Korea National Insurance Corporation v Allianz Global Corporate & Specialty AG
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Rix,Lord Justice Thomas |
| Judgment Date | 02 December 2008 |
| Neutral Citation | [2008] EWCA Civ 1355 |
| Docket Number | Case No: A3/2008/2821 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 December 2008 |
[2008] EWCA Civ 1355
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Qbd, Commercial Court
Mr Justice Field
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Waller
Vice-president Of The Court Of Appeal, Civil Division
Lord Justice Rix and
Lord Justice Thomas
Case No: A3/2008/2821
Bernard Eder QC and Stephen Midwinter (instructed by Messrs Elborne Mitchell) for the Respondent
Malcolm Shaw QC, Steven Berry QC and David Scorey (instructed by Messrs Clyde & Co LLP) for the Appellant
Hearing date : 2 nd December 2008
This is an application for permission to appeal two judgments of Field J given during the course of a trial, of a claim by a North Korean state-owned insurance company against its reinsurers, at present taking place in the Commercial Court. By the first judgment “the justiciability judgment” he ruled that certain allegations being made in the defence of the reinsurers to a claim under a reinsurance policy were non-justiciable and struck the same out. The reinsurers then applied for the trial to be stayed on the basis that a fair trial was no longer possible and the judge, having analysed the nature of the defence still remaining, refused that stay. The trial thus continued and is continuing. The applications for permission to appeal were thus listed urgently with appeals to follow if permission were granted.
The striking feature of the application relating to the justiciability issue is that both parties before the judge were arguing that the issues were justiciable (albeit in certain limited areas it seems, so far as the respondents were concerned, only just). Before this court the attitude of both parties was the same, i.e. neither seeks to uphold the judge's judgment.
Furthermore, although on the direction of the judge a letter was e-mailed to the State of North Korea, the State has not sought to intervene or suggest that the issues raised are non-justiciable. I would add that the claimant is a State-owned company and it seems unlikely that the fact that the allegations were being made against the State and its leader had not been made known to the upper echelons of the State long before the sending of such a letter. Thus the attitude of the claimant to the justiciability issue is unlikely to have been uninformed. That cannot be determinative but a judge should be cautious in rejecting the fully considered position on justiciability of a state-owned party such as KNIC.
The judge made his ruling without any information from the Foreign and Commonwealth Office as to their attitude. Indeed he thought the position so obvious that he did not need such information. With respect to the judge that, I believe, was not a proper course for reasons which will appear hereafter. Since his decision some contact has been made with that Office and an invitation made to them to make representations to the Court of Appeal. The Foreign and Commonwealth Office by letter dated 25 th November 2008 have simply declined that invitation saying that “the Government would not normally make representations in court proceedings unless we were directly interested in the case, or in response to a request from the court concerned”. That is understandable as a response to be dealt with in some haste but one can, I think, infer that, despite being notified of the issues that the judge has held non-justiciable, it has not struck the Foreign and Commonwealth Office that an adjudication on the issues might seriously embarrass diplomatic relations between the United Kingdom and North Korea.
At the commencement of the hearing today, having clarified with Mr Eder QC, who represented the respondents, that we had not misunderstood the position of his clients in relation to the justiciability judgment and that they did not seek to support the judge's judgment, we indicated that in our view the judge was wrong to rule as he did and that it was our intention to try and deliver a judgment during the day so as to enable the trial to continue without further interruption. We made clear that, because we wished to deliver the judgment at speed, and because it could not be said we had had full (or any adversarial) argument on the precise ambits of the law on non-justiciability, our judgment would not attempt an in-depth exposition of that law and should be regarded as a decision limited to this case. Furthermore it was agreed that the judge's description of the background to the case and of the issues could be adopted for the purposes of this judgment.
The background
The Claimant (“KNIC”) sues to enforce a judgement (“the NK judgement”) in the sum of €43,454,383 given by the Court of Pyongyang (“the NK Court”) in the Democratic People's Republic of Korea (“N Korea”) on 11 December 200The defence to the claim is that: (i) the North Korean judgement was procured by a fraud instigated or approved by the State of N Korea and therefore implemented with the knowledge or participation of KNIC (“the fraud defence”); (ii) alternatively, the NK judgement is unenforceable on grounds of public policy in that the North Korean judiciary are part of, and not independent from, the entity (the state) which instigated or approved of the fraudulent procuration of the NK judgement (“the public policy defence”).
KNIC is an insurance company incorporated in N Korea. Under a contract of insurance covering the period 1 November 2004 to 31 October 2005 KNIC insured Air Koryo, an airline incorporated in N Korea, in respect of third party liability claims up to €45 million (or 7.2 billion N Korean Won) each accident, with a nil deductible. The cover for crew and non-revenue passengers for bodily injury and death was €20,000 (NKW 3.2 million) each person.
By a contract of reinsurance covering the same period, KNIC was reinsured by the defendant (“Allianz”) and other reinsurers represented by Allianz in this action (“the Reinsurers”). Under the reinsurance, the limit of liability for third party claims for bodily injury/property damage was €45 million each accident in respect of claims involving Mi-8 helicopters, and for other aircraft €75 million. The reinsurance contract was expressed to be subject to the laws and jurisdiction of N Korea and contained a Currency Conversion Clause which provided that claims in Euros were to be paid in Euros and claims in local currency were to be paid in Euros at an exchange rate of NKW 160 to €1.00.
On 9 December 2005 a Relief Centre, which operated a warehouse at Chonam-Ri in Pyongyang, obtained judgement against Air Koryo in the sum of KPW 7, 634,006,244 in respect of a claim for damage to the warehouse and its contents caused by a crash by an Air Koryo Mi-8 helicopter, No 313, on 9 July 2005. It was Air Koryo's case that the helicopter had been engaged on a mercy mission carrying a lady pregnant with triplets from Jamae Island to a hospital in Pyongyang (“the pregnant woman story”). KNIC invited the Reinsurers to exercise their right under the reinsurance contract to take control of the claim (“the underlying claim”), but they declined to do so.
On 23 January 2006, Air Koryo informed KNIC that it had paid the sum due to the Relief Centre and requested reimbursement under the insurance contract in the sum of NKW 7,353,600,000 (NKW 7,200,000,000 property damage; NKW 9,600,000 deceased crew; and NKW 144,000,000 costs).
On or about 6 March 2006 Air Koryo commenced arbitration proceedings against KNIC under the insurance contract and obtained an award in the sum of NKW 7,301,932,137, which sum KNIC paid on or about 20 July 2006. Relying on the Currency Conversion Clause, KNIC sought reimbursement from the Reinsurers in the sum of €45,657,076, but the Reinsurers refused to indemnify KNIC. KNIC accordingly brought proceedings in the Pyongyang Court against the Reinsurers which resulted in the judgement sought now to be enforced in these proceedings.
On the first day of the trial, Counsel for the Reinsurers, Mr Berry QC, submitted that it should be decided as a preliminary question whether the Reinsurers' defences to KNIC's claim raised issues that the court had no jurisdiction to decide, pursuant to the principles enunciated in Buttes Gas & Oil Co v Hammer [1982] AC 888. Mr Berry was responding to a paragraph in KNIC's Skeleton Opening Submissions where it was suggested for the first time in these proceedings that “there must be at least some concern as to whether the alleged criminality of a foreign state is a question that is even properly justiciable by the English courts —see Buttes Gas & Oil Co v Hammer….”.
Mr Berry's submission was heralded in his Outline Opening Submissions.
“Albeit now raised by KNIC on the eve of the trial, the issue of non-justiciability logically must be determined before the court progresses to hear the evidence and investigate the allegations made by Allianz. This must necessarily be the case, otherwise the court will engage in the very inquiry which, if there is non-justiciability, is prohibited.”
Mr Eder QC, for KNIC, submitted that the judge should not decide the question of non-justiciability as a preliminary point but should hear the evidence concerning the Reinsurers' defences de bene esse and deal with non-justiciabilty when giving final judgement. For reasons given in a separate ruling, the judge decided...
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