Konkola Copper Mines Plc v Coromin [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | COLMAN J.,Mr Justice Colman |
| Judgment Date | 16 May 2006 |
| Neutral Citation | [2005] EWHC 898 (Comm),[2006] EWHC 1093 (Comm) |
| Date | 16 May 2006 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2004 FOLIO NO. 450,Case No: 2004 FOLIO 450 |
[2005] EWHC 898 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Colman J.
Case No: 2004 FOLIO 450
Mr Geoffrey Vos QC and Mr David Lord (instructed by DLA) for the Applicant
Mr Simon Bryan (instructed by Ince & Co) for the Respondent
Hearing dates: 18 March 2005 and 15 April 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Colman:
Introduction
This is an application to stay Part 20 proceedings against the applicant reinsurers pending the determination of issues which are said to affect the reinsurers' liability to the Part 20 claimants.
I refer to the applicants as "the Reinsurers", to the Part 20 claimants as "Coromin" and to the claimants in the main proceedings as "KCM". Coromin were co-defendants in the main proceedings with five insurance companies all incorporated in Zambia. I refer to them as "the Local Insurers".
Reinsurers had initially launched an application for a stay of the Part 20 proceedings on the grounds of forum non conveniens. That has not been pursued.
The claims advanced in the main proceedings against Coromin and the Local Insurers can be outlined as follows.
KCM is incorporated in Zambia and is the owner and operator of Nchanga open pit copper mine in Zambia. The second claimant, ARH Limited SA ("ARH") is incorporated in Luxembourg. It purchased KCM in March 2000 and owned and controlled it until August 2002. It is assignee of certain of KCM's rights to insurance claims the subject of these proceedings, notice of such assignment having been given to the defendant. ARH is an indirect wholly owned subsidiary of Anglo American plc ("Anglo American"). That company is incorporated in England with its head office in London.
Coromin is an insurance company incorporated in Bermuda. It was originally set up as a captive to insure and reinsure risks relating to the operation of Anglo American and other companies within that Group. It is now separately advised and represented in these proceedings and is not controlled as regards the conduct of its defence or of its Part 20 claim by Anglo American, KCM or ARH.
The Reinsurers of Coromin are either Lloyd's Syndicates or reinsurers domiciled in England, or other European Union states or Switzerland. For the purpose of effecting reinsurance cover in the present case Coromin employed as their brokers Aon London.
On 8 April 2001 an avalanche of rock and mud very substantially damaged the Nchanga mine killing ten miners. The claims in these proceedings are directed to recovering an indemnity in respect of the losses suffered by KCM.
Until a few days before the commencement of the hearing of this application, a qualification which I explain later in this judgment, KCM claimed its losses in the main proceedings primarily against Coromin under a Combined Commercial Insurance Policy ("the CCIP") and/or a contract called Coromin Limited Global Master All Risks Policy, to which I refer as the "Coromin Policy". The assured under that policy was:
"ANGLO AMERICAN PLC … and their owned and controlled and associated and affiliated and subsidiary companies or corporations and joint venture partners as they are now constituted or may be hereafter constituted or acquired…'
KCM clearly fell within that description at the time of the loss. The claim against Coromin was for US$50,521,998. That was 100 per cent of the loss, including losses said to fall under the Business Interruption Section of the policy. The claim was advanced on the basis that the loss was caused by an all risks peril.
KCM also advanced in these proceedings an alternative claim. This was against the Local Insurers. It was advanced under a Local Market Insurance Contract, "the Zambian Contract" effected through the brokers Aon Zambia, under which the Local Insurers provided property damage and business interruption insurance expressed as "assets all risks" cover "limited to specified insurance perils as follows: fire, lightning, explosion, flood, collapse including shaft collapse". The claim advanced by KCM under the Zambian Contract was for US$47,886,704. It was on the basis that the losses had been caused by a "collapse" within the meaning of the specified perils.
Finally, KCM included an alternative claim against Coromin. This was advanced under clause 4.17 of the Coromin Policy which provided as follows:
"4.17 DIFFERENCE IN CONDITIONS/DIFFERENCE OF CONDITIONS
Notwithstanding Condition 4.3, OTHER INSURANCE, it is agreed that cover under this Policy is to apply when the perils, limits and/or conditions set forth in this Policy are in addition to or broader in meaning and/or scope that those of specific local or primary policies. This Policy is also extended to cover the loss sustained by the Insured resulting from the application of any co-insurance or average clause forming part of any local or primary policy effected by the Insured, as a resulted of under insurance."
I refer to this as "the DIC clause".
The particulars of claim make it clear that this alternative claim rests upon the basis that KCM is entitled to recover a greater amount under the Coromin Policy than it is under the Zambian Contract. On this basis it is said that it must be entitled to recover at least US$ 2,635,294 which is the difference between US$50,521,998 and US$ 47,886,704. However, it is pleaded that this "DIC clause" could respond to the extent of the entire US$50,521,998 if, for example the Local Insurers were entitled to avoid the Zambian Contract. The DIC clause would be said also to respond if the losses were not covered by the Zambian Contract because they were not caused by insured specified perils. At the present time it is not known precisely what defences will be taken if and when proceedings are commenced against them in Zambia, although it is probable that a coverage issue will be raised as to the applicability of the specified perils.
KCM and ARH expressly pleaded that they only sought to be indemnified once in respect of KCM's losses. In that connection it is to be noted that clause 4.3 of the Coromin Policy provided:
"4.3 OTHER INSURANCE
If at the time of any Occurrence resulting in a loss under this Policy there is any other insurance effected by or on behalf of the Insured covering such loss or any part of it, the liability Insurers under this Policy shall be limited to their rateable proportion of such loss."
By way of defence Coromin pleaded that it never became a party to any direct contract of insurance with KCM or alternatively any such contract would be illegal and void and/or unenforceable in English Law because it was contrary to public policy as being illegal under the law of Zambia which was the place of performance. Coromin went on to plead that KCM was directly insured by the Local Insurers and that they in turn were reinsured by Coromin to the extent of 90 per cent.
By its Part 20 claim against the Reinsurers Coromin pleaded that it was not a direct insurer of KCM and that it was a reinsurer of the Local Insurers who had directly insured KCM to the extent of 90 per cent of the risk. Coromin further pleaded that it was entitled to be indemnified by Reinsurers if Coromin were liable as a direct insurer of KCM for the whole risk or as a direct insurer of KCM for its liability under the DIC clause or if Coromin were liable as a reinsurer of the Local Insurers in respect of their cover of KCM under the Zambian Contract. In other words, Coromin claimed to be indemnified by the Reinsurers whether they were directly liable as insurers of KCM or liable as reinsurers of the Local Insurers.
The Reinsurers' position in response to Coromin's Part 20 claim is that, whereas they accept that they reinsured Coromin, they maintain that the applicable wording of that reinsurance incorporated what has been conveniently called "the KCM wording". That wording had, at least for present purposes, two salient characteristics:
i) the basis of cover was the specified perils as in the Zambian Contract;
ii) there was a Zambian Law and Jurisdiction Clause.
Accordingly, that reinsurance would respond only if the losses fell within the specified perils and not on an all risks basis. It is in issue whether the loss was attributable to a "collapse" within the meaning of the specified perils.
KCM obtained leave to serve the Local Insurers outside the jurisdiction on the basis that they were 100 per cent direct insurers of KCM and necessary or proper parties to the proceedings (Order of Gloster J., 29 June 2004). On 29 October 2004 the Local Insurers applied to set aside that order on the basis of the Zambian Law and Jurisdiction Clause in the Zambian Contract. In making that application the Local Insurers did accept that they were 100 per cent direct insurers of KCM.
The Local Insurers' application has not been determined. On 9 March 2004, nine days before the hearing date of the Reinsurers' application now before the court, KCM and ARH and the Local Insurers entered into an agreement to settle the Local Insurers' application. By that agreement it was agreed that the Local Insurers accepted that they were 100 per cent direct insurers of KCM/ARH on the terms of the KCM wording including the specified perils basis and that KCM/ARH would commence proceedings under the Zambian Contract against the Local Insurers in the High Court of Zambia. The parties to the agreement agreed that in the English proceedings there should be a consent order staying the action against the Local Insurers and that such stay would remain in place until final...
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