Howden North America Inc. v ACE European Group Ltd
| Jurisdiction | England & Wales |
| Judge | Maurice Kay,Toulson,Aikens L JJ |
| Judgment Date | 06 December 2012 |
| Date | 06 December 2012 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Maurice Kay, Toulson and Aikens L JJ.
Richard Jacobs QC (instructed by Covington & Burling LLP) for the appellant.
John Lockey QC and Craig Morrison (instructed by Reynolds Porter Chamberlain LLP) for the respondent.
The following cases were referred to in the judgment:
AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] 1 CLC 205; [2012] 1 WLR 1804.
Barclays Bank plc v HomanUNK [1992] BCC 757.
Bolton MBC v Municipal Mutual Insurance Ltd [2006] 1 CLC 242; [2006] 1 WLR 1492.
CGU International Insurance plc v Szabo [2002] CLC 265.
Durham v BAI (Run Off) LtdWLR [2012] 1 WLR 867.
Faraday Reinsurance Co Ltd v Howden North America IncUNK [2011] EWHC 2837 (Comm); [2011] 2 CLC 897; [2012] EWCA Civ 980; [2012] 2 CLC 956.
JH France Refractories v Allstate Insurance Co (1993) 626 A 2d 502.
Municipal Mutual Insurance Ltd v Sea Insurance Co Ltd [1998] CLC 957.
New Hampshire Insurance Co v Philips Electronics North America Corp [1998] CLC 1062.
Spiliada Maritime Corp v Cansulex LtdELR [1987] AC 460.
Wasa International Insurance Co Ltd v Lexington Insurance Co [2009] 2 CLC 320; [2010] 1 AC 180.
Insurance — Service out of jurisdiction — Cover for US asbestos-related personal injury claims — Proceedings in Pennsylvania against primary and excess layer insurers — Pennsylvania law more favourable to insured than English law — Excess layer insurers sought declarations that policies governed by English law and as to proper meaning and effect of policies — Application to stay US proceedings on forum grounds dismissed — Whether English proceedings for declarations useful — US court unlikely to conclude that English law applied — Insurers failed to show English judgment of assistance to US court — US court would determine applicable law and apply it by own rules — Pre-emptive strike to obtain English judgment to resist enforcement of US judgment not useful exercise of English court's jurisdiction.
This was an appeal from a decision of Field J ([2012] EWHC 2427(Comm)) holding that there was sufficient utility in respect of the declarations sought by the respondent insurers for the English court to exercise its jurisdiction over those claims.
The appellant (HNA) was a US member of the Howden group. It was the subject of asbestos-related personal injury claims in the US. In 2003 HNA brought claims against its primary layer insurers. Those claims were settled in 2005. HNA thereafter sought to notify claims to its excess layer insurers including the respondents and began proceedings against them in Pennsylvania. The judge in Pennsylvania had rejected the insurers' application to stay those proceedings on forum grounds.
The respondents brought English proceedings for declarations that the relevant policies, which did not contain any express choice of law, were governed by English law and as to their meaning and effect in English law, which was more favourable to the insurers than the law of Pennsylvania.
In similar proceedings by another excess layer insurer, Faraday, Beatson J refused to set aside service on HNA out of the jurisdiction, holding that Faraday had sufficiently shown that the policy was governed by English law, that the English court should determine the applicable law and the questions of interpretation of the policy, and that England was the appropriate forum (see [2011] EWHC 2837(Comm); [2011] 2 CLC 897). The judge also held that thoseproceedings had sufficient “utility” to be allowed to proceed because an English judgment might assist the Pennsylvanian court and could be useful in resisting enforcement of a Pennsylvanian judgment. The Court of Appeal dismissed an appeal on the issue of utility([2012] EWCA Civ 980; [2012] 2 CLC 956).
In these proceedings there was a good arguable case for English jurisdiction on the basis that the policies were contracts made within the jurisdiction or made by or through an agent within the jurisdiction, and/or that the policies were governed by English law. The dispute was whether England was the appropriate forum and whether the grant of declarations would satisfy the requirement of utility laid down by New Hampshire Insurance Co v Phillips Electronics North America Corp [1998] CLC 1062 and by Faraday.
Field J held that it was reasonable to assume that the Pennsylvanian court would find an English judgment to be of assistance, although the judge in Pennsylvania had indicated her provisional view that it was unlikely that English law would apply to the claims before her. Also the declarations would, if made, be useful in resisting enforcement of a judgment that ignored the express or implied choice of law of the parties. Apart from the issue of utility, Field J accepted that England was clearly the appropriate forum. HNA appealed on the issue of utility.
Held,allowing the appeal:
1. The position in this case was not the same as that in Faraday and the decision on utility in that case was not determinative. In particular the Pennsylvania proceedings had moved on. It could not properly be said that an English judgment would be of assistance to the Pennsylvanian court when the latter had decided, albeit provisionally, that English law would not apply. Further, if English law did apply, that court was capable of considering and applying it.
2. The judge's second basis for utility was also ill-founded. The insurers' challenge to the jurisdiction of the Pennsylvanian court had failed. It was a court of competent jurisdiction. The Pennsylvanian court would apply its conflict of laws rules to the issue of the applicable law. If it concluded that Pennsylvanian law or the law of some other state of the US was applicable to the policies, it would apply that law. Its judgment on the merits would therefore be a judgment of a court of competent jurisdiction applying its own laws to the merits. In the circumstances mounting a kind of pre-emptive strike to obtain an English judgment in order to lay the ground for a defence to enforcement of a foreign judgment was not a useful exercise of the English court's jurisdiction.
1. 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 ([2012] EWHC 2427 (Comm)). 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.
2. 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.2Secondly, 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.
3. 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.
4. 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...
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