Aig Europe (UK) Ltd v Ethniki sub nom Anonymous Greek Company of General Insurances The Ethniki v Aig Europe (UK) Ltd; Aig Europe (UK) Ltd v Anonymous Greek Company of General Insurances The Ethniki
| Jurisdiction | England & Wales |
| Judge | Evans,Thorpe L JJ,Jonathan Parker J. |
| Judgment Date | 26 November 1999 |
| Date | 26 November 1999 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Evans and Thorpe L JJ and Jonathan Parker J.
Duncan Matthews (instructed by Constant & Constant) for the appellant.
Peter Brunner (instructed by Hextall Erskine) for the respondents.
The following cases were referred to in the judgment of Evans LJ:
ARIG Insurance Co v SASA Ass Riass SpAUNK (unreported, 10 February 1998).
Aughton Ltd v MF Kent Services LtdUNK (1991) 57 BLR 1.
Boss Group Ltd v Boss France SA [1996] CLC 1419; [1997] 1 WLR 351.
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp LtdELR [1981] AC 909.
Credit Suisse Financial Products v Société Generale d'Enterprises [1997] CLC 168.
Custom Made Commercial Ltd v Stawa Metallbau GmbH (Case C-288/92) [1994] ECR I-2913.
de Bloos (Éts A) SPRL v Société en commandité par actions Bouyer (Case C-14/76) [1976] ECR 1497.
Effer SpA v Kantner (Case C-38/81) [1982] ECR 825.
Fisher v Unione Italiana de Riassicurazione SpA [1998] CLC 682.
Kleinwort Benson Ltd v City of Glasgow District Council [1997] CLC 1609; [1999] 1 AC 153.
Leathertex Divisione Sintetici SpA v Bodetex BVBA (Case C-420/97) [1999] CLC 1983.
Martin Peters Bauunternehmung GmbH v Zuid Nederlandse Aannemers Vereniging (Case C-34/82) [1983] ECR 987.
OK Petroleum AB v Vitol Energy SA [1995] CLC 850.
Salotti di Colzani Aimo e Gianmatrio Colzani v Rüwa Polstereimaschinen GmbH (Case C-24/76) [1976] ECR 1831.
Shenavai v Kreischer (Case C-266/85) [1987] ECR 239.
Tatry v Maciej Rataj (Case C-406/92) [1995] CLC 275; [1994] ECR I-5439; [1995] 1 CEC 273.
Union Transport plc v Continental Lines SAUNK [1991] 2 Ll Rep 48 (CA); [1992] 1 WLR 15 (HL).
Conflict of laws — Contract — Reinsurance — Jurisdiction — Place of performance of obligation in question — Reinsurers' claim for non-declaration of liability — Whether reinsurers' claim based on breach of obligations to give notice and provide information in England — Whether jurisdiction clause from underlying insurance incorporated into reinsurance — Civil Jurisdiction and Judgments Act 1982, Sch. 1 (Brussels Convention), art. 5, 17.
This was an appeal by a Greek insurance company from a decision of Colman J refusing to set aside a writ or stay English proceedings on the ground that the court had no jurisdiction by reason of art. 5 or 17 of the Brussels Convention.
The Greek insurance company, “Ethniki”, insured factory buildings and machinery in Greece owned by Hellenic against risks including earthquakes. Ethniki reinsured a percentage of that risk with the respondent reinsurer, “AIG”, in the London market. One of Hellenic's factories was damaged by an earthquake in 1995. Hellenic claimed against the insurers and in 1997 took proceedings. Ethniki issued third party proceedings against AIG. AIG issued proceedings in England seeking a declaration of non-liability under the reinsurance on grounds that Ethniki was in breach of the claims control clauses in the reinsurance because Ethniki had failed to give timely notice of the claim to AIG and had not provided AIG with all information about the losses. AIG argued that Ethniki's obligations under the claims control clause to give prompt notice of claim and to provide information, which were expressed to be conditions precedent to any liability, were to be performed in London and that the English court therefore had jurisdiction by virtue of art. 5(1) of the Brussels Convention. Ethniki said that the place of performance of the obligation in question under art. 5(1) was Greece because the basis of AIG's claim was that Ethniki failed adequately to investigate the claim in Greece. Alternatively a Greek jurisdiction clause in the underlying insurance was incorporated into the reinsurance by the “as original” wording of the reinsurance and thus there was an agreement for Greek jurisdiction within art. 17 of the convention. Colman J held that there were no grounds for declining jurisdiction. Ethniki appealed.
Held dismissing the appeal:
1. The correct inquiry in the present case was to ask whether AIG's claim for a declaration of non-liability depended or was based principally or substantially on the alleged breaches of the claims control clause or on the accompanying allegations of breaches of Ethniki's obligation to investigate the claim fully and timeously in Greece. The judge was clearly correct in the conclusion that AIG's claim was based essentially on the failure to inform it promptly of the claim received in Athens. England was the place of performance of that obligation. Due performance of a term described as a condition precedent to the other party's liability under the contract could properly be described as fundamental, and its breach as the real ground of complaint. ( Éts A de Bloos SPRL v Société en commandité par actions Bouyer (Case C-14/76) [1976] ECR 1497, Custom Made Commercial Ltd v Stawa Metallbau GmbH (Case C-288/92)[1994] ECR I-2913, Union Transport plc v Continental Lines SAWLR[1992] 1 WLR 15(HL) considered.)
2. The judge was right that the “as original” wording of the reinsurance did not have the effect of incorporating the Greek jurisdiction clause from the underlying insurance. The “as original” wording related to the scope of the cover and the parties did not intend the general words of incorporation to include the jurisdiction clause. The jurisdiction clause was appropriate for disputes under the original insurance but not for disputes under the reinsurance. Whether the application of art. 17 was considered as a matter of English law as the proper law of the reinsurance or under Community law, the answer was the same, that the jurisdiction clause was not clearly demonstrated to be part of the reinsurance.
Evans LJ: 1. Two issues arise in this appeal, both of them under the Brussels Convention (Sch. 1 to the Civil Jurisdiction and Judgments Act 1982). The first is the familiar question whether proceedings may be brought in this country against a person not domiciled here, on the ground that art. 5(1) applies:
“5. 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;…”
The second issue, only a little less familiar, is whether the parties “have agreed that [the courts of a country other than England and Wales] are to have jurisdiction to settle any disputes” (art. 17).
2. The appellants, “Ethniki”, are an insurance company domiciled in Greece which in 1997 succeeded to the rights and obligations of another Greek insurance company, Astir Insurance Company SA (“Astir”).
3. In September 1994, Astir insured factory buildings and machinery owned by a Greek company, Hellenic Weapon Company AE (“Hellenic”), against, among other risks, damage caused by earthquakes, for the period of 12 months until September 1995.
4. Astir reinsured 34.5 per cent of that risk with the respondents, “AIG”, by a contract of reinsurance evidenced by a slip policy completed on 28 November 1994.
5. An earthquake damaged one of Hellenic's factories on 15 June 1995. Hellenic and Astir were unable to agree the amount for which the insurers were liable, and in September 1997 Hellenic started proceedings in Athens against Astir. In November 1997 Ethniki, now merged with Astir, issued the equivalent of third party proceedings against AIG.
6. AIG responded by starting this action against Ethniki in London, claiming declarations of non-liability to Ethniki on the ground that Astir/Ethniki was in breach of two undertakings which were conditions precedent to its liability under the reinsurance contract and of its alleged duties in relation to the ascertainment of loss.
7. Ethniki applied for the writ to be set aside, alternatively for the...
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