"The Alexandros T" and Others

JurisdictionEngland & Wales
CourtSupreme Court
JudgeLord Mance,Lord Hughes,Lord Neuberger,Lord Clarke,Lord Sumption
Judgment Date06 November 2013
Neutral Citation[2013] UKSC 70
Date06 November 2013

[2013] UKSC 70

THE SUPREME COURT

Michaelmas Term

On appeal from: [2012] EWCA Civ 1714

before

Lord Neuberger, President

Lord Mance

Lord Clarke

Lord Sumption

Lord Hughes

In the matter of "The Alexandros T"
In the matter of "The Alexandros T" (No 2)
In the matter of "The Alexandros T" (No 3)

Appellant

Steven Gee QC

Tom Whitehead

Peter Stevenson

(Instructed by Norton Rose Fulbright LLP)

Respondent

Iain Milligan QC

Michael Ashcroft QC

Luke Pearce

(Instructed by Thomas Cooper)

Appellant

Mark Howard QC

Michael Swainston QC

Tony Singla

(Instructed by Clyde & Co LLP)

Respondent

Iain Milligan QC

Michael Ashcroft QC

Luke Pearce

(Instructed by Thomas Cooper)

Appellant

David Bailey QC

Adrian Briggs

Jocelin Gale

(Instructed by Mayer Brown International LLP)

Respondent

Iain Milligan QC

Michael Ashcroft QC

Luke Pearce

(Instructed by Thomas Cooper)

Heard on 8 and 9 July 2013

Lord Clarke (with whom Lord Sumption and Lord Hughes agree)

Introduction
1

This is a remarkable case in more than one respect. The appeal depends upon whether the Court is bound to stay action 2006 Folio 815 ("the 2006 proceedings") under Article 27 of Regulation 44/2001 of the Council of the European Union ("the Regulation") and, if not, whether it should do so under Article 28. Before Burton J ("the judge"), the respondents expressly disclaimed any intention to rely upon Article 27 but relied upon Article 28 in support of a submission that the court should stay the 2006 proceedings in favour of proceedings in Greece. The judge refused to grant a stay and gave summary judgment for the appellants against the respondents. The judge granted the respondents permission to appeal to the Court of Appeal on various grounds, including a ground based on Article 27. The Court of Appeal (Longmore, Toulson and Rimer LJJ) held that it was bound to stay the action under Article 27. It also gave some consideration to Article 28 but held that it was not necessary to reach a final conclusion in that regard because of its decision under Article 27. It declined to consider the issues relevant to summary judgment on the ground that, if there was to be a stay, those issues should be determined by the courts in Greece.

The facts and the 2006 proceedings
2

I can take the relevant events from the judgment of Longmore LJ in the Court of Appeal. He in turn took them from the judgment of the judge. On 3 May 2006 the vessel Alexandros T sank and became a total loss 300 miles south of Port Elizabeth, with considerable loss of life. Her owners were Starlight Shipping Company ("Starlight"). They made a claim against their insurers, who denied liability on the basis that the vessel was unseaworthy with the privity of the assured, namely Starlight. The insurers also said that Starlight had failed properly to report and repair damage to the vessel in accordance with Class Rules.

3

Starlight, through their solicitors Messrs Ince & Co, made a number of serious allegations against the insurers which fell into two categories, as summarised by Longmore LJ at para 4: (1) allegations of misconduct by the insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours (described for some reason as "malicious scuttlebutt") against Starlight in the course of purported investigation of their claims; and (2) deliberate failure by the insurers to pay up under the policy, said to have had consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage. The insurers also relied upon material non-disclosure.

4

Those allegations were made before the issue of proceedings and, in particular, in a letter dated 18 July 2006 from Ince & Co to the insurers' solicitors, who were Hill Dickinson LLP, then Hill Taylor Dickinson, whom I will together call "HD". On 15 August 2006 Starlight issued the 2006 proceedings in the Commercial Court against various insurers. The first four defendants have been described as the Company Market Insurers ("CMI") and the fifth to seventh defendants as the Lloyd's Market Insurers ("LMI"). The policies issued by both the CMI and the LMI contained exclusive jurisdiction clauses. They provided for English law and each party expressly agreed "to submit to the exclusive jurisdiction of the Courts of England and Wales". Overseas Marine Enterprises Inc ("OME") were identified in the policies as managers.

5

In paras 5 to 8 of his judgment Longmore LJ spelled out in some detail the issues between the parties in the 2006 proceedings. It is plain that the points raised by Ince & Co to which I have referred were both pleaded and central to the issues between the parties in those proceedings. Thus, in para 7 Longmore LJ referred to a witness statement in which Mr Crampton of Lax & Co, who were now acting for Starlight, asserted that the allegations made by the insurers in defence of the claim were based on false evidence which they had obtained from the bosun. He also relied upon significant payments said to have been made to the bosun on behalf of the insurers in this connection.

6

In addition, a witness statement was introduced in support of a proposed amendment of the claim form alleging that Starlight had sustained losses beyond the measure of indemnity in the relevant policy. It was alleged that, but for the failure of the insurers to pay under the policy, Starlight would have purchased a replacement vessel and had lost between US$ 45 million and US$ 47.7 million by way of increased capital cost and chartering losses. However, on 14 December 2007, Tomlinson J refused to allow the amendment on the basis of the decision of the Court of Appeal in Sprung v Royal Insurance [1999] Lloyd's Rep IR 111, approving the decision in The Italia Express (No. 2) [1992] 2 Lloyd's Rep 281. As Longmore LJ explained in para 1, as a matter of English law, an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim. 1 The law deems interest on sums due under a policy to be adequate compensation for late payment; this is so, even if an insurer deliberately

withholds sums which he knows to be due under a policy. If parties agree that English law is to apply to a policy of insurance, this principle is part of what they have agreed. English law, moreover, gives no separate contractual remedy to an insured who complains that an insurer has misconducted himself before settling a claim. In either case the remedy of the insured is to sue the insurer and, if no settlement is forthcoming, proceed to judgment. The trial was fixed for 14 January 2008
The settlements
7

On 13 December 2007, which was the day before the hearing before Tomlinson J referred to above, the 2006 proceedings had been settled between Starlight and OME and the LMI for 100% of the claim, but without interest and costs, in full and final satisfaction of the claim. It was a term of the settlement agreement that Starlight would obtain a stay by way of a Tomlin Order, and a Tomlin Order by consent between Starlight and the LMI was accordingly made on 20 December 2007, backdated to 14 December, in these terms:

"Save for the purposes of carrying into effect the terms agreed between the Claimant and the Fifth to Seventh Defendants, all further proceedings between the Claimant and the Fifth to Seventh Defendants shall be stayed with effect from 14 December 2007 or such earlier date as may be agreed between the parties or otherwise ordered hereafter."

A similar settlement agreement dated 3 January 2008 was made between Starlight and OME and the CMI and a similar Tomlin Order was made on 7 January 2008, but with immediate effect.

8

In each settlement agreement "the Assured" were defined as being "[OME] and Starlight … as Managers and/or Owners and/or Associated and/or Affiliated Companies for their respective right and interest in the ship Alexandros T". The CMI settlement agreement then provided:-

"1. Each Underwriter agrees to pay on or before 18 January 2008 … their due proportions of the sum of US$16m … being 100% of their due proportions of the sum insured being 50% of the US$32m … without interest or costs.

2. The Assured and Claimant agree to accept the EURO equivalent of each Underwriter's due proportion of US$16m … in full and final settlement of all and any claims it may have under Policy No 302/CF 000220Z against the Underwriters in relation to the loss of " Alexandros T", including all claims for interest and costs (including in respect of all costs orders made to date in the proceedings) but without effect to any other insurance policy in which each Underwriter may be involved.

3. The Assured and Claimant agree to Indemnify each Underwriter against any claim that might be brought against it by any of the Assured's or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of " Alexandros T" or under Policy No 302/CF000220Z….

4. Following the signing of this agreement, and in consideration of the promises herein, the Claimant and the Underwriters will apply to stay the Proceedings as against the Underwriters, the Proceedings to be stayed for all purposes save for the purposes [of] carrying the terms agreed herein into effect, such stay to have effect from the first obtainable date after 27 December 2007

5. Following the due and proper payment by the Underwriters of the amount specified in paragraph 1 above, the Assured and Claimant and the Underwriters agree to file a consent order dismissing the Proceedings, with no order as to costs.

6. This agreement is subject to English law and to the exclusive jurisdiction of the High Court in London."

9

The LMI settlement agreement provided in similar but not identical...

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