Jordan Grand Prix Ltd v Baltic Insurance Group and Others ; Baltic Insurance Group v Jordan Grand Prix Ltd and Others
| Jurisdiction | England & Wales |
| Judge | LORD SLYNN OF HADLEY,LORD LLOYD OF BERWICK,LORD STEYN,LORD HOFFMANN,LORD MILLETT |
| Judgment Date | 16 December 1998 |
| Judgment citation (vLex) | [1998] UKHL J1216-1 |
| Date | 16 December 1998 |
| Court | House of Lords |
[1998] UKHL J1216-1
HOUSE OF LORDS
Lord Slynn of Hadley
Lord Lloyd of Berwick
Lord Steyn
Lord Hoffmann
Lord Millett
And Others
And Others
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Steyn. For the reasons he gives I, too, would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Steyn. For the reasons he gives I, too, would dismiss the appeal.
My Lords,
This appeal raises important questions about the interpretation of Article 11 of the Brussels Convention 1968, which is Schedule 1 (as substituted) to the Civil Jurisdiction and Judgments Act 1982.
The dispute
Jordan Grand Prix Limited is a company domiciled in England. Jordan is engaged in Formula 1 motor racing. A Jordan team competed in the 1994 FIA Constructors' Formula 1 World Championship. Jordan alleges that it undertook to make bonus payments to its employees if it finished in the top six of the 1994 World Championship. Jordan claims that through Belgian intermediaries it insured against this contingent liability with Baltic Insurance Group, an insurance company domiciled in Lithuania.
Quay Financial Software Limited, an Irish company, alleges that it entered into a sponsorship agreement with Jordan whereby it agreed to sponsor the Jordan team for the Championship: the sponsorship money being £1 million if the team finished in the top six and a lesser sum, if it finished in the top seven. Quay alleges that through the Belgian intermediaries it insured this contingent liability with Baltic. Mr. Desmond and Mr. Giblin are the two directors of Quay who were involved in the making of these arrangements.
In November 1994 the Championship ended. The Jordan team finished fifth. Jordan claimed under the main insurance cover on which it relies. Baltic refused to pay. Baltic's case was that neither the bonus agreement nor the sponsorship agreement was genuine. Baltic alleges a conspiracy between Jordan, Quay, two directors of Quay, and others, to defraud Baltic.
The proceedings.
On 26 January 1995, Jordan (the Plaintiff) issued a writ against Baltic (the First Defendant) and two companies carrying on business as reinsurers in Belgium (the Second and Third Defendants). Jordan sued the reinsurers under a "cut-through" clause. On 24 May 1995 Baltic served a defence and counterclaim. Baltic's case is that neither the bonus agreement nor the sponsorship agreement was valid. Baltic asserts that both agreements were kept secret and were "fraudulently manufactured". Baltic alleges that both agreements were made as part of a conspiracy to defraud Baltic. Baltic alleges that the contracts of insurance between Jordan and Baltic and between Quay and Baltic were voidable and that Baltic lawfully avoided them. By the counterclaim Baltic seeks to recover damages for losses it allegedly suffered as a result of the conspiracy. There were 12 defendants to the counterclaim, namely, Jordan, various individuals associated with Jordan, Quay and two of its directors (Mr. Desmond and Mr. Giblin), the Belgian intermediaries and the two reinsurers. For present purposes it is the joinder by Baltic to its counterclaim against Jordan of the three Irish parties, viz Quay, Mr. Desmond and Mr. Giblin (the Sixth, Seventh and Eighth Defendants to the counterclaim), which is at stake. Baltic could have sued the Irish parties in the Irish courts but instead chose to join them to its counterclaim against Jordan in the present proceedings. The three Irish parties took out a summons to strike out the counterclaim against them.
The decisions below:
The matter came before Langley J. The issue was whether Article 11 of the Brussels Convention 1968 allowed Baltic to join the three Irish parties as defendants to the counterclaim. So far as it is material Article 11, which forms part of Section 3 of the Convention, provides as follows:
"… an insurer may bring proceedings only in the courts of the Contracting State in which the defendant is domiciled, irrespective of whether he is the policy-holder, the insured or a beneficiary. The provisions of this Section shall not affect the right to bring a counterclaim in the court in which, in accordance with this Section the original claim is pending."
Three questions were debated before the judge, namely
(1) Does Article 11 only apply to an insurer which is domiciled in a Contracting State? (2) Does Article 11 permit a counterclaim against parties other than the original plaintiff? (3) Does the fact that Mr Desmond and Mr Giblin are not policy-holders, insured persons or beneficiaries (but are directors of Quay and alleged conspirators) mean that Article 11 does not apply to them?
The judge answered all three questions in the negative. The judge accordingly dismissed the counterclaims of Baltic against the three Irish parties. Baltic appealed. By the judgments of Robert Walker L.J. and Otton L.J. the Court of Appeal upheld the reasoning of the judge on all three questions: Jordan Grand Prix Limited v. Baltic Insurance Group and Others [1998] 1 W.L.R. 1049. But as to the third question Robert Walker L.J., who gave the leading judgment, pointed out that if Baltic is not entitled to counterclaim under Article 11 against the Irish parties the third question falls away: 1054H-1055A. Otton L.J. (at 1055B) and Staughton L.J. (at 1056B) agreed.
The anterior question:
Mr Richard Southern, who appeared for the Irish parties, pointed out in a careful analysis of the issues that before the three questions arising on the appeal can be addressed, it is essential to resolve the logically anterior question whether Baltic's counterclaim against the Irish parties is a "matter relating to insurance" within the meaning of Section 3 of the Convention. Baltic alleges an insurance fraud; it seeks to avoid a contract of insurance and to recover damages. The Court of Appeal unanimously held that it is clearly a matter relating to insurance. That is plainly right.
The first question: Does Article 11 apply to any insurer?
The competing interpretations of Article 11 involve treating it as applicable to any insurer wherever domiciled (as submitted by the Irish parties) or as applicable only to an insurer domiciled in a Contracting State (as submitted by Baltic). Article 11 must be construed in the context of the scheme of the convention. Article 2 contains the general principle that persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that state. Section 2 provides for special jurisdiction in respect of various matters including contract, tort, delict, or quasi-delict. Section 3 provides for special jurisdiction in regard to matters relating to insurance. Article 7 is the first provision in Section 3. It provides:
"In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to the provisions of Articles 4 and 5 point 5."
Articles 4 and 5.5 relate to defendants not domiciled in a Contracting State and to branches, agencies or other establishments. Article 8 provides:
"An insurer domiciled in a Contracting State may be sued -
1. in the courts of the State where he is domiciled. or 2. in another Contracting State, in the courts for the place where the policy-holder is domiciled, or 3....
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