Agnew v Länsförsäkringsbolagens A.B.
| Jurisdiction | England & Wales |
| Judge | LORD NICHOLLS OF BIRKENHEAD,LORD WOOLF M.R.,LORD COOKE OF THORNDON,LORD HOPE OF CRAIGHEAD,LORD MILLETT |
| Judgment Date | 17 February 2000 |
| Judgment citation (vLex) | [2000] UKHL J0217-1 |
| Date | 17 February 2000 |
| Court | House of Lords |
and others
[2000] UKHL J0217-1
Lord Nicholls of Birkenhead
Lord Woolf M.R.
Lord Cooke of Thorndon
Lord Hope of Craighead
Lord Millett
HOUSE OF LORDS
My Lords,
I agree with all your Lordships that article 7 of the Convention ('in matters relating to insurance') is not applicable to re-insurance. I agree similarly that the claims in the present proceedings do not fall within article 5(3) as a matter 'relating to tort, delict or quasi-delict'. On the remaining issue, concerning the applicability of article 5(1) ('in matters relating to a contract'), on which your Lordships are divided, I prefer the views and reasoning of my noble and learned friends Lord Woolf and Lord Cooke of Thorndon. Accordingly I would dismiss this appeal.
My Lords,
This appeal turns on the proper interpretation of provisions of the Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1988 (the "Lugano Convention"). As its full title indicates, the Lugano Convention is concerned with harmonising the rules as to the choice of jurisdiction and enforcement of judgments between the Contracting States. The Lugano Convention is set out in Schedule 3C to the Civil Jurisdiction and Judgments Act 1982 as inserted by Section 1(3) of and Schedule 1 to the Civil Jurisdiction and Judgments Act 1991.
The relevant provisions of the Lugano Convention are in identical terms to the provisions of the Brussels Convention. However, the Lugano Convention is entered into between the Members of the European Free Trade Association while the Brussels Convention is entered into by the Members of the European Union. The European Court of Justice has jurisdiction to give rulings on the interpretation of the Brussels Convention under the 1971 Protocol to the Brussels Convention, but not in the case of the Lugano Convention. However, Protocol No. 2 to the Lugano Convention makes any ruling on the Brussels Convention by the European Court of Justice (The E.C.J.) highly relevant to any decision as to the interpretation of the corresponding provisions of the Lugano Convention. Before the Court of Appeal it was argued that there should be a reference in this appeal notwithstanding that it concerns the Lugano Convention to the E.C.J. but the Court of Appeal rejected that argument and there is no appeal against that ruling.
In order to determine the issues raised on this appeal, it is necessary to understand the framework of the Lugano Convention. The general principle laid down by the Convention is that persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state (Article 2). There are then exceptions to that general principle. One of those exceptions is set out in Article 5 of Section 2 which deals with special jurisdictions. Article 5, so far as relevant, 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; in matters relating to individual contracts of employment, this place is that where the employee habitually carries out his work, or if the employee does not habitually carry out his work in any one country, this place shall be the place of business through which he was engaged;
3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred;"
Section 3 of the Lugano Convention contains additional special rules which in turn override, inter alia, the provisions of Article 5. Section 3 commences with Article 7 which provides:
"In matters relating to insurance, jurisdiction shall be determined by this Section, …"
Article 11 of Section 3 provides:
"Without prejudice to the provisions of the third paragraph of Article 10, an insurer may bring proceedings only in the courts of the Contracting State in which the defendant is domiciled, irrespective of whether he is the policy-holder, the insured or a beneficiary.
The provisions of this Section shall not affect the right to bring a counterclaim in the court in which, in accordance with this Section, the original claim is pending."
It is apparent from these provisions of the Convention that it is not possible to avoid the general principle contained in Article 2 by relying on Article 5 because of Article 11, even if the proceedings raise "matters relating to a contract," if the claimant is "an insurer" who is bringing proceedings as to matters relating to insurance.
The Background to the Appeal
The issues on this appeal as to the effect of the Lugano Convention arise in the circumstances which I will now describe. The claimants are representative Lloyd's underwriters and United Kingdom insurers carrying on re-insurance business in the London Market. The defendant is an insurance company incorporated in Sweden with a registered office in Stockholm. For the purposes of the Lugano Convention and the 1982 Act, the defendant is domiciled in Sweden. The defendant issued suppliers' and manufacturers' guarantee insurance (the "original insurance") to A.B.B. Vetco Gray U.K. Ltd. in respect of obligations arising under a contract to supply Norsk Hydro with underwater valves (known as "Xmas Trees") for use in the Troll Oil Field in the North Sea.
From November 1993 to February 1994 the claimants underwrote in London various participations on primary and excess layer facultative reinsurance in relation to the defendant's exposure under the original insurance. The reinsurances were placed by London brokers acting on behalf of the defendant. Facultative reinsurance is a form of reinsurance by which the insurer reinsures each individual acceptance with a reinsurer who is willing to undertake liability. It is to be contrasted with obligatory reinsurance where there is an agreement, and "treaty" entered into between an insurer and reinsurer under which the insurer agrees to the reinsurance of specified categories of insurance which the reinsurer agrees to undertake. Both classes of insurance may also be layered. Then the reinsurer would only be liable for the loss to the extent that it is above or below a particular figure.
In their action the claimants contend that they should be granted a declaration stating that they are entitled to avoid the reinsurance contracts. The grounds on which they rely are that they were induced to enter the contracts by material misrepresentations and that the defendants, through their brokers, were guilty of material non-disclosure. The misrepresentations are alleged to have been made and the non-disclosure is alleged to have occurred during the negotiation and presentation of the risk in London.
When the writ was issued on 7 September 1995 it was endorsed with a certificate by the claimants' solicitors to the effect that the High Court had power to hear and determine the claimants' claim under the Civil Jurisdictions and Judgment Act 1982.
The defendant will succeed on its application if either Article 5 does not apply to the claim or the claimant was an insurer for the purposes of Articles 7 and 11.
The decision of Mance J.
The defendant was unsuccessful both before Mance J. at first instance and the Court of Appeal. Before Mance J. [1996] 4 All E.R. 978 the dispute was confined to the effect of Article 5. As to Article 5 the defendant accepted that the matter in dispute was one "relating to a contract." This concession the judge regarded as being well founded. The defendant however contended that the obligation upon which the claimants relied was one arising not under any term of the contract but independently under the general law. Furthermore, the obligation arose in the context of pre-contractual negotiations and not, as the defendant submitted was required by Article 5(1), under the contract. Mance J. rejected the defendant's contentions. He indicated, at p. 994, that he would regard it as "odd" if the application of Article 5(1) depended on a determination of whether the duty of disclosure arose as a matter of law rather than from a term of the contract. He also considered that it would be "odd" if the application of Article 5(1) should vary according to the time of non-disclosure. The position should be the same whether the claim was to set aside the contract for non-disclosure as at the time it was originally made or for non-disclosure from the date of an intermediate review of the contract. Both non-disclosures should give rise to the same duty of good faith. The judge considered that any distinction between pre-contract and post-contract duties appeared to break down in such situations. The reality was that but for the making of a contract the matter would never have come before a court at all.
The Decision of the Court of Appeal
In the Court of Appeal [1997] 4 All E.R. 937 Evans L.J. gave a judgment dismissing the appeal with which Hobhouse and Schiemann L.JJ. agreed. Evans L.J. stated, at p. 942, that:
"the reference in Article 5(1) to 'the obligation in question' ought not to be considered in isolation from the remaining words in Article 5(1), any more, that Article 5 should be interpreted without regard to the fact that it creates a special exception to the general rule of domiciliary jurisdiction in Article 2."
Evans L.J. also accepted that it is well established that Article 5 should be interpreted by reference to the objects of the Convention rather than by reference to concepts of national law which may vary from one Member...
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