C v D
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE COOKE |
| Judgment Date | 28 June 2007 |
| Neutral Citation | [2007] EWHC 1541 (Comm) |
| Docket Number | Case No: 2007 FOLIO 540 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 June 2007 |
[2007] EWHC 1541 (Comm)
The Honourable Mr Justice Cooke
Case No: 2007 FOLIO 540
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Bernard Eder QC and Stephen Houseman (instructed by Allen & Overy LLP) for the Claimant
Jonathan Hirst QC, Robert Howe and Shaheed Fatima (instructed by Robin Simon LLP) for the Defendant
Hearing dates: 20–21 June 2007
Approved Judgment
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.
Mr Justice Cooke
Introduction
On 26 April 2007 Field J granted the claimant (C) an interim anti-suit injunction against the defendant (D) on a without notice application. That interim relief has since been replaced by undertakings from D, from which D now applies to be released, whilst also seeking a stay of the present claim. C seeks final injunctive and declaratory relief against D in the following form:—
“(1) An injunction, pursuant to section 44 of the Arbitration Act 1996 and/or section 37 of the Supreme Court Act 1981 and/or the inherent jurisdiction of the Court, restraining the defendant from bringing any legal proceedings and/or taking any steps to:—
(a) challenge and/or vacate and/or review (otherwise than in the Courts of England and Wales) the Partial Award dated 13 March 2007 [the Partial Award] rendered by [The Tribunal] in a London arbitration between the claimant and the defendant (the “Arbitration”) and/or challenge and/or vacate and/or review (otherwise than in the Courts of England and Wales) any other award rendered by the Tribunal in the Arbitration (a “Subsequent Award”); or
(b) enjoin or restrain the claimant from taking any steps to seek to confirm or enforce the Partial Award and/or any Subsequent Award or to seek in any court the registration or conversion into a judgment of the Award and/or any subsequent Award; or
(c) enjoin or restrain the claimant from taking any steps against the defendant in the Courts of England and Wales in respect of the Arbitration and/or the Partial Award and/or any Subsequent Award; or
(d) enjoin or restrain the claimant from taking any further steps in the Arbitration.
(2) Such further or other relief as may be just and appropriate.
(3) A declaration that the Partial Award is final and binding.”
D applies for these proceedings to be stayed until after the conclusion of any challenge by it to the Partial Award and/or any subsequent Award in the courts of the United States. It is D's expressed intention to mount such a challenge in the Southern District of New York after the arbitrators have determined the remaining issues in the arbitration and issued their award in relation to them, if not before.
The Insurance Policy
D is a US incorporated insurer with a branch in England registered here. It issued an insurance policy to C (which is also a US corporation) as the named insured. The policy was a claims made policy on Bermuda Form and insured C and others against “all sums which the Insured shall be obligated to pay by reason of liability imposed upon the Insured by law or assumed under contract or agreement by the Insured for damages on account of personal injury resulting from an occurrence,” as defined in the policy. The occurrence limit and the aggregate limit was $100 million and the excess was $190 million. The policy ran from November 1 1997 to November 1 2000. The definition of the insured included both the named insured (C) and any subsidiary, affiliate or associated company of C, as listed on Schedule A to the policy. That schedule included a large number of such companies, including 303 which were incorporated outside the USA. C or its US brokers were, under the terms of the policy to be treated as representing all insureds in all matters arising under the policy.
It is common ground between the parties that both C and the companies listed in Schedule A to the policy were parties to the insurance and were able to bring arbitration proceedings under it, although the arbitration which has given rise to the issues before me was between C and D alone.
The arbitration clause appeared as paragraph V[o] and included the following wording:—
“Any dispute arising under this Policy shall be finally and fully determined in London, England under the provisions of the English Arbitration Act of 1950 as amended…
If the party…notified of a desire for arbitration shall fail or refuse to nominate the second arbitrator…the party who first served notice of a desire to arbitrate will…apply to a judge of the High Court of England for the appointment of a second arbitrator…In the event of the failure of the first two arbitrators to agree on a third arbitrator…any of the parties may…apply to a judge of the High Court of England for the appointment of the third arbitrator….
The Board shall, within 90 calendar days following the conclusion of the hearing, render its decision on the matter or matters in controversy in writing…In case the Board fails to meet a unanimous decision, the decision of the majority of the members of the Board shall be deemed to be the decision of the Board and the same shall be final and binding on the parties thereto, and such decision shall be a complete defence to any attempted appeal or litigation of such decision in the absence of fraud or collusion.”
The Governing Law and Interpretation clause at V[q] provided as follows:—
“This policy shall be governed by and construed in accordance with the internal laws of the State of New York, except insofar as such laws may prohibit payment in respect of punitive damages hereunder and except insofar as such laws pertain to regulation by the Insurance Department of the State of New York of insurers doing insurance business or issuance or delivery of policies of insurance within the State of New York; provided, however, that the provisions, stipulations, exclusions and conditions of this policy are to be construed in an evenhanded fashion as between the Insured and the Company; without limitation, where the language of this policy is deemed to be ambiguous or otherwise unclear, the issue shall be resolved in the manner most consistent with the relevant provisions, stipulations, exclusions and conditions [without regard to authorship of the language, without any presumption or arbitrary interpretation or construction in favour of either the Insured of the Company and without reference to parol evidence].”
In addition there was a Service of Suit clause at V[y] in the following terms:—
“In consideration of the premium charged it is hereby understood and agreed that in the event of failure by D (herein called “the Company”) to pay any amount claimed to be due hereunder, the Company, at the request of the Insured, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this condition constitutes or should be understood to constitute a waiver of the Company's rights to commence an action in any court of competent jurisdiction in the United States to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. It is further agreed that service of process in such suit may be made upon Counsel, [an address in New Jersey], or his or her representative, and that in any suit instituted against the Company upon this contract, the Company will abide by the final decision of such court or of any appellate court in the event of any appeal.
Further, pursuant to any statute of any state, territory, or district of the United States which makes provision therefor, the Company hereby designates the Superintendent, Commissioner, or Director of Insurance, other officer specified for that purpose in the statute, or his or her successor or successors in office as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the Insured or any beneficiary hereunder arising out of this contract of insurance, and hereby designates the above named Counsel as the person to which the said officer is authorized to mail such process or a true copy thereof.”
There was a dispute between the parties as to what was meant by “the internal laws of the State of New York”, the phrase which appeared in clause V[q]. In that context C drew attention to IV[n] where there was reference to “the Employee Retirement Income Security Act of 1974 as amended, and/or any similar federal State or local statutory or common law”. C contended that the expression excluded Federal law as the parties distinguished internal law of the State of New York from Federal law. D drew attention to the decision of the US Court of Appeals Second Circuit in Pryor v Sworner 445 F.2d.1272 where the internal law of a State was said to be that law which would be applied to a purely domestic case, without conflict of laws complications. That was also the approach of Toulson J (as he then was) in XL Insurance Ltd v Owens Corning [2000] 2 LLR 500 at page 507.
The Reference to Arbitration
According to the witness statement of Mrs Gill (a solicitor acting for C), during the policy period various claims were asserted against C and a subsidiary with significant operations in Europe. C paid damages and expenses in respect of these claims, considerably in excess of the policy limits, and made demand of D for payment under the policy which D refused. On 2 May 2005, C initiated arbitration against D in London. The Tribunal's terms of appointment dated 31 August 2005 and signed by the parties and by the Tribunal included the following:—
“2...
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