover up to an aggregate limit of £100 million for any one occurrence.
Each of the 14 policies variously subscribed to by the Claimants 1 that formed part of the Howden Insurance Program was presented to and subscribed by the Claimants (or their predecessors in title) in the London Market. The excess layers were placed by London brokers, namely: Jardine Insurance Brokers International Ltd (1995); Jardine Insurance Services Ltd (1996–1997); Lloyd Thompson Ltd/JLT Risk Solutions Ltd (1997–1999) and JLT Risk Solutions Ltd (2000–2002). To the extent relevant to this application, the coverage provided by the policies was: (i) for sums that the Assured may become legally liable to pay in respect of claims made against them for damages and costs and expenses in respect of or in consequence of personal injury happening during the period stated in the Schedule; and (ii) an indemnity in respect of the Assured's legal liability arising out of faulty, defective or inadequate materials, workmanship, design, plan, specification, formula or advice or any similar cause (irrespective of whether any bodily injury or loss of or damage to material property may have been caused thereby) in respect only of claims made against the Assured during the period of insurance specified in the Schedule or arising out of circumstances of which the Assured became aware during that specified period.
The cover provided by the policies was denominated in sterling, and premium and claims are payable in sterling. Claims under the policies have to be notified to the London brokers who placed the relevant policy.
Howden Group is an engineering concern with a number of subsidiaries around the world supplying fans, rotary heat exchangers, compressors and gas cleaning equipment globally to power generation, petrochemicals, steelmaking, mining and cement production industries.
HNA is now a wholly-owned subsidiary of Anderson Group Incorporated and is a North American licensee of Howden Group. At all material times it was a subsidiary of Howden Group carrying on the business of manufacturing and supplying fans, rotary heat exchangers, compressors and gas handling equipment to utility and industrial markets in Canada, USA and Mexico.
HNA has sought to notify claims to excess layers of the Howden Insurance Programme for various years in respect of asbestos-related claims brought by third parties. The claimants in these personal injury actions allege that HNA is liable for bodily injury, sickness and disease caused by their exposure to asbestos products which were manufactured or distributed by HNA or its predecessors, whose liabilities HNA is alleged to have assumed. HNA has, in turn, brought various claims against its insurers, claiming indemnities under insurance policies in place between 1961 and 1986 (when it was a subsidiary of Ampco-Pittsburgh Corporation) and between 1995 and 2002 (when it was a subsidiary of the Howden Group). In 2003, HNA brought claims against its primary layer insurers (the "2003 Pennsylvania Coverage Action"). These claims were settled in 2005. In 2009, HNA brought claims against certain of its excess insurers, including the Second and Third Claimants (respectively "Gerling" and "New Hampshire"), under Policies 1–6 (the "2009 Coverage Pennsylvania Action"). Settlements have been concluded with some of the excess insurers but not with Gerling and New Hampshire and this action continues against them. It is of considerable relevance to this application. Fact discovery is complete, expert reports have been served and the expert phase of the litigation is about to be completed with the taking of depositions.
In February 2011, Ampco-Pittsburgh Corporation brought a claim (the "2011 Pennsylvania Coverage Action") against various of its insurers upon policies dating from 1981–1984 (which do not include the Claimants in this action) and against HNA (with whom Ampco-Pittsburgh shares coverage under the 1981 to 1984 policies). In July 2011 HNA joined the Claimants to that action and made claims under policies 7 and 8 which are immediately in excess of and follow form to policy 6. This action is significantly less advanced than the 2009 Pennsylvania Action; discovery is not yet complete.
Both the 2009 and the 2011 Pennsylvanian Coverage Actions have been assigned to Judge Conti of the US Federal District Court for the Western District of Pennsylvania.
The proceedings in issue in this application were commenced on 21 September 2011, two years after the start of the 2009 Pennsylvania Action. What is sought by the Claimants is not an order dismissing the claims brought against them in the 2009 Pennsylvania Action nor an order declaring that they are not liable on those claims. Instead, the Claimants seek declaratory relief as to the meaning and effect of the policies, including declarations that: (i) the policies are governed by English law; (ii) on a proper construction of the policies the Claimants are not liable for asbestos-related claims where the third-party claimant had not suffered actionable personal injury or loss of or damage to material property which happens or occurs within the policy period or where a claim arising out of faulty materials was not made or notified within the policy period. These declarations are sought against the background of two fundamental differences in the views of the English and Pennsylvania courts as to what triggers liability under policies of the sort in issue. First, under the law of a number of American states, including Pennsylvania, exposure to a hazardous condition can trigger liability, but this is not so under English law. Second, under English law, but not in Pennsylvania and certain other American states, the period clause is of fundamental importance: the relevant trigger must occur within the policy period.
On 6 December 2010, Faraday Reinsurance Co Ltd ("Faraday") issued proceedings in this court against HNA and Howden Buffalo Inc (HNA's previous corporate name). Faraday is a subscriber to three of the same policies in the Howden Group excess layer as are subscribed to by the Claimants (policies 7, 9 and 11) and sought the same declarations as to these policies as the Claimants seek in the present proceedings. On 7 October 2011, HNA applied to have David Steel J's order granting permission for service outside the jurisdiction set aside on the grounds that: (i) Faraday did not have an arguable case that the policies were governed by English law; (ii) England was not the proper forum for the claim; and (iii) the claims for declarations as to the construction of the policies were not justified and/or lacked utility. In a reserved judgement handed down on 1 November 2011 ( [2011] EWHC 2837 Comm), Beatson J dismissed all of these grounds and upheld Steel J's order in respect of policy 7. In his view, Faraday had much the better of the argument on the question whether the policy 7 was governed by English law, and given the appropriateness of an English Court determining the applicable law and the questions as to what constitutes "injury" and whether there is a single occurrence, England was the appropriate forum. He also held that the proceedings in respect of policy 7 had sufficient utility to be allowed to proceed because they could assist Judge Conti. This was so whether or not the decision of the English court as to governing law would constitute "issue preclusion" (res judicata) in favour of the successful party. However, in light of HNA's undertaking not to make any demand for coverage under policies 9 and 11 (which contained express English law clauses), Beatson J set aside Steel J's order in respect of those policies.
On 21 September 2011, Gerling and New Hampshire filed motions for dismissal in both of the extant Pennsylvania Coverage Actions on forum non conveniens grounds 2. Judge Conti heard the motions on 16 November 2011, by when Beatson J's judgement in Faraday had been handed down. In the course of the hearing she announced her decision to dismiss the motions and gave brief reasons therefor. She handed down a detailed written judgement on 21 June 2012. In her reserved judgement, Judge Conti observed that because the underlying policy did not have an express choice of law clause, the court had to determine which law applied to the policy and in doing so would utilise the choice of law rules of Pennsylvania, the forum state. Under those rules, where there was a true conflict between the competing governing laws – here Pennsylvania and England—the...
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Howden North America Inc. v ACE European Group Ltd
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