Amtrust Europe Ltd v Trust Risk Group S.p.A.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Blair |
| Judgment Date | 10 December 2014 |
| Neutral Citation | [2014] EWHC 4169 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2014 Folio 1330 |
| Date | 10 December 2014 |
[2014] EWHC 4169 (Comm)
Mr Justice Blair
Case No: 2014 Folio 1330
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Paul Downes QC and Joseph Sullivan (instructed by Clyde & Co LLP) for the Applicant
Daniel Shapiro (instructed by Lewis Silkin LLP) for the Respondent
Hearing dates: 25 November 2014 and 2 December 2014
Judgment Approved by the court for handing down
The claimant, AmTrust Europe Ltd, is a UK subsidiary of the American insurance group, AmTrust Financial Services Inc. The defendant, Trust Risk Group SpA, is an Italian insurance broker based in Milan, its President and CEO being Mr Antonio Somma.
The dispute arises from the breakdown of a business relationship between the parties which happened in mid to late 2014. The business is concerned primarily with the placement of medical malpractice insurance in the Italian market. The insured are largely Italian hospitals. For present purposes, the business goes back to 2010, and I am told by the defendant that to date AmTrust has received almost €1 billion in net premiums. The policies are, I am told, typically of 1–3 years duration.
In summary, the claimant has begun proceedings seeking a mandatory injunction requiring the defendant to pay the sum of €32,039,096.32 into a bank account maintained, the claimant says, according to a Terms of Business Agreement between the parties dated 20 July 2010. The claimant says that this is a trust account consisting of premiums received from insured persons to be paid over to the claimant. Its case is that in October 2014 it discovered that the defendant had misappropriated almost all the money in the account, and asks the court to make a mandatory order requiring the defendant to return it.
The defendant denies that the money has been misappropriated. Its case is that it was entitled to transfer the money out of the account in October 2014 because it had the right to receive advance brokerage commission upon placement of the policies. Calculated in that way, the defendant claims to be owed commission in the amount of €97m, of which it says that the disputed sum of €32m represents part payment. In other words, its claim more than exceeds the amount that was in the account.
The defendant contends that the court should not grant the injunction sought on four grounds, which constitute the main areas of dispute on the claimant's application.
(1) The defendant challenges the court's jurisdiction. It contends that the parties have agreed that disputes between them shall be settled by arbitration in Milan, which arbitration is now underway, and that these proceedings should be stayed or dismissed. To the contrary, the claimant's case is that the relevant jurisdiction clause provides that disputes are to be determined in the English courts. Of the issues argued, this has been the most significant, and if correct is a complete answer to the claim.
(2) The defendant submits (contrary to the claimant's submission) that the account in question was not a trust account. There is, it says, no relevant proprietary claim.
(3) The defendant says that no injunction should be granted because damages are an adequate remedy on the basis that it is good for the money should it be held liable to the claimant to replace the money. The claimant says that the defendant's financial position does not support any such conclusion, which is (it submits) irrelevant in the case of a proprietary claim.
(4) The defendant submits that the balance of convenience is against ordering an injunction, and points to a freezing order made by the Italian prosecutor obtained by (or more accurately on the complaint of) the claimant in Italy on 21 November 2014 which is currently freezing its accounts.
The proceedings were begun on 4 November 2014, and came before Eder J on 7 November 2014. He refused to grant relief, expressing a preliminary view against the claimant. He made clear his concern, however, that the matter had come on at extreme speed, and that after reflection a different conclusion might be reached. As he anticipated, both the evidence and the argument when the case came back for a full hearing have become significantly more complete.
I should add that the claimant also has a claim for an anti-arbitration injunction in respect of the arbitration in Milan, but that has not been pursued at this hearing.
The facts
As stated, the parties entered into a Terms of Business Agreement ("TOBA") dated 20 July 2010. It is not in dispute that this is a standard London form governing relations between insurer and broker. At this time, the business was transacted by AmTrust in Italy pursuant to the EU "freedom of services" provisions. This agreement was subject to English law and jurisdiction. Two endorsements to the TOBA were subsequently agreed, which are primarily relevant to the claimant's claim that premium monies were to be held in a trust account.
On 27 January 2011, the claimant, the defendant and AmTrust Financial Services Inc (i.e. the American parent) entered into a Framework Agreement. There is a dispute as to precisely what the agreement covered, the defendant saying that it applies overall to the relationship between the parties, whilst the claimant says that it is concerned with exclusivity.
By the agreement, AmTrust (that term including both the companies which were parties and others in the group) entered into an exclusive relationship with the defendant group in respect of medical malpractice insurance risks in Italy. Under this contract, the defendant was the paying party. It agreed to pay the claimant an amount equal to 6% of the gross premium before insurance premium tax. The Framework Agreement contained an Italian arbitration and choice of law clause. The TOBA was included as a Schedule, and its ongoing status is in dispute.
On 10 May 2013, the parties' relationship moved still closer in the form of an Agency Agreement entered into between the newly established Italian branch of AmTrust (established under the EU "freedom of establishment" provisions) and a company owned and controlled by the defendant called Trust Risk Italia SrL. This agreement was subject to Italian law and arbitration, and (unlike the Framework Agreement) is in the Italian language. This agreement is not the subject of these proceedings.
Thereafter, all new business was placed through the claimant's Italian branch, with Trust Risk Italia acting as agent in the placement of policies. The existing business continued through the claimant.
It is not in dispute that a current account held by the defendant at Banco di Napoli (to put it neutrally) was attributable to the business done between the claimant and the defendant (i.e. Trust Risk Group). The claimant calls it the "trust" or "designated" account established under the provisions of the TOBA, and maintains that net premium received had to be held in it. However, for the moment, I leave the legal nature of the account on one side.
It is not in dispute either that Trust Risk Italia held an account or accounts at the same bank in respect of premium generated by the business conducted under the Agency Agreement.
As stated above, by October 2014, the relationship between the parties had broken down. On 10 October 2014, the defendant wrote to the claimant to the effect that it was entitled to advance commission, the sum set out in an accompanying table being €96,963,055.10. This was on the basis that it was entitled to receive all the brokerage commission upon placement of the policies. On that basis, the defendant said (in effect) that it would withhold premium payments received in September 2014.
By letter of 15 October 2014, the claimant objected, saying that this was a breach of the TOBA. The defendant responded on 17 October 2014 that the parties' relationship was governed by the Framework Agreement and the Agency Agreement, rather than the TOBA, which remains its position.
By letter sent on 21 October 2014, the claimant gave notice of termination under the TOBA.
On 23 October 2014, the claimant served a "Deed of Appointment for an Arbitrator in an Arbitration Proceeding" on the claimant and AmTrust Financial Services Inc, thereby commencing an arbitration under the Framework Agreement.
There were audit rights under the contractual documentation, which the claimant proceeded to exercise on 26 and 27 October 2014. According to the claimant, the audit revealed that the account for the business with the defendant contained only €26,474.38. It should (the claimant says) have contained at least €32,039,096.32 (comprising premiums received in September 2014 in the sum of €22,246,188.27 together with premiums received between 1 and 10 October 2014 in the sum of €9,792,908.05) and should also have contained any premiums received between 10 October 2014 and 26/27 October 2014.
It is not in dispute that the money had been transferred out of the account by the defendant, it says with justification, and for present purposes, these numbers (as opposed to the defendant's right to make the transfers) are not in dispute.
The claimant says that the audit also revealed a deficit in the account in which premiums received by Trust Risk Italia under the Agency Agreement ought to have been held: this account should have contained at least €21,985,355.63 but in fact contained just €18,459.53. Again, for present purposes, these numbers are not in dispute. However, as noted, this aspect of the matter falls outside the claim in these proceedings, since there is no doubt that it is governed by the choice of Italian law and Milan arbitration.
The claimant issued the Claim Form in...
To continue reading
Request your trial
-
Idemia France SAS v Decatur Europe Ltd
...a question of construction or interpretation: see in particular AmTrust Europe Ltd v Trust Risk Group SpA [2015] EWCA Civ 437, [2016] 1 All ER (Comm) 325 (at [44]–[49]) per Beatson LJ, Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd (formerly MLC Emerging Markets Ltd) [1999] ......
-
BNP Paribas S.A. v Trattamento Rifiuti Metropolitani S.P.A.
...... a consortium of companies led by Banca OPI SpA (‘the FAC’). BNPP was not a party to or ... for alternatives for hedging against the risk of interest rate fluctuation and, in accordance ... is faced with a question of construction: Trust Risk Group SPA v Amtrust Europe Ltd [2015] ......
-
HRH Emere Godwin Bebe Okpabi and Others (suing on behalf of themselves and the people of Ogale Community) v (1) Royal Dutch Shell Plc
...... and is the parent company of the Shell group of companies (‘the Shell Group’). SPDC is an ... VTB Capital case (above), where there was a risk that one party was seeking to wear down the other ... dictum at paragraph 33 of his judgment in Trust Risk Group SpA v. Am Trust Europe Limited ......
-
Trust Risk Group SpA v AmTrust Europe Ltd
...APPEAL (CIVIL DIVISION) ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN'S BENCH DIVISION COMMERCIAL COURT The Hon. Mr Justice Blair [2014] EWHC 4169 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL (Transcript of the Handed Down Judgment of WordWave International Limited Trading as D......
-
Resolving Inconsistent Jurisdiction Clauses And Limits To Fiona Trust Presumption
...This was an appeal from a High Court decision covered in our February/March 2015 issue, AmTrust Europe Ltd v Trust Risk Group SpA [2014] EWHC 4169 (Comm) concerning whether the English court had jurisdiction in a dispute between the Italian broker appellant and the UK insurer In 2010 the pa......
-
UK: Competing exclusive jurisdiction and arbitration clauses: the Fiona Trust “one-stop” presumption displaced
...Court has held (in the recent case of AmTrust Europe Limited v Trust Risk Group SpA [2014] EWHC 4169 (Comm)) that it had jurisdiction – despite there being competing exclusive jurisdiction and arbitration clauses – to grant an injunction requiring a broker to replace money it had transferre......
-
Resolving Potentially Inconsistent Jurisdiction And Arbitration Provisions In Commercial Contracts
...Amtrust Europe Ltd v Trust Risk Group SPA [2014] EWHC 4169 (Comm), 10 December 2014, an alleged conflict between jurisdiction and arbitration clauses was resolved by reference to the purpose and construction of the underlying agreements. This case demonstrates that the presumption that part......