Amin Rasheed Shipping Corporation v Kuwait Insurance Company

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Diplock,Lord Wilberforce,Lord Roskill,Lord Brandon of Oakbrook,Lord Brightman
Judgment Date07 Jul 1983
Judgment citation (vLex)[1983] UKHL J0707-2

[1983] UKHL J0707-2

House of Lords

Lord Diplock

Lord Wilberforce

Lord Roskill

Lord Brandon of Oakbrook

Lord Brightman

Amin Rasheed Shipping Corporation
(Appellants)
and
Kuwait Insurance Company
(Respondents)
Lord Diplock

My Lords,

1

The plaintiff/appellant ("the Assured") is a shipping company incorporated in Liberia, but having its head office and carrying on its business in Dubai. It is the owner of a cargo vessel of the landing craft type, the Al Wahab ("the Vessel") which, at the relevant time, traded in Arabian Gulf waters only. In these proceedings, the Assured seeks to litigate in the English commercial court its claim against the defendants/respondents ("the Insurers") for a constructive total loss of the Vessel which was insured under a hull and machinery policy of insurance against marine and war risks ("the policy") that had been issued in Kuwait by the Insurers who have their head office there and branch offices elsewhere in the Gulf, including Dubai, but have no office or representative in England.

2

The policy was on the Insurers' standard printed form of hull policy. It was in the English language only. The wording followed meticulously (with minor and in my view immaterial omissions of express references to London) that of the Lloyd's S.G. policy scheduled to the Marine Insurance Act 1906, but adapted by typewritten insertions for use as a time, instead of a voyage, policy, and excluding references to "goods and merchandise". It incorporated in the body of the policy the usual F.C. & S. clause from what at that time was the Standard English Marine Policy; but, by a typewritten insertion, was expressed to be "Subject to Institute War and Strikes Clauses Hulls dated 1.10.70 as attached"; and a print of those clauses without any additions or amendments was attached to the policy. The policy was expressed to be issued in Kuwait on 28 April 1979 and claims (if any) expressed to be payable in Kuwait.

3

In order to achieve its object of pursuing its claim against the Insurers in the English court, rather than a Kuwaiti court, the Assured had two obstacles to overcome:

4

First, it had to bring the case within Order 11, rule 1(1) of the Rules of the Supreme Court in order to obtain leave to serve a writ on the Insurers out of the jurisdiction. Although the Assured had originally asserted that the contract of insurance had been made on its behalf by an agent trading in England, this failed on the facts; and in this House the only provision of rule 1(1) that was relied upon by the Assured was that contained in subparagraph ( f)(iii) of which the relevant wording is:

"If the action begun by the writ is brought against a defendant not domiciled or ordinarily resident in Scotland to enforce …. a contract …. being …. a contract which

(i) ….

(ii) ….

(iii) is by its terms, or by implication, governed by English law."

5

I will call this first obstacle the jurisdiction point.

6

The second obstacle is that the Assured must satisfy the requirements of Rule 4(2) which provides:

"No such leave shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction under this Order."

7

I will call this second obstacle the discretion point.

8

Leave to issue and serve the writ on the Insurers in Kuwait was initially granted ex parte by Mr. Justice Robert Goff. A summons by the Insurers to set aside this ex parte order came before Mr. Justice Bingham on 4th March 1982. He held against the Assured on the jurisdiction point, but in case on appeal he should be held to be wrong on that, he also gave full consideration to the discretion point and held against the Assured on that point too. He accordingly ordered the issue and service of the writ to be set aside.

9

On appeal to the Court of Appeal (Sir John Donaldson M.R., May and Robert Goff L.JJ.), the Master of the Rolls held in favour of the Assured on both the jurisdiction point and the discretion point. May L.J. found in favour of the Assured on the jurisdiction point, but against it on the discretion point. Robert Goff L.J. found against the Assured on the jurisdiction point but (regrettably as I think) refrained from expressing any opinion on the discretion point, despite the fact that his two brethren were divided on it. So we are left without any majority ratio decidendi in the Court of Appeal.

10

In the result, although the Assured failed all along the line, in the course of doing so, it gave rise to considerable diversity of judicial reasoning. Sir John Donaldson M.R. and May L.J. held that there was jurisdiction to grant leave to serve the writ out of jurisdiction; while Robert Goff L.J. and Bingham J. held that there was no such jurisdiction. May L.J. and Bingham J. were of opinion that, given jurisdiction (which May L.J. thought there was), the discretion should be exercised against leave being granted; the Master of the Rolls took the opposite view that the discretion should be exercised in favour of granting leave, and Goff L.J. expressed no opinion on the point.

11

The jurisdiction point on which judicial opinion in the courts below was evenly divided is one which is of considerable importance in transnational commercial contracts, and the approach in modern times to the exercise of the discretion in cases falling within Order 11, ruled (1)( f) is also deserving of re-examination. So, in spite of the unanimity of the result in both courts below, leave to appeal from the decision of the Court of Appeal was given by that Court.

12

The Jurisdiction Point

13

My Lords, the jurisdiction point is one that falls to be determined by English law and by English law alone. The relevant rules to be applied to its determination are the English rules of conflict of laws, not the conflict rules of any other country—which may or may not be the same as those of England. In particular, so far as the jurisdiction point itself is concerned, it is immaterial whether the courts of the only obvious rival forum, a Kuwaiti court, would take the same view as an English court as to what was the proper law of the policy. The relevance of this only arises if and when one reaches the discretion point.

14

The applicable English conflict rules are those for determining what is the "proper law" of a contract, i.e. the law that governs the interpretation and the validity of the contract and the mode of performance and the consequences of breaches of the contract. Compagnie d'Armement Maritime S.A. v. Compagnie Tunisienne de Navigation S.A. [1971] A.C. 572, 603. To identify a particular system of law as being that in accordance with which the parties to it intended a contract to be interpreted, identifies that system of law as the "proper law" of the contract. The reason for this is plain; the purpose of entering into a contract being to create legal rights and obligations between the parties to it, interpretation of the contract involves determining what are the legal rights and obligations to which the words used in it give rise. This is not possible except by reference to the system of law by which the legal consequences that follow from the use of those words is to be ascertained. In Vita Food Products v. Unus Shipping Co. [1939] A.C. 277 at p.298, Lord Wright said in a passage cited by Upjohn J. in In re Helbert Wagg & Co. Ltd. [1956] Ch. 323 at p.341:

"There were certain differences between that case [ The Torni [1932] P.78] and the present. One was that the bills of lading had a clause that they were ' to be construed in accordance with English law ', not, as in the present case 'shall be governed by English law'. In their Lordships' judgment that distinction is merely verbal and is too narrow to make a substantial difference. The construction of a contract by English law involves the application to its terms of the relevant English statutes, whatever they may be, and the rules and implications of the English common law for its construction, including the rules of the conflict of laws. In this sense the construing of the contract has the effect that the contract is to be governed by English law."

15

My Lords, Order 11, rule (1)( f) (iii), states as the test that is relevant to the jurisdiction point in the instant case that the policy "is by its terms, or by implication, governed by English law". English conflict rules accord to the parties to a contract a wide liberty to choose the law by which their contract is to be governed. So the first step in the determination of the jurisdiction point is to examine the policy in order to see whether the parties have, by its express terms or by necessary implication from the language used, evinced a common intention as to the system of law by reference to which their mutual rights and obligations under it are to be ascertained. As Lord Atkin put it in Rex v. International Trustee for the Protection of Bondholders A.G. [1937] A.C. 500 at p.529:

"The legal principles which are to guide an English court on the question of the proper law of a contract are now well settled. It is the law which the parties intended to apply. Their intention will be ascertained by the intention expressed in the contract if any, which will be conclusive. If no intention be expressed the intention will be presumed by the court from the terms of the contract and the relevant surrounding circumstances."

16

Lord Atkin goes on to refer to particular facts or conditions that led to a prima facie inference as to the intention of the parties to apply a particular system of law. He gives as examples the lex loci contractus or lex loci solutionis, and concludes:

"But all these rules but serve to give prima facie indications of intention: they are all capable of being overcome by counter indications, however difficult it may be in some cases to find such."

17

There is no conflict between this and Viscount...

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