Dornoch Ltd v Mauritius Union Assurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Mark Potter P,May,Tuckey L JJ. |
| Judgment Date | 10 April 2006 |
| Date | 10 April 2006 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Sir Mark Potter P, May and Tuckey L JJ.
Michael Swainston QC and Alan Maclean (instructed by Clyde & Co) for the respondents.
Ali Malek QC and Mark Humphries, Solicitor Advocate (instructed by Linklaters) for the Mauritius Union Assurance Co Ltd.
Gavin Kealey QC and David Bailey (instructed by Clifford Chance) for the Mauritius Commercial Bank Ltd.
The following cases were referred to in the judgment of Tuckey LJ:
Compania Naviera Micro SA v Shipley International Inc (The Parouth)UNK[1982] 2 Ll Rep 351.
Forsikringsaktieselskapet Vesta v ButcherELR[1989] AC 852.
Islamic Arab Insurance Co v Saudi Egyptian American Reinsurance CoUNK[1987] 1 Ll Rep 315.
Marc Rich & Co AG v Societa Italiana Impianti pA (The Atlantic Emperor)UNK[1989] 1 Ll Rep 548.
Partenreederei M/S Heidberg v Grosvenor Grain & Feed Co Ltd (The Heidberg) (No. 2)UNK[1994] 2 Ll Rep 287.
Spiliada Maritime Corp v Cansulex Ltd (The Spiliada)ELR[1987] AC 460.
Vitkovice Horni a Hutni Tezirstvo v KornerELR[1951] AC 869.
Insurance Reinsurance Jurisdiction clause Forum non conveniens Mauritian insurance company insured Mauritian bank under bankers' blanket policy Excess policy provided cover for premises and transit risks Primary insurances contained Mauritian jurisdiction clause Bank discovered large scale fraud perpetrated by senior employee, issued proceedings in Mauritius and claimed on policy Reinsurers of excess policy claimed declarations that they had validly avoided reinsurance for misrepresentation and non-disclosure, that loss fell outside its scope and claimed damages for deceit or misrepresentation Whether England or Mauritius appropriate forum Reinsurance arguably not subject to Mauritian jurisdiction clause Jurisdiction clause from underlying insurance not incorporated by general words English law applicable to question whether reinsurance contained jurisdiction clause English law proper law of reinsurance contract and reinsurers' tort claims Judge entitled to attach importance to English proper law and to conclude that England appropriate forum Rome Convention, art. 3, 4 Private International Law (Miscellaneous Provisions) Act 1995, s. 11, 12.
This was an appeal from the decision of Aikens J ([2005] EWHC 1887 (comm)) that the Mauritius Union Assurance Co Ltd (MUA) had failed to show a good arguable case that a mauritius jurisdiction clause was incorporated into a contract of reinsurance.
MUA insured the Mauritius Commercial Bank (MCB). MCB's cover consisted of a primary bankers' blanket policy on the broker's BRS 98 form covering a variety of risks including employees' infidelity, premises and transit and two excess policies. The excess policies provided increased cover for infidelity and premises and transit respectively. Each of those policies was expressly subject to Mauritius law and jurisdiction.
MCB's primary policy was reinsured in the bankers blanket market and led by Munich Re. The primary reinsurance covered most but not all the risks covered by the underlying policy. It contained a Mauritius jurisdiction clause. The excess infidelity policy contained no jurisdiction clause and the excess premises and transit policy, reinsured by the respondent reinsurers in the specie (articles of high value) market, was a slip policy which contained the words jurisdiction clause.
MCB discovered a large scale fraud which had resulted in the misappropriation of large sums between 1991 and 2002. MCB started proceedings in Mauritius claiming the losses it had suffered from that fraud against 38 defendants. The fraud was alleged to have been committed by one of the bank's senior managers who was alleged to have siphoned off and fraudulently misappropriated funds belonging to MCB over the 11 year period by means of various unauthorised advances and transfers, the proceeds of which were paid to a number of recipients by cheque.
MCB also claimed in Mauritius against MUA under the three direct insurance policies.
The reinsurers avoided the excess premises and transit reinsurance for misrepresentation and non-disclosure. The reinsurers issued proceedings, and obtained permission to serve them on MUA and MCB in Mauritius, claiming declarations that they had validly avoided the reinsurance, alternatively that the loss fell outside its scope, and damages for misrepresentation against MUA and damages for deceit, alternatively negligent misstatement, against MCB. The reinsurers had been joined as defendants in the Mauritius insurance action.
The judge held that the general words in the reinsurance slip did not incorporate a Mauritius jurisdiction clause. He held that English law was the proper law of the reinsurance, as it was of the torts alleged against MUA and MCB, and that England was clearly the appropriate forum in which to decide the reinsurers' claims for declaratory relief against MUA and in tort against MUA and MCB. Accordingly he refused to set aside his earlier order for service out of the jurisdiction. MUA and MCB appealed.
Held, dismissing the appeal:
1. The court had to apply English law as the law of the forum in deciding whether a Mauritius jurisdiction clause had been incorporated into the reinsurance. (The Heidberg [1994] 2 Ll Rep 287 approved.)
2. The correct question was whether reinsurers had a good arguable case that the reinsurance did not contain a Mauritius jurisdiction clause. (Islamic Arab Insurance Co v Saudi Egyptian American Reinsurance CoUNK[1987] 1 Ll Rep 315applied.)
3. The insurance and reinsurance contracts were closely connected but they were not a complete match. The general words in the slip did not incorporate the Mauritius jurisdiction clause from the primary reinsurance. The words jurisdiction clause indicated that the parties intended to have a jurisdiction clause, but Mauritius was not the only candidate. The matter was left at large. An English jurisdiction clause was just as much a candidate as Mauritius and one might have expected an English jurisdiction clause to appear as a condition in the slip. The most that could be said was that the parties intended to agree a jurisdiction clause but in the event never did so. Reinsurers clearly had a good arguable case that the reinsurance was not subject to a Mauritius jurisdiction clause.
4. If the reinsurance was not subject to such a Mauritius jurisdiction clause, the judge's conclusion that England was clearly the appropriate forum for the trial of the English action was difficult to assail.
5. The reinsurers had a good arguable case that English law was the proper law of the contract because there was no express choice of law under art. 3 of the Rome Convention and there was a good arguable case that the contract was most closely connected to England under art. 4 of the Rome Convention because the characteristic performance of a reinsurance contract was payment in the event of a claim and that would be performed in England.
6. Under s. 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995 the judge had been entitled to conclude that the tort claims were governed by English law since the most significant elements were making the untrue statements in the proposal form, presenting the untrue statements through the broker chain to reinsurers and reliance by them on those untrue statements to their loss in England.
7. The judge made a full assessment of the factors for and against the English forum in relation to the claim against MUA and the claim against MCB. He had been entitled to give weight to the fact that English law was the proper law of the contract. It was open to him overall to conclude that England was the forum in which the claims could be most suitably tried for the interests of all the parties and the ends of justice. In doing so he did not attach too little weight to the general policy of English law to avoid multiplicity of proceedings.
Tuckey LJ:
1. This is a reinsurance jurisdiction dispute. The first appellant, The Mauritius Union Assurance Company Limited (MUA), insured the second appellant, The Mauritius Commercial Bank Limited (MCB), under three policies, each of which it reinsured 100% back to back in the London market. One of the reinsurances contained a Mauritius jurisdiction clause. This appeal concerns one of the others. Aikens J held, [2005] EWHC 1887 (Comm), that MUA had failed to show a good arguable case that such a clause was incorporated into this contract. He held that English law was its proper law, as it was of the torts alleged against MUA and MCB, and that England was clearly the appropriate forum in which to decide the reinsurers' claims for declaratory relief against MUA and in tort against MUA and MCB. Accordingly he refused to set aside his earlier order for service out of these proceedings. MUA and MCB appeal with the permission of the judge.
2. MCB is a commercial bank and MUA an insurance company in Mauritius. From June 1999 MUA provided bankers' blanket insurance for MCB which it renewed for 12 months from 30 June 2002 to 30 June 2003. The renewal was not completed until MUA's reinsurances were in place. MCB's cover consisted of a primary bankers blanket policy on the broker's BRS 98 form covering a variety of risks including employees infidelity, premises and transit and two excess policies. The excess policies provided increased cover for infidelity and premises and...
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