Konkola Copper Mines Plc v Coromin Ltd

JurisdictionEngland & Wales
JudgeSir Anthony Clarke MR,Rix,Richards L JJ
Judgment Date17 January 2006
Neutral Citation[2006] EWCA Civ 5
Docket NumberCase No: A3/2005/1148
CourtCourt of Appeal (Civil Division)
Date17 January 2006
Between:
Konkola Copper Mines Plc
and
Arh Limited S.a.
Claimants
and
Coromin Limited & Others
Defendants/ Respondent
and
Swiss Reinsurance Company & Others
Part 20 Defendants/ Appellants

[2006] EWCA Civ 5

[2005] EWHC 898 (Comm)

Before:

The Right Honourable Sir Anthony Clarke Mr

The Right Honourable Lord Justice Rix and

The Right Honourable Lord Justice Richards

Case No: A3/2005/1148

Mr Joe Smouha QC & Mr David Lord (instructed by Messrs DLA Piper Rudnick Gray Cary UK LLP) for the Appellants

Mr Steven Berry QC (instructed by Messrs Ince & Co) for the Respondents

Lord Justice Rix

Lord Justice Rix:

1

This is an appeal in which a Part 20 defendant says that the judge was wrong not to stay the Part 20 proceedings against it and ought to have done so: both pursuant to a foreign jurisdiction clause and in the court's inherent case management powers. As such the appeal attacks the exercise of the judge's discretion.

2

It is a case of procedural and factual complexity, and to some extent mystery too, for at least four reasons. Its data makes it so. It stands at an interlocutory stage at which the court is reluctant to trespass on the decisions that properly belong to trial. There are proceedings abroad as well as here. And the claimant in both jurisdictions is not a party to the appeal in this court. For all or some of those reasons this court has to a material extent had to contend with conflicting submissions or assertions which it is not easy to evaluate.

3

The question is nevertheless whether behind these difficulties there lie some hard facts which either support or undermine the judge's approach to the case.

The parties

4

The claimant in these proceedings is Konkola Copper Mines plc ("KCM") . It is incorporated in Zambia where it owns and operates the Nchanga copper mine. On 8 April 2001 an avalanche of rock and mud substantially damaged its mine, killing ten miners. Its claim is directed to recovering an indemnity for its loss under its insurance arrangements. For these purposes there is an important issue whether its mine suffered "collapse" or "landslip".

5

At the relevant time KCM was a subsidiary within the Anglo American mining group, whose parent company, Anglo American plc, is incorporated in England with its head office in London. Through its Luxembourg subsidiary, ARH Limited SA ("ARH") , Anglo American purchased KCM in March 2000 but disposed of it in August 2002. ARH is also a claimant, as assignee of certain of KCM's rights to insurance. I need not mention ARH again, since it will suffice to refer to KCM as the claimant.

6

There are potentially up to three layers of insurance. There are local insurers in Zambia (the "Zambian underwriters") . They insured KCM on a direct basis, which provided cover for named perils including collapse but not landslip. Their insurance incorporated a "Local Law and Jurisdiction Clause".

7

A further layer of insurance was provided by Coromin Limited, an insurance company incorporated in Bermuda. At the time of loss Coromin was a captive insurer set up to insure or reinsure risks relating to companies within the Anglo American group. It is no longer controlled by Anglo American, and pursues its conduct in these proceedings independently. There are issues whether Coromin is an insurer of KCM directly (on an all risks basis) or only a reinsurer of the Zambian underwriters (on the named perils basis) .

8

The third layer of insurance was provided by a group of European underwriters, led by Swiss Reinsurance Company ("Swiss Re") and including Lloyd's syndicates and companies domiciled in England, other European countries or Switzerland (the "Reinsurers") . There are issues as to the nature of the reinsurance provided by the Reinsurers. They say that they provided retrocession to Coromin on special terms (the "KCM wording") which essentially mirrored the named perils cover provided by the Zambian underwriters and incorporated a Zambian law and jurisdiction clause. Coromin says that they included KCM in a global Anglo American group policy organised by Coromin which provided cover on all risks terms and incorporated an English law and jurisdiction clause.

9

The reinsurance provided by the Reinsurers was broked in London through Aon Limited, an English company.

10

The party structure of these proceedings, which were commenced on 27 May 2004, is as follows. KCM is claimant and sued Coromin and the Zambian underwriters: Coromin as a direct insurer on the all risks basis reflected in the global policy and the Zambian underwriters on their local insurance. Since that time KCM and the Zambian underwriters have agreed that their dispute should be heard in Zambia under Zambian law. Consent orders dated 10 and 17 March 2005 were made reflecting that agreement, which inter alia stayed these proceedings against the Zambian underwriters. Thus at the time of this appeal (and of the hearing below) Coromin was the single surviving defendant.

11

Coromin denied that it had entered into any all risks insurance of KCM but nevertheless sought to protect itself against KCM's claim by commencing Part 20 proceedings against the Reinsurers. It served both its defence and Part 20 claim form on 24 September 2004. The Reinsurers say that they have reinsured only on a named perils basis and that KCM suffered a landslip and not a collapse. Coromin says that if it is liable to KCM directly at all, then it is reinsured by the Reinsurers on an all risks basis. The Reinsurers say that a Zambian law and jurisdiction clause applies and on that ground resist jurisdiction in England. Coromin relies on the English law and jurisdiction clause in its global policy.

12

Coromin has also more recently, and since the hearing and judgment below, joined Aon to its Part 20 proceedings, alleging that if, contrary to its primary argument that the Reinsurers have reinsured it on an all risks basis, the reinsurance is only on a named perils basis, then Aon is liable to it in negligence and breach of contract: since it had instructed Aon to obtain cover on the former basis and been told by Aon that that had been achieved.

KCM and the Zambian underwriters; the consent orders; and the Zambian proceedings

13

It is necessary to say something further about KCM and the Zambian underwriters. KCM obtained leave to join them to its English proceedings as necessary or proper parties to its claim against Coromin. The Zambian underwriters' response was to challenge jurisdiction on the ground of the Zambian law and jurisdiction clause in their contracts. They also denied that they had insured any more than 10% of the interest, saying that 90% had been insured by Coromin.

14

The consent orders to which I have referred above record the agreement by which KCM agreed to bring its claim against the Zambian underwriters in Zambia under Zambian law, and the Zambian underwriters agreed to accept, subject to the collapse or landslip coverage issue, potential liability as 100% direct insurers of KCM. The consent orders refer to the relevant insurance contract as being one for 12 months from 1 July 2000 to 30 June 2001 entered into on the same terms as a prior 3 month cover for the previous quarter 31 March to 30 June 2000.

15

The consent orders, staying KCM's English proceedings against the Zambian underwriters, were made by Cresswell J and Andrew Smith J in the week immediately before the hearing of the Reinsurers' application to stay Coromin's Part 20 proceedings against them. When the judge on that hearing, Colman J, on 18 March 2005 learned of these consent orders, he was concerned, in the light of the submissions that had been addressed to him on behalf of Coromin and the Reinsurers, that the consent orders had made it impossible for him to canalise the litigation as a whole into a single set of proceedings, either in Zambia or in England, and thus raised the threat of inconsistent judgments in an intractable form. He therefore wrote a letter to all the parties or former parties in the proceedings, that is to say including KCM and the Zambian underwriters, neither of whom had been present at the hearing of 18 March, requesting them to attend at a further hearing at which he wished to consider whether the consent orders should be set aside as having been made ex improviso without the judges of those orders being told of the overall ramifications of such orders for the English proceedings as a whole.

16

In his letter Colman J said:

"In principle, the consequence is a highly unsatisfactory procedural situation which it is hard to imagine that any commercial judge would have permitted to arise if the full effects of such an order had been disclosed at the time of the consent application for a stay…

In these circumstances I have adjourned the reinsurers' application for the Part 20 proceedings to be stayed and for germain relief until after the representations of the claimants and the Local market Insurers.

The representations should deal with the following issues:…

(iii) why the claimants should be permitted to pursue their parallel claims against Coromin in these proceedings while simultaneously pursuing their alternative claim against the Local Market Insurers in Zambia;

(iv) whether the claim against Coromin in these proceedings should not be struck out or stayed forthwith pending determination of the Zambian proceedings."

17

The judge heard the parties on 22 April 2005. The essence of what then happened is set out in the judgment under appeal, now reported at ...

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