American International Specialty Lines Insurance Company v Abbott Laboratories
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE CRESSWELL |
| Judgment Date | 28 November 2002 |
| Neutral Citation | [2002] EWHC 2714 (Comm) |
| Date | 28 November 2002 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Folio No. 1139 of 2002 |
[2002] EWHC 2714 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Mr. Justice Cresswell
Folio No. 1139 of 2002
MR. C. HOLLANDER Q.C. and MS. F. PILBROW (instructed by Messrs. Clausen Miller) appeared on behalf of the Claimant.
MR. L. RABINOWITZ Q.C. (instructed by Messrs. Slaughter and May) appeared on behalf of the Defendant.
(As approved by the Judge)
This application raises points of importance as to:
(i) the principles relevant to applications for an anti-suit injunction; and
(ii) whether wording such as "the insurance afforded by this policy shall follow all the terms and conditions of policy [A]" is sufficient to incorporate an arbitration clause in policy A.
I will refer to the parties as follows: the claimant —"American", the defendant —"Abbott".
On 31 October 2002, American applied (without notice to Abbott) to Mr. Justice David Steel for an anti-suit injunction against Abbott. At the same time American also sought, and was granted, permission to serve a claim form on Abbott outside the jurisdiction.
American applies to continue the anti-suit injunction. Abbott applies to set aside the permission given to American to serve the claim form outside the jurisdiction and to set aside the anti-suit injunction. In particular, Abbott submits that:
1. American's proposed claim does not fall with CPR part 6.20(5)(c) because it is not in respect of a contract governed by English law. Alternatively the court should exercise its discretion against the grant of permission; and
THE BACKGROUND FACTS
I am grateful to both legal teams for the trouble taken to agree the following statement of background facts:
"Abbott is a US manufacturer of pharmaceutical products. American is an Alaska corporation with a principal place of business in New York, engaged in the business of writing various types of insurance, including excess commercial general liability insurance.
During early 1996 the form of the Swiss Re Policy 348.001, CAP 3082 and the Multiline Cap Agreement was negotiated between Abbott and Swiss Re. As at 4 March 1996 the existing draft of the Multiline Cap Agreement provided for dispute resolution by ICC arbitration in London or Paris. As at 5 April 1996 the CAP 3082 Policy provided for dispute resolution by London arbitration under the provisions of the UK Arbitration Acts (although the document was not yet agreed). The CAP 3082 Policy was signed on 15 April 1996. It included an arbitration provision which, so far as material, provides:
In accordance with the American Policies, American agreed with Abbott that 'in consideration of the premium paid and subject to all the terms and conditions set forth below that the insurance afforded by this policy shall follow all the terms and conditions of' policy 348.001 issued to Abbott by Swiss Re, 'including all renewals and rewrites thereof'.
On 31 October, Steel J. granted an anti-suit injunction in favour of American (without notice to Abbott) in the following terms:
'The defendant be restrained … from (1) taking any steps designed to prevent the claimant from pursuing this action in this court or the London arbitration … and (2) (without prejudice to the generality of (1) above) from taking any steps … to continue or prosecute the proceedings filed by it on 17 October 2002 against … the claimant in the United States District Court Northern District of Illinois Eastern Division'.
The application to Steel J. included the assertion by American that American's claim was to enforce an arbitration agreement which it contended was governed by English law and that its claim fell within CPR rule 6.20(5)(c). The anti-suit injunction has since been extended by consent until today.
THE CLAIMANT'S SUBMISSIONS
Mr. Hollander QC for the claimant submitted as follows:
Mr. Hollander accepted for the purposes of this application (while reserving his client's position (in case this matter goes further) that the weight of authority as to incorporation is in accordance with the decisions of Colman J. in Excess Insurance Co. Ltd. v. Mander [1995] LRLR 358 and His Honour Judge Raymond Jack QC (as he then was) in Trygg Hansa v. Equitas [1998] 2 Ll Rep 439. Mr. Hollander, however, submitted that the law is not entirely clear, and that notwithstanding the test in Excess and Trygg Hansa, the words in the present case,
("the insurance afforded by this policy shall follow all the terms and conditions of policy number 348.001 issued by SR International Business Ins Co Ltd including all renewals and rewrites thereof")
were apt to incorporate the arbitration clause. The Excess layers written by American, were part of the umbrella structure which Abbott's brokers were seeking to set up for the 1996–1999 years.
Mr. Hollander's submissions continued as follows:
Endorsement number 1 is a unilateral provision giving rights to Abbott. It gives no rights to American. The only part of the endorsement which enables American to do anything is the second sentence, which limits the right given to Abbott in the first sentence by making clear that even where the first sentence applies, that does not preclude American from seeking a transfer of a suit brought under the right given to Abbott in the first sentence to another permissible United States court.
Abbott can only use endorsement number 1, on its true construction, when there has been an award or judgment in its favour for a sum due. It follows that the endorsement does not delete and replace the arbitration clause because there is nothing in endorsement number 1 which is capable of affecting American's right to arbitrate a claim. Whatever the relationship between the service of suit clause and the arbitration clause, the arbitration clause is neither to be deleted nor replaced. In any event, it is not possible to regard a London arbitration clause as substantially similar to the service of suit clause; they are on any view radically different clauses.
As to proper law, the London arbitration clause made express reference to the English Arbitration Acts 1950, 1975 and 1979 and/or any statutory modifications or amendments thereto, for the time being in force. Where the parties have agreed not merely that the seat of the arbitration will be in London, but have also made express reference to the English Arbitration Acts, the court will ordinarily deduce from this a clear intention and choice (for the purposes of Article 3 of the Rome Convention 1980) on the part of the parties to choose English law as the governing law of the contract. It will be presumed that the parties intended that their relationship was to be governed by English law in the absence of compelling reasons to the contrary. At the very least, the issue of proper law is one on which American has shown a sufficiently arguable case to give the court jurisdiction.
Mr. Hollander further submitted that Illinois law does not employ principles of construction materially different from those applied as a matter of English law. The relationship between the arbitration clause and the service of suit clause is one of construction. The service of suit clause fulfils a requirement of Illinois law where surplus lines insurance policies are issued in Illinois by a corporation not authorised or licensed to do business in Illinois. It facilitates service, hence its title, "service of suit clause". It goes beyond the provisions of the New York Convention in enabling service to be effected on an Alaskan corporation elsewhere in the United States. It does not purport to replace the arbitration clause. It can thus be interpreted as facilitating litigation following arbitration, concerning the validity of enforcement of any arbitration ruling.
Indemnity insurance such as the present involves a claim for unliquidated damages. It is not a claim for the payment of a debt. It follows that sums can only be claimed to be due after an award, judgment or agreement as to a specific sum.
As to the grant of an injunction, where the English court takes the view that there has been a breach of an arbitration clause or an exclusive jurisdiction clause, it will grant an injunction to restrain breach unless there are special reasons not to do so. This approach is apparent from a long line of authorities, see The Angelic Grace [1995] 1 Ll Rep 87; Donohue v. Armco [2002] 1 Ll Rep 79; and Natwest Bank v. Utrecht-America [2002] 2 All ER (Comm) 7. It is clear from this line of cases that in such circumstances the English court will not defer to the foreign court, nor will it sit tight until any application may be dealt with by the foreign court. In the present case there are no special or strong reasons which should preclude the English court from taking action now, and good reasons why it should grant an injunction. American made clear its intention to seek arbitration in London. Abbott waited until American commenced London arbitration, said nothing about its intention to commence US proceedings, and then sought and obtained an extension of time for appointment of an arbitrator, again without mentioning its intention to commence proceedings in the United States. Abbott could have applied to the English court, or the arbitrators when appointed, for a ruling that the arbitrators have no jurisdiction, and if appropriate apply for an injunction in England to restrain arbitration. They have not done so. American's application has been made promptly, as soon as American became aware of the proceedings in Illinois.
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