AL Mana Lifestyle Trading L.L.C. & Others v United Fidelity Insurance Company PSC
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Lady Justice Andrews,Lord Justice Nugee |
| Judgment Date | 31 January 2023 |
| Neutral Citation | [2023] EWCA Civ 61 |
| Docket Number | Case No: CA-2022-001821 |
| Court | Court of Appeal (Civil Division) |
[2023] EWCA Civ 61
Lord Justice Males
Lady Justice Andrews
and
Lord Justice Nugee
Case No: CA-2022-001821
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mrs Justice Cockerill
[2022] EWHC 2029 (Comm)
Royal Courts of Justice
Strand, London, WC2A 2LL
John Lockey KC & David Walsh (instructed by Kennedys Law LLP) for the Appellants
Gavin Kealey KC & Josephine Higgs KC (instructed by Mishcon de Reya) for the Respondents
Hearing date: 19 th December 2022
Approved Judgment
This judgment was handed down remotely at 10.30am on 31 January 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
The issue on this appeal is whether the “Applicable Law and Jurisdiction” clause in a series of insurance policies issued by the appellant defendants contains an agreement which gives the English court jurisdiction over claims brought by the respondent claimants under the policies.
The claims are brought by the claimants under a suite of seventeen “Multi-Risks” insurance policies underwritten by the defendants. The claims are all for indemnities for business interruption losses, said by the claimants to arise from the Covid-19 pandemic and estimated by them to have a combined value of about US $40 million.
The clause in question provides as follows:
“ APPLICABLE LAW AND JURISDICTION:
[1] In accordance with the jurisdiction, local laws and practices of the country in which the policy is issued. [2] Otherwise England and Wales UK Jurisdiction shall be applied,
[3] Under liability jurisdiction will be extended to worldwide excluding USA and Canada.”
The numbers in square brackets are not included in the clause, but were added by the parties for ease of exposition. The comma at the end of the second sentence is clearly a typographical error and should be a full stop. Nothing turns on this.
The defendants' case is that, in each policy, the clause provides for the exclusive jurisdiction of the court of the country in which the policy was issued (for simplicity I will refer to this as “the local court”), with a fallback for English or Welsh jurisdiction in the event that the local court does not have or would not accept jurisdiction.
The claimants' primary case, accepted by the judge, is that the clause gives whichever party wishes to bring a claim a free choice. It may bring proceedings either in the local court or in England. Alternatively, if that is wrong, the jurisdiction of the English court is available so long as the jurisdiction of the local court is not mandatory under the law of that country. Mr Gavin Kealey KC for the claimants made clear that this alternative arises only if, contrary to his primary case, there is what he described as an element of conditionality in the clause.
Background
The claimants are 27 entities forming part of the Al Mana Group, carrying on businesses in the food, beverage and retail sectors, principally in the Middle East and Gulf region, but also with a small part of their operation in Ireland. The group does not carry on business in England or Wales.
The defendants are insurance companies operating within Gulf Cooperation Council countries, located respectively in the United Arab Emirates, Qatar and Kuwait, which is where the policies in question were issued: 15 policies issued by the first defendant in the UAE, some of which cover multiple insureds operating in different jurisdictions; one issued by the second defendant in Qatar; and one issued by the third defendant in Kuwait.
For present purposes, all of the policies are on materially identical terms. They contain five sections of cover or potential cover (because not all the claimants took out cover under each section), namely: (1) Property All Risks, which extends to include cover for certain business interruption losses, (2) Money All Risks, (3) Blanket Fidelity, (4) Workmen Compensation; and (5) Public & Product Liability.
Each policy contains a Schedule which includes, among other things, the “Applicable Law and Jurisdiction” clause which I have already set out. It includes also other clauses which were referred to in argument in the court below and are set out in the judgment, but which have not featured in the appeal.
The judgment
The claim form was issued on 21 st May 2021. It was served on the defendants out of the jurisdiction in reliance on what the claimants contended was the agreement for English jurisdiction contained in the Applicable Law and Jurisdiction clause. The defendants' challenge to the jurisdiction came before Mrs Justice Cockerill on 27 th July 2022. In her reserved judgment, handed down only two days later, the judge accepted the claimants' primary case that the clause gives whichever party wishes to bring a claim a choice of bringing proceedings either in the local court or in England and Wales. In that sense the jurisdiction for which the clause provides is non-exclusive, although exclusive as against the rest of the world.
Applying the approach of the Supreme Court in Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, [2021] AC 649 at [77], the judge set herself the task of considering “how the words of the contract would be understood by a reasonable person to whom the document should be taken to be addressed”, that is to say “an ordinary policyholder” and not “a pedantic lawyer who will subject the entire policy wording to a minute textual analysis”.
The judge went some way towards accepting the main points made by the defendants. Thus she accepted that the clause provides for a single choice of the law of the country in which the policy was issued (“the local law”) as the governing law, and that this is so regardless of where proceedings are brought; that a choice of the local law is a factor in favour of the defendants' construction; that the words “in accordance with” which provide for a mandatory choice of the local law were the same words as provide for the jurisdiction of the local court; that these words are capable, in an appropriate context, of being used in an “imperative and directory” sense; and that the formulation “in accordance with … otherwise … shall” might be understood as providing for an exclusive jurisdiction, together with a fallback. However, she considered that these points were not decisive, either individually or collectively.
Ultimately, the judge's acceptance of the claimants' approach was founded on three points. First, she considered that the word “otherwise” as used in the clause is most naturally considered as equivalent to “or”, so that the clause provides for a choice of jurisdiction. Second, she considered that the difficulty with regarding the first sentence as providing the primary rule, with the second sentence providing for a fallback, is that the clause does not identify the circumstances in which the fallback is triggered. Third, she regarded the claimants' construction as supported by what she called “the commercialities or practicalities”: either there was a real prospect that the local court would not accept jurisdiction, in which case it was unattractive for a claimant to have to bring proceedings there in order to find out whether it would accept jurisdiction, only to start again in England if it would not; or there was no realistic prospect of jurisdiction being declined in which case the second sentence of the clause was otiose, a conclusion which the English court would not readily reach; and it made sense to provide for a single neutral venue, namely the English court, particularly as common issues could arise under policies issued in each of the three jurisdictions where the defendants are located.
The judge expressed her conclusion as follows:
“88. … Both as a question of impression and on detailed analysis I consider that the better view is that the clause provides for non-exclusive jurisdiction – a true alternative. I accept that the clause is to some extent odd, but this result is less odd and creates fewer difficulties than the approach urged by the Defendants. A non-exclusive jurisdiction clause best harmonises the wording and the commercialities of the clause in the context of the wider factual matrix.”
Accordingly she did not need to consider the claimants' alternative construction to the effect that the jurisdiction of the English court is available so long as the jurisdiction of the local court is not mandatory under the local law.
She did go on to consider and reject the defendants' alternative case that jurisdiction should be declined on forum non conveniens grounds. That case has not been pursued on appeal.
Submissions on appeal
For the defendants Mr John Lockey KC submitted that the clause, properly construed, provides for the exclusive jurisdiction of the local court. Sentence [1] contains a clear agreement on the applicability of the local law and local jurisdiction. Sentence [2] contains a fallback position, as regards jurisdiction only, which does not apply where (as here) the local court would accept jurisdiction; sentence [2] is incapable of transforming the agreement in sentence [1] into an agreement which treats the jurisdiction of the local court as no more than optional if one of the parties chooses to litigate in England or Wales. Sentence [3] is not concerned with...
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