Howden North America Inc. and Another v Ace European Group Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Aikens,Lord Justice Toulson,Lord Justice Maurice Kay |
| Judgment Date | 06 December 2012 |
| Neutral Citation | [2012] EWCA Civ 1624 |
| Date | 06 December 2012 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2012/2495 |
[2012] EWCA Civ 1624
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE FIELD
2011FOLIO1118
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Maurice Kay (Vp Of The Court Of Appeal, Civil Division)
Lord Justice Toulson
and
Lord Justice Aikens
Case No: A3/2012/2495
Richard Jacobs QC (instructed by Covington & Burling LLP) for the Appellant
John Lockey QC & Craig Morrison (instructed by Reynolds Porter Chamberlain LLP) for the Respondent
Hearing dates : 15th of November 2012
I. The story so far.
There is before the court an adjourned application for permission to appeal and, if permission is granted, an appeal from the order of Field J dated 17 September 2012. The case concerns eight insurance policies, which the appellant ("HNA"), says cover it against liability for asbestos claims made against HNA, which is an American subsidiary in the Howden Group of Companies. The immediate issue is whether Field J was correct to refuse to set aside his own order permitting service of proceedings out of the jurisdiction on HNA. Similar issues in relation to related insurance cover of HNA have already been litigated up to this court. 1 I will refer to that as "the Faraday litigation". It is common ground, however, that we are not formally bound to follow the result of this court in that case.
The legal background to the present litigation and other, more extensive litigation between HNA and its liability insurers in Pennsylvania, is that there are two fundamental differences between the law of a number of states in the USA, including Pennsylvania, and that of England as to what triggers liability under policies like those in issue. First, under the law in Pennsylvania, exposure to a hazardous condition can trigger liability under the liability policy, but this is not so under English law. 2 Secondly, under English law, but not under that of Pennsylvania, the relevant trigger of liability must occur in the policy period as defined in the policy "period clause". 3 That is not so under Pennsylvania law. Accordingly, from the point of view of an insurer under a liability policy which otherwise might cover liability of the insured for asbestos claims, it would be advantageous if the applicable law of the policy is English law. But from the point of view of the insured, it is advantageous if the applicable law is Pennsylvanian law, because the breadth of cover granted will be greater.
The Howden Group is concerned with engineering and it has a number of subsidiaries around the world. HNA is a North American licensee of the Howden Group. It supplies fans, rotary heat exchangers, compressors and gas cleaning equipment to utility and industrial markets in Canada, USA and Mexico. Third parties have brought asbestos-related personal injury claims against HNA in the USA, alleging that HNA is liable for bodily injury, sickness and disease caused by their exposure to asbestos products which were manufactured or distributed by HNA or its predecessors, for whom it is said that HNA is liable.
HNA has been a party to the insurance programmes of the groups to which it has belonged at various times. As usual, the insurance programmes were organised in various layers of cover and were renewed annually. The policies cover the years 1961–1986, when HNA was a subsidiary of Ampco-Pittsburgh Corporation, and
1995–2002, when HNA was a subsidiary in the Howden Group. There are two relevant sections to the policy coverage. Under section 1 the insurers are liable to indemnify HNA for any sums which it may become legally liable to pay claims made against it for damages, costs and expenses in respect or in consequence of personal injury and/or damage to material property only insofar as this happened (or occurred) during (and not before or after) the relevant policy period. Under section 2 the insurers are liable to indemnify HNA in respect of legal liability arising out of the matters set out in that section but only insofar as claims were made against HNA during the relevant policy period or claims have subsequently been made against HNA which arise out any circumstances which could reasonable have been expected to give rise to a claim under section 2 of the policy and of which a nominated person in HNA was aware during the relevant policy period.In 2003 HNA brought claims against its primary layer insurers, alleging that it was entitled to recover under the policies in respect of asbestos related claims against HNA. Those claims were settled in 2005. HNA had long anticipated that its liability for the asbestos related claims brought against it could exhaust lower levels of its insurance cover and might (or would) lead to claims on the policies which are the subject of this appeal. HNA therefore sought to notify claims to insurers on the excess layers of the insurance programme and for various years, to which it was a party, in respect of asbestos-related claims brought by third parties. These notifications have given rise to two further sets of proceedings in Pennsylvania, which I will describe below.
The present English proceedings were brought by insurers of HNA under eight policies of liability insurance. The claim form was issued on 21 September 2011. The policies all concern "excess layers" of cover for policy periods between 1995 and 1999. Brief details of the policies are given in a schedule to this judgment ("the Schedule"). I will call the individual insurer respondents respectively "Ace", "Gerling" "New Hampshire", "Portman", "QBE" and "Swiss Re". Collectively I will refer to them as "the Insurers".4
The relief sought by the Insurers in these proceedings is unusual. It is not for the usual declarations of non-liability, nor is it for an injunction to restrain proceedings in Pennsylvania. The relief is, broadly, for declarations that (i) the policies are governed by English law; (ii) on a proper construction of the policies (under English law), the insurers are not liable under Section 1 of the policy for asbestos-related claims where the third-party claimant had not suffered actionable personal injury within the policy period; (iii) on a proper construction of the policies (under English law), the Insurers are not liable under Section 2 in relation to asbestos-related bodily injury claims arising out of faulty defective or inadequate materials etc not made by a third party against an insured during the policy period or where a claim arising out of faulty materials was not made or notified within the policy period; and (iv) the Insurers will not be liable where the quantum of the claim or claims in question arising out of one event or attributable to one single cause had not reached the attachment point for the policy.
It will be immediately obvious that the second, third and fourth declarations sought are thus intended to reflect the English law position on liability in respect of an asbestos related claim under the present types of policy. The declarations sought do not go into the details of individual cases and it is accepted that they raise no complex legal issues so far as English law is concerned. The issues can properly be said to concern principles of "hornbook" insurance law.
In the two pending proceedings in the US District Court for the Western District of Pennsylvania HNA is the plaintiff and the Insurers are the defendants. One action was begun in 2009 against New Hampshire and Gerling and other excess insurers. I will call it "the 2009 proceedings". So far as the present appeal is concerned, the 2009 proceedings relate to policies number (1) to (6) of the Schedule. None of these policies have a proper law or jurisdiction provision. The 2009 proceedings have been settled against other excess insurers but they continue against New Hampshire and Gerling and have been assigned to US Federal Judge Conti, who was also the judge in the 2003 proceedings.
By the time of the hearing before Field J, the 2009 proceedings had reached a fairly advanced stage. Field J said: "…fact discovery is complete, expert reports have been served and the expert phase of the litigation is about to be completed by taking depositions".5 Most importantly, (as I will explain in more detail below), Judge Conti had rejected an application by the Insurers to stay or dismiss the 2009 proceedings on grounds of forum non conveniens. She handed down her judgment on 21 June 2012, although she had dismissed the motions on 16 November 2011. Things have moved on since the hearing before Field J. We were shown a Case Management Order made by Judge Conti on 7 November 2012. This set out a procedural timetable that would lead to a hearing to determine the applicable law of the policies. It is anticipated that the hearing on this issue will take place in March 2013 and there would be judgment some time thereafter.
The other set of Pennsylvania proceedings was begun by Ampco-Pittsburgh Corporation in February 2011.I will call these "the 2011 proceedings". These proceedings were against various of Ampco-Pittsburgh's insurers upon policies dating from 1981–1984. Originally these proceedings did not involve any of the Insurers. But they did include HNA as a defendant. In July 2011, that is just two months before the Insurers begun the present action in England, HNA joined all the Insurers into the 2011 proceedings. HNA made claims under policies (7) and (8) in the Schedule. These policies also do not have any proper law or...
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