Agnew v Lansforsakringsbolagens AB [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Mance J |
| Judgment Date | 30 July 1996 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 30 July 1996 |
Queen's Bench Division, Commercial Court
Mance J.
Andrew Lydiard (instructed by Clyde & Co) for the plaintiff.
Michael Ashe QC (instructed by Rosling King) for the defendants.
The following cases were referred to in the judgment:
Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (“The Good Luck”) [1989] 2 L1 Rep 238.
Banque Keyser Ullmann SA v Skandia (UK) Insurance Co LtdELR [1990] 1 QB 665.
Black King Shipping Corp v Massie (“The Litsion Pride”) [1985] 1 L1 Rep 437.
Boss Group Ltd v Boss France SA [1996] CLC 1419.
Carter v BoehmENR (1766) 3 Burr 1905.
Custom Made Commercial Ltd v Stawa Metallbau GmbHECAS (Case C-288/92) [1994] ECR I-2913.
De Bloos (Éits A) SPRL v Société en Commandite par Actions BouyerECAS (Case 14/76) [1976] ECR 1497.
Effer SpA v KantnerECAS (Case 38/81) [1982] ECR 825.
Hedley Byrne & Co Ltd v Heller & Partners LtdELR [1964] AC 465.
Industrie Tessili Italiana Como v Dunlop AGECAS (Case 12/76) [1976] ECR 1473.
Ivenel v SchwabECAS (Case 133/81) [1982] ECR 1891.
Kalfelis v Bankhaus Schroder, Munchmeyer, Hengst & CoECAS (Case 189/87) [1988] ECR 5565; [1990] 2 CEC 22.
Kleinwort Benson Ltd v City of Glasgow District Council [1996] CLC 759.
Merchants and Manufacturers Insurance Co v HuntELR [1941] 1 KB 295.
Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1994] CLC 868; [1995] 1 AC 501.
Peters (Martin) Bauunternehmung GmbH v Zuid Nederlandse Aannemers VerenigingECAS (Case 34/82) [1983] ECR 987.
Shenavai v KreischerECAS (Case 266/85) [1987] ECR 239.
Shevill v Presse Alliance SAELR [1995] 2 AC 18.
Société ISI v Société de promotion des Centres privés audiovisuelsUNK (unreported, 25 January 1983, 1983 Revue Critique 516).
Trade Indemnity plc v Försäkringsaktiebolaget NjordUNK [1995] 1 All ER 796.
Union Transport plc v Continental Lines SAWLR [1992] 1 WLR 15.
Insurance — Reinsurance — Reinsurers claimed to avoid for misrepresentation — English and Scottish reinsurers claimed against Swedish insurance company — Plaintiffs claimed that English court had power to hear claim under Lugano Convention — Whether London was place of performance of obligation in question — Whether insurers” duty not to misrepresent risk constituted obligation founding jurisdiction at place of performance — Civil Jurisdiction and Judgments Act 1982, Sch. 3C (Lugano Convention), art 5(1).
This was an action by English and Scottish reinsurers against a Swedish insurance company in which the reinsurers claimed that reinsurances were induced by material misrepresentations entitling them to avoid their participations.
The writ was endorsed with a certificate that the court had power to hear the claim under the Civil Jurisdiction and Judgments Act 1982 since Sweden was a party to the Lugano Convention. The defendants applied by summons under RSC, O. 12, r. 8 to set aside the writ on the ground that art. 5(1) of the convention did not apply to the claim. The defendants accepted that the matter was one relating to a contract within art. 5(1) but reserved the right to contend the contrary in a higher court.
The question was whether the defendant insurers” duty to make a fair presentation of (and so not to misrepresent) the risk to the plaintiffs as reinsurers when making the reinsurance contracts constituted an “obligation” in the sense of art. 5(1). The defendants argued that the right to avoid an insurance contract for non-disclosure or misrepresentation of material fact 1= arose not under any term of the contract but independently under the general law. The defendants relied on the decision of Rix J in Trade Indemnity plc v Forsakringsaktiebolaget NjordUNK [1995] 1 All ER 796 that an obligation to avoid misrepresentations or non-disclosures in the making of a contract was not an obligation which founded jurisdiction at the place of performance.
Held, dismissing the defendants” application to set aside the proceedings under O. 12, r.8:
1. The defendants were right to concede that the matter was one relating to a contract or contracts. A claim for a declaration establishing a plaintiffs right to avoid a contract for breach of the duty to make full disclosure and not to misrepresent was a claim relating to a contract within art. 5(1). The fact that the remedy was avoidance emphasised the reality that, without the making of the contract, the matter would never come before a court at all.
2. The obligation of good faith or fair presentation was of a nature capable of falling within art. 5(1). Article 5(1) drew no express distinction between obligations arising in the context of negotiation of a contract and obligations arising under or after the contract, once it was concluded that the matter related to a contract. The matter turned on the issue whether the defendants through their brokers properly performed their Unquestioned duty of fair presentation in London and that seemed to satisfy the requirements of art. 5(1).
Mance J:
Introduction
The plaintiffs are Lloyd's underwriters and English or (in the case of the second plaintiffs) Scottish companies, carrying on reinsurance business in the London market. The defendants are a Swedish insurance company carrying on business in Stockholm. The defendants issued guarantee insurance to ABB Vetco Gray UK Ltd (“ABB”) in respect of obligations arising under a contract to supply Norsk Hydro with underwater valves (“Christmas Trees”) for use in the Troll oil field in the Norwegian sector of the North Sea. The plaintiffs as reinsurers underwrote various participations on primary and excess layer reinsurances in respect of the defendants” exposure to ABB.
The plaintiffs claim in this action that the reinsurances were induced by material misrepresentations entitling them to avoid their participations. They seek declarations accordingly. Representations are said to have been made to the effect that the valves were “bog standard” and/or “tried and tested”. They are said to have been incorrect. The plaintiffs make the alternative claim that the defendants were in breach of an express warranty in the reinsurances to the effect that the valves were not and would not be prototypes. Neither party suggested that this was other than a very secondary claim and Mr Lydiard did not rely on it for any purpose relevant before me.
Sweden is party to the Lugano Convention and the writ was endorsed with a certificate that this Court had power to hear the claim under the Civil Jurisdiction and Judgments Act 1982. Whether this is so depends upon the scope and construction of art. 5(1) of the Convention set out in Sch. 3C to that Act. The defendants apply by summons dated 6 November 1995 under RSC, O. 12, r. 8 to set aside the writ on the ground that art. 5(1) does not apply to the present claim.
Article 5 provides:
“A person domiciled in a Contracting State may, in another Contracting State, be sued:
(1) in matters relating to a contract, in the courts for the place of performance of the obligation in question;…
(3) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred;…”
When the present summons was issued, the defendants had in their favour the benefit of a decision of Rix J in Trade Indemnity plc v Försäkringsaktiebolaget NjordUNK[1995] 1 All ER 796. The plaintiffs ask me to reconsider aspects of that decision. On 25 January 1996 the Court of Appeal reached a majority decision in Boss Group Ltd v Boss France SA[1996] CLC 1.419.
For the plaintiffs to bring themselves within art. 5(1) in this case, three criteria must be satisfied:
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(1) the matter must be one “relating to a contract”;
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(2) there must be an “obligation” in question in the action in the sense of the article; and
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(3) England must be the place for performance of any such obligation.
Mr Ashe QC for the defendants accepted that the present matter is one “relating to a contract”. Rix J's decision is to like effect. Mr Ashe added however that he reserved the right to contend the contrary in a higher court. In these circumstances, and since the point is one of law and in some degree interrelated with the second criterion, I shall express some views on it myself, though necessarily without the benefit of contrary argument.
Before me the submissions have focused on the second criterion. It has been common ground that the claim concerns the defendants” duty to make a fair presentation of (and so not to misrepresent) the risk to the plaintiffs as reinsurers when making the reinsurance contracts. The issue has been whether that duty constitutes an “obligation” in the sense of art. 5(1).
If the first two criteria are satisfied, it was common ground that the third is also satisfied. The duty to make a fair presentation fell due for performance in London and any misrepresentation took place in the course of the brokers” presentation of the risk to the reinsurers in their offices or underwriting boxes in London.
The basic principle of jurisdiction under the Convention is that persons domiciled in a contracting state should be sued in that state whatever their nationality: art. 2. Article 3 introduces a number of special heads of jurisdiction, set out in s. 2ff. (art. 5ff.) The basic sphere of operation of art; 5(1) is defined by the first criterion identified above, which is to be given an independent Convention interpretation. As the European Court decided in Martin Peters Bauunternehmung GmbH v Zuid Nederlandse Aannemers VerenigingECAS (Case 34/82) [1983] ECR 987:
“9.…the concept of matters relating to a contract serves as a criterion to define the scope of one of the rules of special jurisdiction available to the plaintiff…[and] should not be interpreted simply as referring to the national law of one or other of the States concerned.
10. Therefore…the concept of matters relating to a contract should be regarded as an...
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