Shipowners' Mutual Protection and Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat Ve Ticaret A.S. ("Yusuf Cepnioglu")
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice McFarlane,Lord Justice Moore-Bick |
| Judgment Date | 20 April 2016 |
| Neutral Citation | [2016] EWCA Civ 386 |
| Docket Number | Case No: A3/2015/0679 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 April 2016 |
[2016] EWCA Civ 386
The Right Honourable Lord Justice Moore-Bick (THE VICE PRESIDENT OF THE COURT OF APPEAL, CIVIL DIVISION)
The Right Honourable Lord Justice Longmore
and
The Right Honourable Lord Justice McFarlane
Case No: A3/2015/0679
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE TEARE
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr David Lewis QC & Mr Oliver Caplin (instructed by Clyde & Co LLP) for the Appellant
Mr Chirag Karia QC (instructed by Holman Fenwick Willan LLP) for the Respondent
Hearing dates: 24 th & 25 th February 2016
Introduction
This appeal is another case in which this court has to ascertain the juridical nature of a foreign statute which gives a victim the right to sue a defendant's insurer directly without first suing the insured. Our own provisions are contained in the Third Parties (Rights Against Insurers) Act 1930 ("the 1930 Act"), since the similarly named Act of 2010 has not yet been brought into force. But our courts have also had to consider foreign statutes in cases in which it is necessary to decide what law governs the direct claim. This may be relevant for deciding whether the right of direct suit is a contractual right governed by English law for the purposes of obtaining permission to serve proceedings out of the jurisdiction or of establishing the applicability to such suit of an arbitration or exclusive jurisdiction clause and, if so, whether it is appropriate to protect any such right by invocation of the court's jurisdiction to grant an anti-suit injunction. In such cases the question which has to be determined is whether the intention and effect of the foreign statute is to enable the victim to enforce against the insurer essentially the same obligations as those that could have been enforced by the insured or whether the statute has created a new and independent right which is not intended to mirror the insurer's liability under the contract of insurance. If the former, it may be right to hold that the victim is bound by any jurisdiction or arbitration clause in the insurance contract (with the consequences that service out of the jurisdiction and even an anti-suit injunction might be appropriate); if the latter, any jurisdiction or arbitration clause would be unlikely to bind the victim and, in that event, service out of the jurisdiction and anti-suit injunctions would, on the face of things, be inappropriate.
As far as English law is concerned, it is clear that the victim is enforcing the rights of the insured against the insurer. That is because the rights of the insured against the insurer are, by virtue of section 1(2) of both the 1930 Act and the 2010 Act "transferred to and vest in" the third party to whom the insured is liable. It follows that the victim will be bound by any arbitration clause in the insurance contract, see The Padre Island [1984] 2 Lloyd's Rep 408, a case which would not be decided differently even if the 2010 Act were in force now.
Foreign legislation may not be so clear. In Through Transport Mutual Insurance Association (Eurasia) Ltd v New Indian Assurance Co Ltd, The Hari Bhum (No. 1) [2004] 1 Lloyd's Rep 206; [2005] 1 Lloyd's Rep 67 and [2005] 1 All ER (Comm) 715 the court had to consider the Finnish Insurance Contract Act 1994 which provided that a person who had sustained loss under general liability insurance was entitled to claim compensation
"in accordance with the insurance contract direct from the insurer"
if the insured had been declared bankrupt or was otherwise insolvent. Moore-Bick J had little difficulty in saying that the third party was seeking to enforce a contractual obligation derived from the contract of insurance rather than some independent contract of recovery; it was therefore for the proper law of the contract (English law) to determine whether the third party was bound by the arbitration clause. He held that the third party was so bound. He went on to grant an anti-suit injunction to protect the arbitration clause, a decision which was, in due course, reversed by the Court of Appeal in circumstances to which I shall later have to refer. But it was not suggested by this court that his decision that the essential nature of the right was a right to enforce the insurance contract (and thus the arbitration clause) was wrong.
The relevant Spanish law was considered by Hamblen J and this court in The London Steam Ship Owners Mutual Insurance Association Ltd v The Kingdom of Spain (The Prestige (No. 2)) [2014] 1 Lloyd's Rep 309; [2015] 2 Lloyd's Rep 33 in which the shipowners' liability for oil pollution was compulsorily insured up to a certain amount by the claimant. Article 117 of the Spanish Penal Code enabled an injured party to bring a direct claim against the shipowners' insurer in accordance with Article 76 of the Insurance Contract Act 1980. That Article provided that the injured party was entitled to a direct action against the insurer
"to demand of him the fulfilment of the obligation to compensate."
The Article also provided
"Direct action shall be exempt from the defences that the insurer may have had in respect of the insured."
The Provincial Court of Madrid had held in an earlier case that the right of the third party was "exclusively covered by the insurer against the obligation to indemnify for acts established by policy", a conclusion which was deduced (inter alia) from
"the need for it to be related to the first sentence of Article 76 which grants the wronged third party … the action to demand from the insurer compliance with its obligation to indemnify."
In the light of this judgment and other evidence from a Spanish lawyer, Hamblen J held that although the third party's right against the insurer was independent in origin it was not independent in content.
"It derives from the law rather than the contract, but it does not exist separately from the contract and its content reflects the contract, save for the Article 76 exceptions."
It was therefore not an independent right, a conclusion with which this court agreed. Awards obtained by the claimant pursuant to the arbitration clause in the insurance contract were therefore made with jurisdiction and were enforceable awards.
Facts of this case
In this case it is Turkish law which has to be considered. Part 2, chapter 1(B) of the Turkish Insurance Contract Law deals with liability insurance and provides as follows in translation:-
" I General Provisions
1. Subject and Scope of the Contract
Article 1473
1) Under a liability insurance contract, the insurer shall pay to the victim compensation up to the amount stipulated in the insurance contract, for the liability of the insured due to an event that occurred, unless otherwise agreed, during the contract period, even if the loss materialised after that period.
2) If the insurance is taken out for the liability related to the enterprise of the insured this insurance shall cover, unless otherwise agreed, the liability of the representatives, administrators, auditors and also the employees of the insured. In that case, the insurance shall be deemed taken out in favour of those persons.
…
6. Right of Direct Action
Article 1478
The victim may claim its loss up to the insured sum directly from the insurer provided that the claim is brought within the prescription period to the insurance contract.
7. Right of the Insurer to obtain Information from the Victim
Article 1479
The insurer may request information from the victim for determining the cause and the extent of the loss. The victim must provide all of the documents that can reasonably be provided…
II Compulsory Liability Insurance
1. Obligation of Contracting
Article 1483
Subject to the provisions of other legislation, insurers shall not refrain from granting cover for compulsory insurances in the insurance classes in which they are active.
2. Obligation of Performance as against the Victim
Article 1484
1) In case the insurer is totally or partially discharged of its obligation of performance towards the insured, its obligation of performance as against the victim shall remain effective up to the sum insured under the compulsory insurance.
2) The termination of the insurance relationship shall become effective after one month following the notification by the insurer to the competent authorities that the contract has expired or is to expire.
…"
Teare J observed of these provisions that it was apparent from both articles 1473 and 1478 that Turkish law confers upon "the victim" a right to sue the liability insurer. Such a right was not given by the liability insurance contract because only the insured can sue under the contract. However, there was obviously a close connection between the victim's right and the insured's right under the contract because the limit of the insurer's liability to the victim is the limit under the contract and any claim must be brought within the time period allowed by the contract.
On 8 th March 2014 the vessel YUSUF CEPNIOGLU, which was operating on a liner service between Turkey and North Africa, grounded on the Greek island of Mykonos. Salvage services were rendered but the vessel was a total loss. At the time of the grounding the vessel was laden with 207 containers. The cargo was being carried pursuant to 74 bills of lading issued by the time charterers. The proper law and jurisdiction of the bills...
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