Axis Corporate Capital UK II Ltd (suing on its own behalf and on behalf of the other underwriting members of Lloyd's Syndicate 2007 for the 2008 and/or 2009 years of account) and Others v ABSA Group Ltd (sued on its own behalf and on behalf of all other Original Insureds identified in the Reinsurance Contracts referred to herein)
| Jurisdiction | England & Wales |
| Judge | Nicholas Vineall |
| Judgment Date | 13 April 2021 |
| Neutral Citation | [2021] EWHC 861 (Comm) |
| Date | 13 April 2021 |
| Docket Number | Case No: CL-2020-000871 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 861 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice,
Rolls Building, Fetter Lane,
London, EC4A 1NL
Nicholas Vineall QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: CL-2020-000871
Peter MacDonald Eggers QC and Sandra Healy (instructed by Reynolds Porter Chamberlain LLP) for the Claimants
Ben Lynch QC and Leonora Sagan (instructed by Allen and Overy) for the Defendants
Hearing dates: 16 March 2021, post hearing submissions 29 March 2021
Approved Judgment
Nicholas Vineall QC:
In these proceedings, commenced on 30 December 2020, the Claimant Reinsurers (“Reinsurers”) contend that proceedings brought against them in South Africa by the Defendants, and commenced there on 23 November 2020, have been brought there in breach of an agreement or agreements between them that the Courts of England and Wales should have exclusive jurisdiction.
On 25 January 2021 Reinsurers applied for an interim anti-suit injunction. The Defendants' South African solicitors were given notice but declined to attend, stating they intended to oppose the relief sought in due course. A hearing took place before Calver J on 2 February 2021 and in a judgment delivered on that day he granted an interim anti-suit injunction restraining the Defendants from pursuing the South African proceedings until the return date.
This is the return date hearing and is therefore the first occasion on which both sides' arguments have been advanced. The question for me is whether I should continue, or vary, or decline to continue, the interim injunction made on 2 February 2021.
The resolution of those issues is intimately bound up with (though not necessarily determined by) the construction of various law and jurisdiction clauses. I raised with the parties the question of whether I was being invited to decide those points of construction at this stage. The Claimant Reinsurers invited me to decide those issues of construction, as though this hearing included a preliminary issue on the points of construction. The Defendants' position was that although it was, they said, unnecessary to reach final decisions on the points of construction in order to resolve the application, they had no objection to the Court doing so. Neither party suggested that there might be further evidence or argument relevant to the points of construction beyond that which was available on this application. In those circumstances, and having heard full argument on the points of construction, it seems to me both appropriate and desirable to decide the construction issues. Accordingly this judgment first sets out the contractual background and facts, then determines the points of construction, and then addresses the question of what if any antisuit injunction is appropriate in the light of the findings as to construction.
BACKGROUND
The background is a series of contracts of insurance between D4 as insurer and the other Defendants, plus a series of contracts which are described as contracts of reinsurance, but which the Defendants say are in substance much closer to being contracts of insurance. Although these policies cover the years 2008/09 and 2009/10, the parties agree that for present purposes there are no material differences between the policies for the two years, so I shall confine myself to describing the position for 2008/09.
The Absa Manx Original Insurance
The Fourth Defendant, (“ABSA Manx”) is a captive insurer incorporated in the Isle of Man. By two policies of insurance entered into for the years 2008/9 and 2009/10, it agreed to insure the First Defendant (“ABSA Group Limited”) together with its subsidiaries (including the Second and Third Defendants, (whom I shall call together “the South African ABSA entities”) in respect of various liabilities, including what was called “civil liability” insurance. Both these Insurances are entitled “Banker's Comprehensive Crime Electronic Crime and Professional Indemnity Policy”.
I shall call the contracts of insurance under which ABSA Manx insured the South African ABSA entities the Original Insurances, because that is how they are referred to in the reinsurance contracts. In the Original Insurances the relevant premiums (clause 4), indemnity limits (clause 6) and deductibles (clause 7) are all expressed in South African Rand (ZAR) and the Original Insurances contain a service of suit clause nominating a South African law firm. Clause 10 of the Schedule of the Original Insurances is headed “Wording” and incorporates all terms and conditions of the Primary Reinsurances. At clause 11 of the Schedule is a pay as paid clause which states:
“It is hereby noted that a specific reinsurance placement has been arranged by the Assurer in respect of the risks covered by this insurance and it is a condition precedent to any liability of the Assurer under this policy that it receives payment from its Reinsurers. …”.
At clause 12, the Original Insurances contain a “Direct Claims Payment Clause” which provides, in part, as follows:
“It is hereby agreed by the Reinsurers that in the event of a claim under the original insurance, the Assured shall be entitled to recover such claims directly from the Reinsurers, but only for the proportions subscribed by such Reinsurers and provided that the Reinsurers have not already made settlement for their proportions to the Reassured and provided that all due premiums have been paid by the Reassured to the Reinsurers…”.
At the time of the hearing the only such contract that was in evidence was a Primary Layer Original Insurance in which each claim was subject to a deductible of ZAR 30m and a limit of indemnity of ZAR 100m. The apparent absence of any contracts of insurance for sums exceeding ZAR 100m gave rise to a submission by Reinsurers that their contacts to reinsure sums above ZAR 100m could not give rise to liability because there was no underlying insurance to be reinsured. However, on the day after the hearing the Defendants sought to adduce a series of further very similar contracts recording insurance for first, second and third excess layers above ZAR 100m, and which correspond, in terms of sums insured, to the contracts of reinsurance which I shall describe in a moment. Having given the parties an opportunity to make submission on what course should be taken, I permitted those new documents to be adduced in evidence, and allowed the parties to make further written submissions in relation to them.
Although Reinsurers formally reserved their position as to the new documents the evidence now available suggests strongly that the South African ABSA entities and their captive insurer entered into a series of contracts of insurance for an original and three excess layers of insurance, which were, as to sums insured, essentially back to back with the reinsurance contracts entered into with the Reinsurers.
At the ex parte hearing Reinsurers had proceeded on the assumption that there would be corresponding insurances for the contracts of reinsurance they had written. Now that the hiatus caused by the Defendants' temporary inability to locate the excess layer insurance contracts has been overcome, it appears that the Reinsurers were right to infer that such contracts existed, so the upshot is that both the ex parte hearing and this hearing proceed on the same basis, in terms of there being underlying insurances with the captive insurer, and back to back reinsurances with various of the Claimants.
The Reinsurances
I turn then to the various contracts which describe themselves as reinsurance contracts, and which I shall therefore call for convenience the Reinsurance Contracts. There is a Primary Layer Reinsurance Contract, and then there are a series of three Excess Layer contracts. The sums indemnified are ZAR 100m under the primary layer (subject to the ZAR 30m excess), the next ZAR 250m under the first excess, the next ZAR 650m under the second excess (making a total of ZAR 1 billion), and there is a further layer above that.
I was shown a proposal form (in fact for the 09/10 year) signed by Absa Group Limited (D1) on behalf of the South African ABSA entities (as the “Proposer”) which seeks a limit of indemnity of ZAR 1 billion in total and in which the Proposer answers a series of question pertinent to the risks which are to be underwritten and which contains a note beneath the declaration that “if a policy is concluded it will be issued on a claims made basis ie to indemnify the Proposer for claims first made against it in the manner described in the policy…”. This proposal form (and, I infer, its 08/09 equivalent) was apparently used for all the layers of “reinsurance”.
The Primary Layer Reinsurance
In the primary layer of reinsurance there is a retention of ZAR 30m and a limit of ZAR 100m, matching the limit and deductible of the Primary Layer Original Insurance. The Schedule defines the Reassured as ABSA Manx and the “Original Assured” as the South African ABSA entities. It identifies an individual at a South African firm of solicitors as the person...
To continue reading
Request your trial
-
English High Court Blocks Financial Services Group From Bringing Excess Insurance Claim Against UK Reinsurers in South Africa Where Courts of England and Wales Had Exclusive Jurisdiction Under Excess Layer Reinsurance Contracts
...result does give effect to and enforce those agreements.” Axis Corporate Capital UK II Ltd. v. ABSA Group Ltd., No. CL-2020-000871, [2021] EWHC 861 (Comm), in the High Court of Justice, Business and Property Courts of England and Wales, Commercial Court (Apr. 13, function JDS_LoadEvent(fun......