Chapter 7: Reinsurance and Insurance Jurisdiction at Common Law

7.1 Common law jurisdiction rules remain important in relation to reinsurance and insurance because of the prevalence of business in non-EU countries such as the USA, Japan, China, Korea, Russia and Commonwealth countries. In this chapter we deal with the jurisdiction rules applicable under English law where the Brussels Regulation does not apply. By way of a convenient and commonly used shorthand we refer to this law as the common law, as distinct from the law contained in the European legislation, although all the court’s exorbitant jurisdiction derives from statute and there may be other particular English legislation which is relevant. The usage is justified because the principles in this area have been and continue to be very largely developed by the courts.

7.2 The approach of the common law to clashes of jurisdiction is very different from the civil law:

“This part of the law is concerned with the resolution of clashes between jurisdictions. Two different approaches to the problem have emerged in the world today, one associated with the civil law jurisdictions of continental Europe, and the other with the common law world. Each is the fruit of a distinctive legal history, and also reflects to some extent cultural differences which are beyond the scope of an opinion such as this. On the continent of Europe, in the early days of the European Community, the essential need was seen to be to avoid any such clash between member states of the same community. A system, developed by distinguished scholars, was embodied in the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (1968) (Schedule 1 to the Civil Jurisdiction and Judgments Act 1982), under which jurisdiction is allocated on the basis of well-defined rules. This system achieves its purpose, but at a price. The price is rigidity, and rigidity can be productive of injustice. The judges of this country, who loyally enforce this system, not only between United Kingdom jurisdictions and the jurisdictions of other member states, but also as between the three jurisdictions within the United Kingdom itself, have to accept the fact that the practical results are from time to time unwelcome. This is essentially because the primary purpose of the Convention is to ensure that there shall be no clash between the jurisdictions of member states of the Community. In the common law world, the situation is precisely the opposite. There is, so to speak, a jungle of separate, broadly based, jurisdictions all over the world. In England, for example, jurisdiction is founded on the presence of the defendant within the jurisdiction, and in certain specified (but widely drawn) circumstances on a power to serve the defendant with process outside the jurisdiction. But the potential excesses of common law jurisdictions are generally curtailed by the adoption of the principle of forum non conveniens – a self-denying ordinance under which the court will stay (or dismiss) proceedings in favour of another clearly more appropriate forum.” 1

The Brussels Regulation regime has been described as a “closed system”, that is, it is one within which the rules are the same for all members, and which is designed to avoid clashes of jurisdiction by laying down precise rules which can lead to rigidity and injustice (see, for example, para. 5.282 above – for the Italian Torpedo). The common law system deals with a “jungle of different, broadly based, jurisdictions all over the world”, 2 and is characterised by widely drawn power to serve proceedings outside the jurisdiction but curtailed by the principle of forum non conveniens. 3 Accordingly, the purpose of the common law of forum non conveniens is to avoid cases being heard in inappropriate jurisdictions, not necessarily to avoid all parallel proceedings: “indeed parallel proceedings in different jurisdictions are not of themselves regarded as unacceptable.” 4

7.3 If the court has jurisdiction under the Brussels Regulation it will not have jurisdiction under the common law. The precise line between the application of the Brussels Regulation and the common law is therefore crucial, as to which see chapter 4.

7.4 As to the common law rules themselves, there is a primary distinction to be made between cases where jurisdiction may be established as of right, that is, without permission (presence within the jurisdiction and submission), and cases where the claimant must obtain permission from the court. Where the claimant must obtain permission it is usually because the defendant is situated abroad and it is necessary to rely on an exorbitant ground of jurisdiction or not proceed in England at all. The court has a discretion not to permit such exorbitant service. Wherever the English court has jurisdiction (whether with or without permission) the defendant may challenge the jurisdiction. Where permission to serve out was required the defendant may apply to set aside the permission. The defendant may also apply in any case (whether or not service out was as of right or required permission) for a stay of the English proceedings on forum non conveniens grounds. This is a fruitful area of reported cases. Where it is the claimant who wishes in effect to challenge foreign proceedings he may apply to the English court in certain circumstances for an order against a defendant to restrain foreign proceedings (an anti-suit injunction).

7.5 It is convenient to consider the issues which arise under the following headings:

1. Establishing (re)insurance jurisdiction without permission.

2. Establishing (re)insurance jurisdiction with permission of the court.

3. Challenging (re)insurance jurisdiction: setting aside, stay and anti-suit injunction.

4. Conclusions.