American Motorists Insurance Company v Cellstar Corporation and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance,Lord Justice Mantell,Lord Justice Kennedy |
| Judgment Date | 04 March 2003 |
| Neutral Citation | [2003] EWCA Civ 206 |
| Docket Number | Case No: A3/2002/0785 |
| Court | Court of Appeal (Civil Division) |
| Date | 04 March 2003 |
[2003] EWCA Civ 206
Lord Justice Kennedy
Lord Justice Mantell and
Lord Justice Mance
Case No: A3/2002/0785
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
COMMERCIAL COURT (DAVID STEEL J)
Mr Michael McParland (instructed by Waltons & Morse) for the Appellant
Ms Karen Troy-Davies (instructed by Addleshaw Booth & Co) for the Respondents
Introduction
This is an appeal from the judgment and order of David Steel J dated 15 th March 2002 whereby he set aside service of proceedings out of the jurisdiction on the first respondent, Cellstar Corporation ("Cellstar"), and stayed proceedings against the second respondent, Cellstar (U.K.) Limited ("CUK").
The claimant and appellant is American Motorists Insurance Co. ("Amico"), which claimed in these proceedings a declaration that, by reason of breaches of warranty or other defences under a policy of insurance No. 30M 001 077 02 effective from 12 th January 1999, it was as insurer under no liability to either CUK or Cellstar in respect of the loss of two consignments of mobile phones despatched from CUK's Manchester warehouse to other European destinations in March and April 2000. These English proceedings were issued on 15 th February 2001 after Texas attornies acting for CUK had on 9 th February 2001 written giving Amico 10 days to pay the claims. In March 2001 Cellstar began Texan proceedings against Amico for payment of the losses. Amico in June 2001 joined CUK as a third party in those proceedings.
The Judge concluded that Amico had failed to show a good arguable case for saying that the insurance policy was governed by the law of England. On that basis in his view Texas was the forum where the disputes under the policy should be resolved. On this appeal, it is submitted by Amico that he was wrong as regards the governing law and that English law governs at least as regards CUK, and that he should therefore have treated England as the appropriate forum for the resolution of the disputes between Amico and CUK, and should have treated Cellstar as a necessary or proper party to the resolution of those disputes. The basis for the last submission is that it is Cellstar that has issued the proceedings in Texas against Amico for failure to settle the losses.
Alternatively, Amico submits that, even if the Judge was right to proceed on the basis that the law of Texas applies as between Amico and CUK, the Judge had no jurisdiction to stay the proceedings against CUK; and that there would then in any event be no reason to stay further proceedings against Cellstar. The lack of jurisdiction to stay proceedings against CUK is said to follow from the Brussels Convention, particularly Title II section 3 (jurisdiction in matters of insurance), which governed jurisdiction within European Contracting States at the relevant time (though replaced since 1 st March 2002 by Council Regulation (EC) No. 44/2001 of 22 nd December 2000). The submission is that In re Harrods (Buenos Aires) Ltd. [1992] Ch. 72 does not govern the situation under that section. But, if necessary, Amico asks for a reference to the European Court to determine whether re Harrods is good law. The respondents agree that, if there is any question as to the correctness of re Harrods, then a reference would be appropriate (although they submit that, even if Amico's proceedings against CUK cannot be stayed, that is no reason for allowing Amico to sue Cellstar here). There is already a reference to the European Court on the correctness of re Harrods in Owusu v. Jackson [2002] EWCA Civ 877 (a case concerning Title II section 1 of the Brussels Convention). Any reference in the present case could probably be combined with that earlier reference.
The policy
The policy, issued by Amico to cover Cellstar and its subsidiaries, describes itself as a Global Transportation Policy, and is dated at Houston, Texas, December 1 st, 1999. It consists of a signed front page headed Global Transportation Policy Declarations which identifies the insured, period, limits, deductible ("as Per Endorsement Attached"), description of covered property ("Cellular telephones and related equipment and accessories …."), forms and endorsements, reporting information (including a reporting rate "Per Country Schedule Attached") and producer information, and contains an agreement to provide insurance as stated in the policy. There follow ten pages ending with another signature page, together with a three page Endorsement No. 1 also dated 1 st December 1999 which includes clauses headed Deductible Valuation Warranties and Country Schedule. In the current proceedings in Texas Cellstar challenges the validity of the whole of endorsement No.1 or at least of the Valuation Warranties under Texan law, but the reasons have not been developed before us, and Amico certainly does not accept them or their suggested effect.
More specifically, the policy provides:
"NAMED INSURED AND MAILING ADDRESS
Cellstar Corporation and its Subsidiaries
1730 Briercroft Court
Carrollton, Texas 75006
POLICY PERIOD: FROM 12/01/1999 TO 12/01/2000
12.01 A.M. Standard Time at your mailing address.
IN RETURN FOR YOUR PAYMENT OF THE PREMIUM, AND SUBJECT TO ALL THE TERMS OF THIS POLICY, WE AGREE WITH YOU TO PROVIDE THE INSURANCE AS STATED IN THIS POLICY."
Under the head of Reporting Information, the policy provided for a Deposit (and Minimum) Premium of $894,747, a premium base of Gross Product Sales, a reporting rate per $100 as per the Country Schedule and an annual reporting period. The County Schedule provided differing rates and aggregate deductibles for 17 countries, including the United Kingdom and Netherlands, and a breakdown of the Minimum and Deposit premium of $894,747 between such countries. It also stated:
"The applicable Aggregate Deductible applied in any loss adjustment is determined by which of your country-based sales operations is responsible for the lost or damaged shipment in their financial returns to you and is shown in the schedule below to the far right of that country."
Under the head "Additional Premium", Endorsement No. 1 provided that the premium charged did not contemplate transportation by seagoing vessel, and that there was a right to charge additional premium for additional exposures.
Endorsement No.1 also includes the Valuation Warranties which are central to the issue of Amico's liability to CUK or Cellstar for the losses claimed. They give Amico the right to void coverage for any consignment valued over $10,000 in respect of which no declaration of its full value and payment of valuation charges has been made to the carrier, forwarder, warehouseman or other relevant third parties. The present losses are not the only losses for which Amico has denied liability by reference to the Valuation Warranties. Cellstar's Texan proceedings have been expanded to include a number of losses in places outside Europe.
The policy wording states that, in the event of a loss, contact should be made with Kemper Ocean Marine Claims Department, at an address in Summit, New Jersey, and says:
"Throughout this policy, the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the Company providing this insurance."
By clause 25, Time for Suit, it provides:
"No suit or action for the recovery of any claim arising under this policy shall be maintainable in any Court unless such suit or action shall have been commenced within twelve months from the date of the happening of the loss out of which the said claim arose; provided, however, that it [sic], by the laws of the State within which this policy is issued such limitation is invalid, then any such claim shall be void unless action is commenced within the shortest limit of time permitted by the laws of such State."
There were endorsements subsequent to 1 st December 1999, one covering (for an additional premium of $1500) the move of inventory etc. from "the current Netherlands location" to another Dutch address and providing "In addition Telfort is added as a Loss Payee in respect of the fulfilment operation in the Netherlands".
The policy was negotiated during a meeting or meetings in Houston. The Judge recited that Cellstar, although a Delaware corporation, had its principal office in Houston. That is also Amico's case. Cellstar and its subsidiaries are given a mailing address in Houston for policy purposes. The producing broker engaged by Cellstar was based in Texas. Amico, although incorporated in Illinois, has underwriting offices in Houston, through which it negotiated and issued the policy, which was signed on its behalf by a Mr Casella.
CUK, one of Cellstar's subsidiaries, is an English company, with a warehouse in Manchester. The consignments the subject of the claims were despatched from Manchester to other European destinations. Cellstar clearly has subsidiaries in at least some of the other countries listed in the policy schedule, although whether these subsidiaries' businesses divide neatly between the different listed countries is not known.
It can be seen that the policy was a form of open policy, to cover future movements of cellular telephones, particularly from the countries listed in Endorsement no. 1. Insured under it are Cellstar itself and its subsidiaries. The internal arrangements between Cellstar and its subsidiaries have not been investigated. Whether any subsidiary provided any part of...
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