Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurnace Company Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Moore-Bick,Mr. Justice Moore-Bick |
| Judgment Date | 18 December 2003 |
| Neutral Citation | [2003] EWHC 3158 (Comm) |
| Docket Number | Case No: 2003 Folio 442 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 December 2003 |
[2003] EWHC 3158 (Comm)
The Honourable Mr. Justice Moore-bick
Case No: 2003 Folio 442
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Ricky Diwan (instructed by Richards Butler) for the Claimant
Mr. Christopher Smith (instructed by Holmes Hardingham Walser Johnston Winter) for the Defendant
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
In October 1999 an Indian merchant, Saluja Fabrics, shipped on board the vessel Hari Bhum at Calcutta a container said to contain various types of garments for carriage to Moscow. The container was shipped under a through transport bill of lading issued by Borneo Maritime Ltd which provided for the goods to be carried by sea to Kotka, Finland and thence by road to Moscow. The goods were insured against loss or damage in transit by the defendant, New India Assurance Company Limited ("New India").
The container arrived at Kotka on 30 th November 1999. On 16 th December Borneo Maritime Oy, an associated company of the carrier incorporated in Finland, issued a CMR waybill for the carriage of the container by road from Kotka to Moscow. Unfortunately, the container did not reach Moscow, having been lost in circumstances which are still in dispute somewhere in the course of its journey through Russia.
The claimant, Through Transport Mutual Insurance Association (Eurasia) Ltd ("the Club"), is a mutual insurance association which provides insurance to its members in respect of various kinds of losses and liabilities incurred in connection with the carriage of goods. Borneo Maritime Ltd was a member of the Club for the year beginning 1 st September 1999; Borneo Maritime Oy was insured as an associated company of Borneo Maritime Ltd.
Following the loss of the container Saluja Fabrics made a claim against New India. In due course it was compromised and the benefit of any claim against the carrier was thereupon assigned to New India. During 2002 Borneo Maritime Oy filed for bankruptcy and on 26 th November 2002 it was struck off the register. It is not clear whether any claim had been intimated to the company before that occurred, but it is common ground that no payment had been made by Borneo Maritime Oy or Borneo Maritime Ltd in respect of the loss of the container.
The Club rules for the year beginning 1 st September 1999 contained the following provisions:
" Clause A. Cargo Liabilities
1 RISKS INSURED
1.1 Loss of or Damage to Cargo
You are insured for your liability for physical loss of or damage to Cargo and for consequential loss resulting from such loss of damage.
General Provisions
Clause A. Exclusions & Qualifications
1. STANDARD EXCLUSIONS AND QUALIFICATIONS
1.3 Indemnity insurance
Insurance with the Association is on the basis of indemnity which means that the Association shall pay you only
(a) after you have suffered a physical loss of your insured property, for example, your Equipment, or
(b) after you have expended money, for example, by paying a claim of your Customer or a Third Party for which you are liable or by paying for repairs to your insured property.
Clause D. Law & Disputes
1. LAW
Every insurance provided by the Association and the rights and obligations of you (or any other person) and the Association arising out of or in connection with such insurance, is subject to and shall be construed in accordance with English law.
2. DISPUTES
If any difference or dispute shall arise between you (or any other person) and the Association out of or in connection with any insurance provided by the Association or any application for or an offer of insurance, it shall be referred to arbitration in London."
On 16 th December 2002 New India began proceedings in its own name against the Club in Finland by applying to the District Court of Kotka for the issue of a writ in respect of its claim for the loss of the container. The claim was made under section 67 of the Finnish Insurance Contracts Act 1994 which, broadly speaking, gives a claimant the right to proceed directly against the defendant's insurer when the insured defendant himself is insolvent. On 3 rd January 2003 a writ was issued which was served on the Club in this country on 31 st March. On 30 th April the Club took steps to contest the jurisdiction of the District Court of Kotka and on 8 th May it issued an arbitration claim form in this court seeking a declaration that New India was bound to pursue any claim in arbitration and an injunction to restrain it from pursuing its claim in Kotka. On 16 th May Gross J. gave the Club permission to serve the claim form on New India out of the jurisdiction and on 2 nd July, following service of the proceedings in Mumbai, New India applied for the order for service out of the jurisdiction to be set aside or, in the alternative, for the proceedings here to be stayed in the exercise of the court's discretion.
On 22 nd October 2003 the District Court of Kotka rejected the Club's challenge to its jurisdiction. In reaching its conclusion the court held that it had jurisdiction to determine the claim because it arose out of an international contract for the carriage of goods by road and because under article 10 of the E.C. Judgments Regulation ( Council Regulation (EC) No 44/2001) claims against insurers may be brought in the courts of the country where the harmful event occurred. It held that neither Saluja Fabrics nor New India were parties to the contract of insurance and that New India's claim against the Club was not derived from Borneo Maritime Oy. For these reasons it was not bound by the arbitration agreement. I understand that an appeal against that decision is pending.
The matter now comes before me on the hearing of New India's application to set aside service or to stay the action and the Club's application for an injunction restraining New India from pursuing the proceedings in Finland. Logically the first question to consider is that of service out of the jurisdiction, but at the heart of both these applications lies the question whether, in the eyes of English law, New India's claim against the Club is subject to the arbitration clause in the Club rules.
The arbitration clause
The arbitration clause is framed in wide terms. It applies to any difference or dispute arising out of or in connection with the insurance and it purports to extend to disputes involving third parties as well as members. On the face of it, therefore, it is apt to cover claims under the insurance made against the Club by assignees or others whose claims are derived in one way or another from a member. Mr. Diwan submitted that the claim now being pursued by New India in Kotka is in substance one to enforce directly against the Club the rights of indemnity available to Borneo Maritime Oy under the contract. In effect it is seeking to obtain the benefits of a statutory assignment and is therefore bound by the arbitration clause in the rule: see Socony Mobil Oil Co Inc v West of England Ship Owners Mutual Insurance Association (London) Ltd (The 'Padre Island') [1984] 2 Lloyd's Rep. 408.
Mr. Smith did not dispute that the arbitration clause in the Club's rules is wide enough to apply to someone who seeks to pursue a claim against the Club under the terms of the insurance, whether as an assignee or on some other derivative basis. He submitted, however, that New India is not seeking in its action in Finland to enforce a derivative claim of that kind, but is pursuing an independent statutory remedy provided by the Insurance Contracts Act and that therefore the arbitration clause has no application. This raises a question of characterisation.
Although New India is pursuing a claim in Finland under a Finnish statute, I think Mr. Diwan was right in submitting that in proceedings before an English court a dispute about the nature of New India's claim can only be resolved by applying the principles of English law relating to characterisation. The learned editors of Dicey and Morris on The Conflict of Laws (13 th ed.) suggest in paragraph 2–034 that characterisation is in essence a process of refining conflicts of laws rules by expressing them with greater precision and if that is correct, as I think it is, it follows that the court must apply the principles of its own law relating to characterisation rather than those of the relevant foreign law.
Three modern cases to which I was referred support that conclusion. The first is National Bank of Greece and Athens v Metliss [1958] A.C. 509. The case concerned sterling bonds issued by the National Mortgage Bank of Greece to the respondent in 1927. In 1949 the payment of interest on bonds payable abroad (which included the bonds issued to Metliss) was suspended by emergency legislation and the moratorium was subsequently continued until and after the commencement of the action. As a result of certain bank amalgamations the National Bank of Greece and Athens became the universal successor to the National Mortgage Bank of Greece. Metliss brought an action on the bonds in this country. The House of Lords characterised the claim as one to enforce a contractual obligation and held that, since the proper law of the contract was English law, Greek legislation was ineffective to alter the obligations contained in the bonds.
The next case is Adams v National Bank of Greece [1961] A.C. 255. Following the decision at first instance in National Bank of Greece and Athens v Metliss the legislation providing for the amalgamation of banks which had given rise to the universal...
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