EI Du Pont de Nemours & Company and Another v Agnew
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BINGHAM,LORD JUSTICE NEILL,LORD JUSTICE FOX,or |
| Judgment Date | 21 July 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J0721-4 |
| Docket Number | 87/0763 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 July 1987 |
[1987] EWCA Civ J0721-4
Lord Justice Fox
Lord Justice Neill
Lord Justice Bingham
87/0763
1986 E. No. 730
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
(MR JUSTICE STEYN)
Royal Courts of Justice,
MR JONATHAN MANCE, Q.C. and MR J. COOKE (instructed by Messrs. Barlow Lyde & Gilbert) appeared on behalf of the Appellants (Defendants (1) to (6), (8) to (11) and (13)).
MR C. RUSSELL (instructed by Messrs. Stephenson Harwood) appeared on behalf of the Appellants (Defendants (12)).
MR CHRISTOPHER CLARKE, Q.C. and MR B. SPELLER (instructed by Messrs. McKenna & Co.) appeared on behalf of the Respondents.
In February 1977 Mr George Chelos had an operation in Evanston, Illinois. During his postoperative treatment he was given the anti-coagulant drug Coumadin. Necrosis then developed in both his legs, which had to be amputated below the knee. In November 1977 he began proceedings in the Circuit Court of Cook County, Illinois, against the second plaintiffs in this action, Endo Laboratories Inc. ("Endo"), who had marketed Coumadin since 1954 and had supplied the drug given to Mr Chelos. Endo were at that time a wholly-owned subsidiary of the first plaintiffs in this action, E.I. Du Pont de Nemours & Company ("Du Pont"), having become such in 1970. Endo merged with Du Pont in 1983 and in 1985 Mr Chelos joined Du Pont as a defendant to his claim. In his complaint Mr Chelos alleged not only negligence in manufacturing, distributing and selling the drug but also wilful and wanton misconduct. The action was tried by a judge and jury in January to March 1986. The jury found in favour of Mr Chelos and awarded him compensatory damages of $13,172,240 and punitive damages of $26,083,000, a total of $39,255,240. This total was reduced to $26,172,240 when, in December 1986, the punitive damage award was on review reduced to $13 million. Further challenges to the verdict and the award are in train in Illinois. Mr Chelos himself died at the end of January 1987.
Du Pont and Endo were insured against product liability claims. The defendants in this action are all insurers who wrote parts of the risk. I shall have to examine the insurance cover in a little detail in due course. It is enough at this stage to identify the parties briefly. The first and second defendants are representative Lloyds' underwriters. The third defendant is the English arm of a Swiss insurance company and carries on business in London. The fourth to sixth, eighth to eleventh and thirteenth defendants are foreign companies, all (with the exception of the fourth) incorporated in the United States. The twelfth defendant also is a United States company, but is separately represented in this action. The seventh defendant is again a United States company, but it is in liquidation and has played no part in these proceedings; I shall ignore it from now on.
On 24th March 1986, only four days after Mr Chelos had obtained judgment in Illinois, Du Pont and Endo launched this action by issuing a writ in the Commercial Court of the Queen's Bench Division of the High Court in London against the first three defendants (all resident within the jurisdiction) claiming a declaration that they were entitled to be indemnified by those defendants against their liability to Mr Chelos. On 2nd April the writ was amended to join the fourth to thirteenth defendants, all of whom are resident out of the jurisdiction. Leave was given to serve out of the jurisdiction on those defendants. All the defendants were served.
On 28th April 1986 the insurers, other than the twelfth defendants, began proceedings in Illinois against Du Pont and Endo seeking a declaration that they were not bound to indemnify those companies against the jury's award of punitive damages and seeking an injunction to restrain the English proceedings.
The situation is, at first sight, somewhat surprising. It not infrequently happens that English companies who have suffered large awards in tort against them in the United States seek to sue their London-based underwriters in the United States, no doubt hoping that the same generous spirit which animated the claim against them might inform their claim to indemnity. The underwriters, fearing such a result, prefer to be sued here. But in this case the roles are reversed. It is the underwriters who seek determination of their liability in Illinois and the assureds who wish the issue to be resolved here. The reason for this reversal is no secret. Public policy in Illinois precludes, or may preclude, indemnification of an assured against an award of punitive damages based on his personal (as opposed to vicarious) liability. For this purpose a corporation is, it would appear, regarded as personally rather than vicariously liable for the acts of its senior management. Since punitive damages are awarded to punish a defendant for grossly reprehensible conduct, it is said to be contrary to the public policy of Illinois that he should escape his punishment, where the fault is personal to him, by obtaining indemnity from his insurer. Thus the insurers have an obvious incentive to seek trial in Illinois, where they will try to establish a high degree of personal fault on the part of their assured. Du Pont and Endo seek trial in England because, as they hope, English public policy imposes no insuperable obstacle to their recovery of full indemnity.
Both in the insurers' Illinois action ("the Illinois action") and in the present action there has been interlocutory activity. In the Illinois action the insurers sought an interlocutory injunction restraining English proceedings, and Du Pont sought to dismiss or stay the Illinois action. Both motions were refused in August 1986. In March 1987 the insurers issued a further motion seeking summary judgment for a declaration that they are not liable for punitive damages and for an injunction restraining English proceedings. In May Du Pont applied for summary judgment in their favour. These motions were heard on 9th June, but the outcome is not yet known. Judgment is expected towards the end of this month.
In the present action the first to third defendants applied to stay the action on the ground of forum non conveniens. The fourth to sixth, eighth to eleventh and thirteenth defendants applied to set aside service upon them on the ground that no basis of jurisdiction had been established against them under Order 11 rule 1 of the Rules of the Supreme Court. In the alternative they applied to stay the action. The twelfth defendants made the same application, but on partly different grounds. These applications came before Steyn J. in chambers on 11th July 1986. He gave judgment in open court dismissing the applications on 16th July. The insurers appeal. It is their appeals which are now before us.
The Law
Steyn J. directed himself in accordance with the test laid down by Lord Diplock in MacShannon v. Rockware Glass Ltd. (1978) AC 795 at 812A, and relied on by Lord Brandon of Oakbrook in The "Abidin Daver" (1984) AC 398 at 419F. Considering first the stay sought by the first, second and third (English-based) defendants, the learned judge concluded that a stay would deprive Du Pont and Endo of a substantial and legitimate juridical advantage, namely the opportunity to pursue their claim in a forum where the insurers' defence based on public policy might be much less strong than in Illinois. He accordingly dismissed those defendants' application without finding it necessary to consider whether Illinois was a more natural and appropriate forum than England for the hearing of the insurance litigation. In the case of the foreign-based insurers the learned judge held that the court had had jurisdiction to order service out, because the relevant policies were (as he found) governed by English law. In exercising his discretion to uphold the service out and in refusing a stay, the judge was primarily influenced by the desirability of avoiding multiple actions: he was impressed by the fact that the action would be proceeding in England against the first three defendants anyway, because he had already refused them a stay. He found it unnecessary to consider the other factors relied on by Du Pont and Endo in favour of the English forum.
Unhappily, the learned judge made his decision after the argument but before the speeches of the House of Lords in Spiliada Maritime Corporation v. Cansulex Ltd. (" The Spiliada") (1986) 3 WLR 972. The speech of Lord Goff of Chieveley contains so comprehensive and so authoritative a statement of the principles applicable in this field that it must now provide the necessary starting point for any consideration of problems arising within it.
Where a party duly served with proceedings within this jurisdiction seeks to stay them,
"The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other forum having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more...
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