Du Pont (E.I.) de Nemours & Company v Agnew (No. 2)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE NEILL,LORD JUSTICE STOCKER |
| Judgment Date | 23 March 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J0323-1 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 88/0267 |
| Date | 23 March 1988 |
[1988] EWCA Civ J0323-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR. JUSTICE EVANS)
Royal Courts of Justice
Lord Justice Dillon
Lord Justice Neill
and
Lord Justice Stocker
88/0267
1987 Folio 1378
MR. C. CLARKE, Q.C. and MR. B. SPELLER (instructed by Messrs. McKenna & Co., Solicitors, London EC3M 7DQ) appeared on behalf of the Plaintiffs (Appellants).
MR. A. LONGMORE, Q.C. and MR. J. COOKE (instructed by Messrs. Barlow Lyde & Gilbert, Solicitors, London EC2M 2PJ) appeared on behalf of the Defendants (Respondents).
In this judgment I refer to the present appellants as "Du Pont" and to the respondents as "the Insurers".
How the present English proceedings brought by Du Pont against the Insurers and the converse proceedings brought in Illinois by the Insurers against Du Pont have come about is clearly explained in the judgment of Bingham L.J. delivered in another division of this court on 21st July 1987.
On that occasion, as appears from the judgment of Bingham L.J this court, applying the tests laid down by the House of Lords in the Spiliada, (1987) Appeal Cases 460, affirmed a decision of Steyn J. which had dismissed applications (a) by those of the Insurers who were not resident within the jurisdiction of the English courts to set aside the service of the English proceedings on them; and (b) by those of the Insurers who were resident within the jurisdiction of the English court, and who had been properly served with the English proceedings within the jurisdiction, to have those proceedings stayed on the grounds of forum nonconveniens.
The judgment of Bingham L.J. establishes, so far as the English courts are concerned,
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(1) that the proper law of all the contracts of insurance against product liability effected by Du Pont with the Insurers is English law; and
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(2) that England was therefore a natural and appropriate forum for the trial of the dispute between Du Pont and the Insurers, and there was no other available forum which was clearly or distinctly more appropriate than the English forum, i.e. in which the case might be tried more suitably for the interests of all the parties and the ends of justice.
As to (1) the dominant consideration was that the leading policy for each of the two layers of insurance was a Lloyds policy issued in London by the Lloyds Policy Signing Office on behalf of Lloyds underwriters, and all the other policies warranted the same terms and conditions as the Lloyds policy.
As to (2) the factor which in the judgment of the court weighed particularly heavily in favour of the English forum was that, the policies being governed by English law and Du Pont being therefore entitled to such indemnity as on a proper construction of the policies English law affords them, the English court was necessarily better placed than any other to rule on the question whether by English law Du Pont should be denied an indemnity because of matters of public policy of the law of Illinois.
Since the decision of 21st July 1987 all the Insurers have accepted service of the English proceedings and submitted to the jurisdiction of the English court.
On 20th August 1987 Judge O'Brien in the Illinois court, in an interlocutory decision, even-handedly dismissed cross-applications by the Insurers and Du Pont for summary judgment in the Illinois proceedings. He had earlier dismissed a motion by the Insurers to restrain Du Pont from proceeding with the English proceedings and a motion by Du Pont to stay the Illinois proceedings pending the outcome of the English proceedings.
In a footnote 1 to the judgment of 20th August 1987, Judge O'Brien stated that the court believed that Illinois law governed the construction of the insurance policy (specifically the lead policy with Lloyds underwriters). If—which it may very well not have been—that statement was intended to bear as broad a meaning as, standing alone, it appears to bear, it is not a conclusion which an English court could have reached, because by English law the proper law of a contract, which governs its construction, is fixed when the contract is made and has to be determined as at that time. The proper law governing the construction of a contract of indemnity insurance giving world wide cover cannot change from time to time from one system of law to another and then to yet another and so on as claims under the policy arise in different countries of the world.
More importantly, in the body of his judgment of 20th August 1987, Judge O'Brien held,
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(i) that on the construction of the Policies the intent of the parties was to provide coverage for punitive damages unless incurred as the result of "seepage, pollution or contamination"—see pages 4 and 5—
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(ii) that on the particular issue whether Du Pont's conduct was insurable against punitive damages, the law of Illinois had the most significant relationship to the issue, and so the issue fell to be decided by the application of Illinois law—see pages 6 to 8; in reaching this conclusion the judge seems at page 7 to have attached considerable importance to the substantial interest of Illinois in enforcing its laws against unconditional indemnification of punitive damages—and
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(iii) that even if the law of another state—sc. English law—applied to the issues raised and the construction of the policy the public policy of Illinois would bar indemnification—see page 17.
It is common ground that since these rulings were only interlocutory they do not give rise to any estoppel against Du Pont.
It now appears that the Illinois proceedings are likely to come on for trial next month, well in advance of any possible trial of the English proceedings. Du Pont are accordingly very concerned firstly that any final decision at trial of the Illinois court in favour of the Insurers in the Illinois proceedings may be relied on by the Insurers in the English proceedings as giving rise to a cause of action estoppel or an issue estoppel which will preclude Du Pont from pursuing their claims in the English proceedings, and secondly that at the end of the trial in Illinois the court there might accede to the Insurers' claim in the Illinois proceedings for a permanent injunction to restrain Du Pont from continuing the English proceedings.
Du Pont accordingly made application in the Commercial Court for certain injunctions and declarations. The application came before Evans J. and on 19th February 1988 he refused Du Pont the main relief they sought. Du Pont appeal to this court and I shall come shortly to the terms of their notice of appeal. Evans J. did however grant Du Pont two subsidiary injunctions, and there is a cross-appeal by the Insurers against these. Since the cross-appeal lies in a very short compass, I shall deal with that first.
The injunctions granted by Evans J. against which the Insurers cross-appeal are to the following effect:
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(a) an injunction restraining the Insurers from claiming the relief sought in count 1 of their amended complaint in the Illinois proceedings (viz. a declaration that the Insurers are not liable to indemnify Du Pont against liability for the punitive damages) save by reference to the law of Illinois; and
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(b) an injunction restraining the Insurers from proceeding with the claim in the Illinois proceedings for a permanent injunction to restrain the English proceedings, save on the further order of the English court.
In the event (b) does not have to be considered, as the Insurers made it plain in this court, as in the court below, that they were prepared to give an undertaking in the terms of (b) if no other relief was granted against them.
As to (a), there seems to have been a certain amount of confusion. In the penultimate paragraph of a judgment which had not been put into writing, Evans J. commented that
"if there was an application for an injunction…. which would prevent the defendants from seeking to use the Illinois proceedings except for the purpose of establishing what is Illinois law in relation to this matter, then that is an injunction which I would be prepared to grant."
Mr. Clarke Q.C. for Du Pont then submitted a form of injunction which seemed to fall within his note of the judge's words, and which would have given him much of the substance of the relief which the judge appeared to have rejected earlier in his judgment. This form of injunction the judge did not accept, and he proceeded to make the injunction (a). It was not what Mr. Clarke was wanting for Du Pont and does not appear to square very easily with what the judge had said in the passage I have quoted from his judgment. As Mr. Longmore has forcibly pointed out, however, Du Pont are in the Illinois proceedings putting forward submissions of English law, and the only obvious effect of injunction (a) is to prevent the Insurers from answering those submissions by reference to English law—i.e. the Insurers will be unable to submit to the Illinois Court that Du Pont's American lawyers have got their English law wrong. That cannot be right. Accordingly I would allow the cross-appeal and discharge injunction (a). I would also discharge injunction (b) and accept in lieu the undertaking in the same terms offered by the Insurers.
I turn now to Du Pont's appeal.
By their notice of appeal Du Pont seek one or...
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