Airbus S.A.S. v Generali Italia S.p.A.

JurisdictionEngland & Wales
JudgeLord Justice Males,Lord Justice Lewison,Lord Justice Davis
Judgment Date14 May 2019
Neutral Citation[2019] EWCA Civ 805
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A4/2018/2700
Date14 May 2019

[2019] EWCA Civ 805

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Mrs Justice Moulder

[2018] EWHC 2737 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Davis

Lord Justice Lewison

and

Lord Justice Males

Case No: A4/2018/2700

Between:
Airbus S.A.S.
Respondent (Claimant)
and
(1) Generali Italia S.p.A.
(2) AXA Corporate Solutions Assurance
(3) Allianz Global Corporate & Speciality Se Representation for Italy
Appellants (Defendants)

Angus Rodger (of Steptoe & Johnson UK LLP) for the Appellants

Akhil Shah QC (instructed by DLA Piper UK LLP) for the Respondent

Hearing date: 16th April 2019

Approved Judgment

Lord Justice Males

Introduction

1

The claimant in this action and the respondent to this appeal (“Airbus”) claims declarations (1) that it is not liable to the defendant insurers for losses incurred in relation to an incident which occurred on 29 September 2013 in which an aircraft which it had manufactured sustained damage when landing in Rome and (2) that proceedings commenced against it by the defendants in Italy have been commenced contrary to the terms of an English exclusive jurisdiction clause. The clause in question is contained in an Airframe Warranties Agreement dated 8 July 2010 (“the Warranties Agreement”) concluded between (among others) Airbus and the defendants' insured, the Italian airline company Alitalia. The issue on this appeal is whether the English court has jurisdiction over these claims by virtue of the jurisdiction clause. Moulder J held that it does and the defendant insurers (henceforth “the appellants”) now appeal.

2

The appellants contend, in outline, that the jurisdiction clause is of limited scope and does not extend to Airbus's claims in this action, that the claim for a negative declaration falls within an arbitration clause in a different agreement, a Purchase Agreement dated 31 October 2005 which provides for ICC arbitration in Geneva, and that their own proceedings in Italy under articles of the Italian Civil Code are not within the scope of either clause. They say in addition that they cannot be in breach of an exclusive jurisdiction clause to which, as insurers, they were never parties and that, regardless of the true construction of the clause, there is no basis on which the English court can make a declaration against them.

Background

3

Airbus S.A.S., a French company, is the manufacturer of an A320–200 aircraft with serial number 4249 (the “Aircraft”). It sold the Aircraft pursuant to an agreement (the “Purchase Agreement”) dated 31 October 2005 between Airbus and Air One S.p.A. (“Air One”, an Italian company). The Aircraft was operated by Alitalia Compagnia Aerea Italiana S.p.A. (“Alitalia”).

4

On 29 September 2013 the Aircraft was forced to make an emergency landing at Rome's Fiumicino Airport with the landing gear partially retracted, causing significant damage. Italian accident investigators identified a defect in the right hand main landing gear door actuator as the cause of this incident. Airbus subsequently performed a fleet wide retrofit of Alitalia's landing gear door actuators without charge.

5

The appellants (together with another insurance company which is now insolvent and has played no part in this action), all Italian companies, are insurers of Alitalia and have indemnified Alitalia in respect of over US $11 million worth of damage caused by the incident.

6

On 24 July 2017 the appellants commenced proceedings against Airbus in Italy. They claim damages under Article 2043 of the Italian Civil Code for negligence. The claim was initially brought by way of subrogation but in the appellants' own name as permitted by Italian law, although since the hearing before Moulder J a further claim has been added which is described as an independent claim not made by way of subrogation. The basis of both claims is that Airbus failed to take preventative action it should have taken in the light of earlier incidents involving other Airbus 320 aircraft and directives from the European Air Safety Agency.

7

Airbus commenced the present action on 9 January 2018. It seeks declarations that it has no liability to the appellants, that the Italian action falls within the scope of the exclusive English jurisdiction clause agreed by Alitalia and that the appellants acted in breach of that clause by starting the Italian proceedings.

8

After issuing its claim in England, Airbus then responded in the Italian action, objecting to the jurisdiction of the Italian court and, as required by Italian procedure, also setting out its substantive defences. Airbus has two defences to the appellants' claim. It denies all liability in respect of the emergency landing, saying that its conduct has been highly diligent at all times; and it contends that any liability is excluded by contract, relying on clause 12.5 of the Purchase Agreement by which it sold the Aircraft to Air One. This judgment does not address the merits of the parties' dispute.

The background contracts

9

The contractual process by which Alitalia became the operator of the Aircraft was as follows.

The Purchase Agreement

10

The Purchase Agreement dated 31 October 2005 was between Airbus as Seller and Air One as Buyer. It provided for Air One to purchase 30 (subsequently increased to 70) Airbus A320–200 aircraft of which the Aircraft (not yet built) was one.

11

Clause 12 of the Purchase Agreement set out the warranties to be given by Airbus on delivery of the aircraft. In essence these provided that each aircraft and all warranted parts as defined would at delivery to the Buyer be free from defects in material, workmanship and design and from defects due to failure to conform to the specification. The warranties were limited to those defects which became apparent within 48 months after delivery of the affected aircraft and provided also (in very brief summary) that in the event of a breach of warranty, the Buyer's remedy and the Seller's obligation and liability were limited to the repair, replacement or correction of the defective part to the exclusion of all warranties, obligations and liabilities arising by law (see in particular clauses 12.1.1, 12.1.3, 12.1.4 and 12.5). The clause set out also a procedure for making a claim under the warranties (clauses 12.1.5 and 12.1.6). Clause 12.3 provided for Airbus to provide the Buyer of each aircraft with such warranties as it had obtained from suppliers.

12

Clause 13 of the Purchase Agreement provided for Airbus to indemnify the Buyer against patent and copyright claims.

13

The Purchase Agreement was initially subject to French law but this was changed to English law by an amendment dated 9 April 2008. It provided (both before and after this amendment) for ICC arbitration with a seat in Geneva (clause 22.4):

“Any dispute arising out of or in connection with this Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by a panel of three (3) arbitrators appointed and ruling in accordance with such rules.

Arbitration shall be conducted in the English language and shall take place in Geneva, Switzerland.”

The Novation Agreement

14

Air One transferred its right to purchase 50 of the A320–200 aircraft (including the Aircraft) to Aircraft Purchase Fleet Limited, an Irish company (“APFL”) by a Partial Novation and Amendment Agreement dated 23 December 2008. The parties to this agreement were Airbus, Air One and APFL. So far as these aircraft were concerned, the Purchase Agreement was novated with the consequence that Air One was released from its obligations under the Purchase Agreement and APFL assumed the obligation to purchase the Aircraft in accordance with the terms and conditions of the Purchase Agreement. The agreement was governed by English law and also contained its own arbitration agreement providing for ICC arbitration in Geneva (clause 11).

The Purchase Agreement Assignment

15

APFL then assigned certain of its rights under the novated Purchase Agreement to Mainstream Aircraft Leasing Ltd (“Mainstream”), an Irish company, by a Purchase Agreement Assignment dated 8 July 2010. This was two days before the Aircraft was due to be delivered. The parties to this agreement were APFL and Mainstream and it was limited to the particular Aircraft with which this case is concerned. Specifically, Mainstream acquired the right to accept delivery of and purchase the Aircraft under clause 2.1 of the Purchase Agreement and to compel Airbus to perform its obligations under that clause and it took an assignment of “the Warranties”, defined to mean the warranty rights given by Airbus pursuant to clauses 12 and 13 of the Purchase Agreement (see clause 2.1 of the Purchase Agreement Assignment). Mainstream, in turn, agreed to purchase the Aircraft on the delivery date and pay the purchase price to Airbus (clause 3.1).

16

This agreement was governed by English law and provided in clause 17.2 for the exclusive jurisdiction of the English courts “to settle any disputes arising out of or in connection with this Agreement and any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement)”. (This is the same wording as contained in clause 13.2 of the Warranties Agreement: see below).

The Sale and Leaseback Agreement

17

Having acquired the right to purchase the Aircraft, Mainstream entered into a Sale and Leaseback Agreement with Jetstream Aircraft Leasing Limited (“Jetstream”), a Cayman Islands company, by which it sold the Aircraft to Jetstream and leased it back again.

The Sub-Lease

18

Mainstream then sub-leased the Aircraft to Alitalia by a Sub-Lease dated 6 July 2010 (in fact two days before the date of the Purchase Agreement Assignment, but it is apparent that the...

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