Amin Rasheed Shipping Corporation v Kuwait Insurance Company
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE MAY,LORD JUSTICE ROBERT GOFF |
| Judgment Date | 15 December 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J1215-1 |
| Docket Number | 82/0475 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 December 1982 |
[1982] EWCA Civ J1215-1
The Master of the Rolls
(Sir John Donaldson)
Lord Justice May and
Lord Justice Robert Goff
82/0475
1981 A. No. 2344
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE BINGHAM)
Royal Courts of Justice.
MR. COLIN ROSS-MUNRO, Q.C. and MISS B. DOHMANN (instructed by Messrs. Constant & Constant) appeared on behalf of the Appellants.
MR. ADRIAN HAMILTON, Q.C. and MR. R. THOMAS (instructed by Messrs. Ince & Co.) appeared on behalf of the Respondents.
This is an appeal from an order of Mr. Justice Bingham setting aside service of proceedings upon the Kuwait Insurance Company. The basis of the learned judge's order was that neither RSC Order 11, rule l (f) (ii) nor (iii) applied and that in consequence there was no jurisdiction to uphold the ex parte grant of leave to serve the proceedings out of the jurisdiction. That leave had necessarily been granted on a prima facie view of the situation and by the time that the matter came before Mr. Justice Bingham the material available was far more extensive. The learned judge further held that if, contrary to his view, the plaintiffs' claim fell within Order 11, he would still, in the exercise of his discretion, have set the service aside.
Paragraph (f) (ii) is no longer relied upon and we have been concerned solely with paragraph (f) (iii). This authorises, but does not require, the court to give leave to serve proceedings out of the jurisdiction if the action is brought to recover damages in respect of the breach of a contract which "is by its terms, or by implication, governed by English law".
"Parties are entitled to agree what is to be the proper law of their contract, and if they do not make any such agreement, then the law will determine what is the proper law…[The agreement] need not be in express words. Like any other agreement it may be inferred from reading their contract as a whole in the light of relevant circumstances known to both parties when they made their contract" (per Lord Reid in Whitworth Street Estates Limited v. Miller (1970) Appeal Cases 583 at page 603A).
In the instant appeal it is not suggested that there was any agreement between the parties in express terms or that any such agreement can be inferred. Accordingly the choice of proper law has to be determined upon accepted principles governing the conflict of laws and, this being an English court, we have to apply English principles. The test to be derived from the authorities can be simply stated: the proper law of any contract is that system of law with which the transaction has its closest and most real connection (Dicey 10th edition rule l45 and Re United Railways of Havana and Regla Warehouses Ltd. (1961) Appeal Cases 1007). But stating the test is one thing; applying it is quite another. By its nature the test involves an exercise in judgment, a weighing of a multitude of different factors. Indeed there is no limit to the number of factors which can be taken into account, provided only that they have some bearing on "the transaction". The word is important because it directs the court's attention to the contractual matrix and excludes consideration of matters which, although important to one of the parties, are extraneous to the transaction itself and may be unknown to the other party. In the instant appeal, the Kuwaiti Insurance Company's re-insurance arrangements were in this category.
The insurance effected by the plaintiffs was upon a small cargo vessel of landing craft type, the "Al Wahab". The plaintiffs themselves are a Liberian company, but their business was carried on from Dubai and it was their Dubai address which was rightly given on the writ. The defendants ("KIC") are a Kuwaiti insurance company. The vessel was first insured against war and marine risks for 12 months from the 29th April, 1977 and the cover was renewed for 1978/9 and 1979/80. The claim is upon the 1979/80 policy, under which the trading limits were Arabian Gulf. The basis of the claim is irrelevant to a determination of the proper law of the contract, although relevant to an exercise of discretion, and it is sufficient for immediate purposes to record that the plaintiffs allege that the vessel became a constructive total loss consequent upon her seizure in Saudi Arabia by the authorities of that country.
The factors which we were invited to weigh were as follows:
(a) The insurance was placed by Rasheed Shipping (London) Ltd., an English associated company of the plaintiffs, through J.H. Minet Ltd., London brokers.
(b) Premiums were paid in sterling to Minet in London.
(c) The negotiation of claims and settlements on KIC policies issued to the plaintiffs was undertaken in London.
(d) Claims had been paid in London through Minet, often by credit note.
(e) Minet acted as the defendants' re-insurance brokers, both generally and in respect of this policy.
(f) Minet maintained a running account with KIC in London.
(g) Minet maintained a running account with the plaintiffs in London.
(h) From the policy being issued in Kuwait it was sent by KIC to Minet in London who sent it on to the plaintiffs.
(i) The form of the policy and the terms and language in which it was expressed.
(j) The fact that the money of account was English sterling.
(k) The fact that claims were payable in Kuwait.
(l) The fact that the defendants were a Kuwait company and the plaintiffs a Liberian company resident in Dubai in the United Arab Emirates.
In my judgment, factors (a) to (h) inclusive are either irrelevant or weightless. I appreciate that at first sight this is a somewhat startling conclusion, but I have no doubt that it is right. The essential nature of the transaction, the 1979/80 contract of insurance, was that it was a direct renewal of the 1978/9 policy which was itself a direct renewal of the 1977/8 policy. The first policy was negotiated and issued in Kuwait without any London intervention Minet originally came into the picture as KIC's re-insurance brokers, the plaintiffs being asked to send various documents to them as such. This occurred after the 1977/8 policy had been issued. Later the plaintiffs' London company was farmed or acquired and Minet began to act for the plaintiffs as well as continuing to act for the defendants as re-insurance brokers. The financial administration of the insurances came to be routed through London as a matter of administrative convenience, but the essential nature of the insurance of the vessel, which is the transaction with which we are concerned, was quite unchanged between 1977 and 1980 and so too was the system of law with which that transaction had the closest and most real connection.
It is common ground that there are only two starters in the proper law race. They are Kuwaiti law and English law. Painting towards Kuwaiti law are the facts that KIC is a Kuwaiti company, the plaintiffs are not an English company and, although not Kuwaiti, carry on business in the Arabian Gulf, the policy was issued in Kuwait and it provides for claims to be paid in Kuwait where, prima facie, the premium would also be payable. Against this is to be set the form of the policy and the fact that it is written in English sterling. In my judgment the use of sterling as the money of account and payment is of very little, if any, significance as whatever the proper law I would have expected a policy on a vessel which traded outside Kuwaiti waters to be written in an internationally accepted currency and probably in English sterling or U.S. dollars.
Accordingly I am left with the form and terms of the policy itself. It is a single factor, but of very considerable weight. The policy is based upon the Lloyd's S.G. form of policy set out in the First Schedule to the Marine Insurance Act 1906. The modifications consist of slight adaptations to take account of the fact that the underwriter is a single company, rather than a congeries of individuals or syndicates, the omission of all words appropriate solely to the insurance of goods, a minor further amendment of the memorandum with regard to particular average, the words "sunk or burnt" being added, the amission of the warranty that the policy is as good as "the surest writing or policy of assurance heretofore made in Lombard Street, or in the Royal Exchange, or elsewhere in London" and the addition of the traditional f.c. and s. clause in the body of the policy. That said, the provenance of the policy is clear at the most casual glance.
The marine risks covered are those set out in the traditional words of the S.G. policy and such of the Institute Time Clauses—Hulls 1.10.70 as are incorporated by clause 3 of the Institute war and Strikes clauses—Hulls—Time 1.10.70, which latter clauses provided the war and strike risk cover. There was neither adaptation nor even reprinting of the latter clauses, which were attached to the policy in the form of a print made in England and sold by Witherby & Co. Ltd. of London. The primary war risk cover is in the following terms:
"1. Subject always to the exclusions hereinafter referred to, this insurance covers only
(1) (a) the risks excluded from the Standard Form of English
Marine Policy by the clause:—"
and the f.c. and s. clause is set out verbatim
"(b) the cover excluded from the Standard Form of English Marine Policy with the Institute Time Clauses—Hulls 1.10.70 (including 4/4ths Collision Clause) attached, by the clause:—
Warranted...
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