Dornoch Ltd v Mauritius Union Assurance Company Ltd

Hearing dates: 28 th, 29 th and 30 th June and 11 th July 2005

I Synopsis

The Mauritius Commercial Bank Limited, the second defendant in these Proceedings ("MCB"), is a bank incorporated in Mauritius. For many years it has carried on business in Mauritius as a leading commercial bank. The Mauritius Union Assurance Company Limited, the first defendant in these proceedings ("MUA"), is an insurance company domiciled in Mauritius. From June 1999, MUA underwrote Bankers' Blanket insurance for MCB and it did so for the period from 30th June 2002 to 30 ^th June 2003. The insurance covered losses sustained during the period of the insurance or discovered during that period. In fact, MUA issued three policies to MCB, each of which was based upon a standard Bankers' Blanket insurance policy form known as "BRS 98". The primary policy covered a number of risks including infidelity; premises; and transit. There were then two excess policies. The first covered various risks including infidelity; but that policy excluded cover for premises and transit. The second excess policy covered "All Risks of Physical Loss or Damage", although in fact it covered only losses relating to premises and transit. This policy contained a "Condition" which extended coverage "to include Infidelity – 72 hour discovery period". It is agreed that each of those insurance policies is governed by the law of Mauritius and each contains a clause giving the Courts of Mauritius jurisdiction over any disputes arising under the policy concerned.

Each of these direct insurance policies was reinsured for 100% in the London market.1 There were three Reinsurance policies, which matched the cover provided by the direct insurance. The primary Reinsurance covered a range of risks including employee infidelity, premises and transit. That was placed in the Bankers' Blanket Bond market. This policy was led by Munich Re. The policy is on Form J(a), which is a London market form, but the policy incorporates a standard BRS 98 wording. Under the heading "Conditions", which are applicable to all sections of this reinsurance, it states "Wording as per BRS 98". Under that heading it states also "Mauritius Jurisdiction Clause". Within the BRS 98 wording is a further heading "Conditions". Under that heading, Clause 8 is titled "Jurisdiction". It provides:

"This insurance shall be governed by the Common Law or Statutes of the Country stated in Item 9 of the Schedule whose Courts shall have jurisdiction in any dispute arising hereunder, and any summons, notice of process to be served on the Insurers for the purpose of instituting legal proceedings against them in connection with this Insurance may be served upon the Person(s) named in Item 10 of the Schedule who have authority to accept service on their behalf".

Item 9 of the "Wording Schedule" of BRS 98 states: "Country of Jurisdiction: Mauritius".

There was one Excess Reinsurance policy which covered various risks including employee infidelity, but excluding premises and transit. That was also placed in the Bankers' Blanket Bond market and led by Munich Re. This case is not concerned directly with either of these two reinsurance policies.

It is concerned with the third Reinsurance policy, which is an "Excess All Risks of Physical Loss or Damage Reinsurance", hereafter "the Excess Reinsurance" 2. This policy principally covered physical losses relating to premises or other insured property and physical losses in transit. But it had an extension to include infidelity, with the somewhat cryptic qualification "72 Hour Discovery Period". That policy was placed in the Specie market in London and was led by the first claimants in these proceedings, who are managed by XL Insurance.

On 14 ^th February 2003, MCB announced that it had discovered a large-scale fraud which had resulted in the misappropriation of Mauritian Rupees ("MuRs") 632,613,615. This misappropriation had taken place over a period of some 11 years

On 19 ^th January 2005, the claimants in the present proceedings notified MUA that the Reinsurance policies were avoided for misrepresentation and non-disclosure. On the same day the claimants applied for permission to serve the present proceedings ("the English Reinsurance Action") out of the jurisdiction on MUA and MCB in Mauritius. The Brief Details of Claim sought: (i) a declaration that the Excess Reinsurance had been validly avoided on account of non-disclosure or material misrepresentation by MUA; (ii) a declaration that the claimants ("the Reinsurers") were not liable to MUA because the claims, even if proved, fell outside the scope of the Excess Reinsurance; (iii) damages for misrepresentation pursuant to the Misrepresentation Act 1967, as against MUA; (iv) damages for deceit, alternatively damages for negligent misstatement, as against MCB.

On 1 ^st February 2005, I made an Order granting permission to serve the proceedings on MUA and MCB out of the jurisdiction in Mauritius. On 21 ^st February 2005 the Supreme Court of Mauritius gave permission to MUA to join the Reinsurers to the Mauritius Insurance proceedings, as "Defendants –in– Guarantee". On 22 ^nd February 2005 Linklaters (Solicitors for MUA) sent to Clyde & Co (Solicitors for the Reinsurers) a copy of the Plaint joining the Reinsurers as Defendants –in—Guarantee in the Mauritius Insurance proceedings. On the same day the Reinsurers applied in the existing English proceedings for an anti-suit injunction and an anti-anti-suit injunction against MUA. I granted those injunctions ex parte on the following day. On 6 ^th April 2005 that injunction was replaced, by consent, with undertakings given by MUA.

On 29 ^th April 2005 MUA applied for a stay of the English Reinsurance proceedings and for an Order setting aside permission to serve those proceedings out of the jurisdiction. MUA also sought an Order to set aside the anti-suit and anti-anti-suit injunctions. On 9 ^th May 2005 MCB applied for a stay of the English Reinsurance proceedings as against them and for an Order to set aside the permission to serve those proceedings out of the jurisdiction on MCB in Mauritius.

These applications came on for hearing before me on Tuesday 28 ^th June 2005. I was provided with eight large and one small ring binder file of evidence. I was also supplied with three large ring binder files of authorities. By the end of the hearing there were some 90 authorities in five bundles. The so-called "Skeleton Arguments" ran, in total, to 106 pages. More written submission were provided during the course of the hearing. The hearing itself had been estimated at 2 days. In fact, by the end of the third day, the submissions on behalf of the Reinsurers, in response to those of MUA and MCB, were not complete. Because of the Court's and Counsels' commitment the case had to be adjourned for over a week. Submissions were completed on Monday, 11 ^th July 2005. I reserved judgment.

The question at issue in relation to both claims by the Reinsurers is whether England is clearly the appropriate forum for the just resolution of these disputes. The general legal principles are well settled. It is also established that on applications of this kind, the Judge must not make final conclusions on issue of fact. This is clearly not one of those cases, referred to by Lord Templeman in Spiliada Maritime v Cansulex Ltd, 3 where I could have made the decision after submissions lasting hours rather than days, having studied the documents in the quiet of my room. But I do question whether it was necessary or wise to immerse the Court in as much detail on the underlying facts as the parties did.

IIThe Insurance and Reinsurance Contracts

The Insurance Contracts

As I have already noted, the Bankers' Blanket Insurance of MCB by MUA was originally written in 1999. However no party placed importance on the insurance position prior to 2002. For 2002/3 the Reinsurance cover was actually put in place before the direct insurance. This fact is relied on by Mr Swainston QC for the Reinsurers. The Bankers' Blanket Insurance of MCB ran for twelve months as from 30 ^th June 2002. The three direct policies were all written on the terms and conditions with...