AXA Corporate Solutions Assurance S.A. v Weir Services Australia Pty Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Blair |
| Judgment Date | 21 April 2016 |
| Neutral Citation | [2016] EWHC 904 (Comm) |
| Docket Number | Case No: CL-2015-000634 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 21 April 2016 |
[2016] EWHC 904 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Blair
Case No: CL-2015-000634
Jonathan Hough QC (instructed by Clyde & Co LLP) for the Claimant
Alexander Layton QC (instructed by Herbert Smith Freehills LLP) for the Defendant
Hearing dates: 12 th April 2016
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
There are two applications before the court. They relate to a coverage dispute under liability insurance policies issued by the claimant insurance company, AXA Corporate Solutions Assurance SA ("AXA"). The relevant policies are: (1) global liability policies issued in England which insured companies in Weir Group plc including the defendant, Weir Services Australia Pty Limited ("Weir"), and (2) a "broadform" liability policy issued in Australia in favour of Weir and other subsidiaries of the group in Australia.
There are now two sets of proceedings in different courts in relation to this dispute. The first in time are these proceedings brought in the English court by AXA against Weir seeking declaratory relief in relation to the global policies. These proceedings were filed on 27 August 2015, but not served on Weir in Australia until 10 March 2016 pursuant to permission granted by Knowles J on 19 January 2016.
The second are proceedings brought by Weir against AXA in the Commercial List of the New South Wales court on 8 March 2016 seeking indemnity under the Australian policy, alternatively under the global policies. There was no need to obtain leave to serve these out of the jurisdiction, since service was effected on the Australian branch of AXA. The proceedings were issued by Weir as soon as it became aware of the English proceedings.
The two applications are:
1) AXA's application dated 10 March 2016 seeking an anti-suit injunction to restrain Weir from pursuing in Australia its claim to be indemnified under the global liability insurance; AXA does not seek to restrain Weir so far as the Australian proceedings relate to the broadform liability policy issued there. It does however maintain that England is the appropriate forum for its claim in relation to the global policies issued in England, and that this claim should go first. It submits that the issue of the Australian proceedings was intended to frustrate the English proceedings, and was vexatious or oppressive conduct entitling the court to grant anti-suit relief.
2) Weir's application dated 24 March 2016 seeking to set aside the order of Knowles J dated 19 January 2016 granting permission to AXA to serve these proceedings on it in Australia. Weir accepts that there were grounds for service out in that the global policies are governed by English law, and the contracts were made here. However, it submits that AXA cannot show that England is the proper place to bring the claim, the onus being on it in this regard. The appropriate forum it argues is New South Wales. Setting aside service would of course render AXA's application for an anti-suit injunction otiose.
In substance, the effect is that AXA wants the claim under the global policies to be determined first by the court in England, to be followed by a determination by the court in New South Wales if the position under the Australian policy becomes relevant. Weir wants all matters determined by the court in New South Wales.
The parties
The claimant is a major insurance company based in France and operating from branches globally. The defendant is one of several Australian subsidiaries of the Weir Group plc, which is an engineering company headquartered in Scotland and listed on the London Stock Exchange.
The policies
There are three global policies covering years between 2011 and 2014, but for the purposes of these applications, it is not necessary to distinguish between them. Each was written on the London market, having been arranged in England between AXA's London branch and Marsh Ltd as placing brokers on behalf of Weir group.
The policies are part of a worldwide, integrated liability insurance programme which AXA at the material time provided for the Weir group. So far as relevant, it consisted of global policies (each described as a "Global Master Policy"), and local policies entered into in various countries where companies in the Weir group carry on business (each described as a "Local Underlying Policy").
The global policies provided cover for (i) public liability, (ii) products liability, (iii) pollution and (iv) professional indemnity. Relevant limits of indemnity were £15 million for products liability and £5 million for professional indemnity (both in the aggregate).
The relevant local policy in Australia for the policy year 2011/12 was arranged in Australia between AXA's Sydney branch and Marsh Pty Ltd as placing brokers. It covered Weir and four other Australian subsidiaries of the Weir group for public liability and products liability, but not for professional indemnity. For both types of liability, the limit of indemnity per occurrence was AUS$7,654,950 (about £5 million at the time).
Both policies cover costs in addition, though in different terms. This is potentially significant, because as explained below, in money terms Weir's claim consists primarily of legal costs incurred in connection with an arbitration.
It is important to be clear as to the interrelationship between the global and local policies, which is largely provided for in the section of the global policies headed "Global Liability Programme Memoranda". In summary, this is as follows.
The global policies provide cover on a DIC/DIL (difference in conditions/ difference in limits) basis. The effect is that the global policy provides primary cover either where there is no local underlying policy, or where there is such a policy (as in this case), where the claim falls outside the terms of the local policy, but inside the terms of the global policy. The global policy also provides excess cover where a claim is covered by the local and global policies, but the value of the claim exceeds the limit of the indemnity of the local policy. In essence, it is common ground that the result is that the insured looks to the local policy first, and then to the global policy so far as it provides cover over and above.
Governing law and jurisdiction
The global policies have a clause in the following terms:
"The Insured is free to choose the law applicable to this policy. The Insurer proposes that the policy will be governed by the laws of England and Wales unless the Insured and the Insurer agree otherwise."
Though as Weir points out, this is not a choice of law clause in conventional form, it was to the same effect, since the policy was to be governed by English law unless both parties agreed otherwise. (They did not in this case, and unsurprisingly there is no evidence that there was any issue in this regard.) In any case, it is not in dispute that under usual principles, absent choice, the policies are governed by English law since they were issued by the English branch of AXA: Articles 4 and 19 of the Rome I Regulation, and see generally Dicey, Morris and Collins, Conflict of Laws (15 th ed.) rule 236.
The Australian broadform policy does not have a choice of law clause, but having been issued by the Sydney branch of AXA to Australian companies, there is no dispute that it is governed by the law of an Australian State, and in all probability this would be New South Wales.
Neither form of policy has a jurisdiction clause.
The background facts
Weir's claim arises out of a 2007 contract with a Philippines company which operates a gold mining project. The contract involved Weir refurbishing a large item of plant known as a SAG mill, (SAG standing for "semi-autogenous grinding"). In 2011, the circumferential weld connecting a plate to the main cylindrical drum of the discharge end of the mill fractured.
On 4 December 2013, arbitral proceedings were commenced by the Philippines company claiming damages against Weir for breach of contract, and for contravention of the Australian Trade Practices Act 1974 by allegedly making representations without any proper basis as to its capacity to carry out the refurbishment works. As amended, the claim was for US$68 million, most of which arose under the statutory claim, the contractual claims being subject to a limit of liability.
Shortly afterwards, Weir notified AXA of a claim under both the relevant global policy, and the Australian broadform policy. AXA declined cover under both. The consequent coverage dispute negotiations and discussions have primarily involved AXA personnel in England, personnel from Marsh Ltd in London, and the insurance and control manager for Weir Group based in Glasgow. The lawyers acting for the parties in negotiations have offices in Sydney and London, but those directly concerned in the coverage dispute have been in the firms' London offices.
The arbitration hearing was conducted in Sydney in July 2015, pursuant to the rules of the Australian Centre for International Commercial Arbitration. Weir was represented by its Sydney lawyers.
Pending the award, on 8 December 2015 Weir and the Philippines company entered into a confidential agreement described as the "Cap and Collar Agreement"...
To continue reading
Request your trial