Trust Risk Group SpA v AmTrust Europe Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Beatson,Lord Justice Christopher Clarke,Lord Justice Elias |
| Judgment Date | 30 April 2015 |
| Neutral Citation | [2015] EWCA Civ 437 |
| Docket Number | Case No: A3/2014/4247 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 April 2015 |
[2015] EWCA Civ 437
Lord Justice Elias
Lord Justice Beatson
and
Lord Justice Christopher Clarke
Case No: A3/2014/4247
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Hon. Mr Justice Blair
Royal Courts of Justice
Strand, London, WC2A 2LL
Charles Samek QC and Daniel Shapiro (instructed by Lewis Silkin LLP) for the Appellant
Paul Downes QC and Joseph Sullivan (instructed by Clyde & Co LLP) for the Respondent
Hearing date: 24 February 2015
I. Introduction
This appeal concerns a jurisdiction dispute arising from the breakdown of a business relationship about the placement of medical malpractice insurance in the Italian market. Trust Risk Group SpA ("TRG"), an Italian insurance broker based in Milan, is the appellant. AmTrust Europe Limited ("ATEL"), the UK subsidiary of the American insurance group, AmTrust Financial Services Inc ("AmTrust"), is the respondent.
The underlying question is whether the contractual arrangements between TRG and ATEL consist of a single composite and overarching agreement, a "Framework Agreement" dated 27 January 2011 to which an earlier agreement, a Terms of Business Agreement ("ToBA") dated 20 July 2010 appended to it as a Schedule, is subordinate, or whether the Framework Agreement and the ToBA are two freestanding contracts. The Framework Agreement provides for Italian law and arbitration in Milan. The ToBA contains a jurisdiction and choice of law clause providing that it "be construed according to English law and any disputes arising under it shall … be determined in the English Courts". TRG appeals against the order of Blair J dated 10 December 2014 reflecting his judgment handed down on the same date: [2014] EWHC 4169 (Comm). Blair J decided that ATEL had a "good arguable case" that the ToBA continued as an agreement and was not superseded by the "Framework Agreement", and that the courts of England and Wales have jurisdiction in relation to disputes arising out of that agreement.
The material provisions of the ToBA and the Framework Agreement are set out or summarised in the Appendix to this judgment. The ToBA is a non-exclusive brokering agreement. The Framework Agreement provided for an exclusive relationship between TRG and ATEL regarding medical malpractice insurance in Italy. The parties to it were TRG, ATEL and AmTrust. The judge also ordered TRG to repay €32 million which ATEL claims has been misappropriated from a designated trust account held with Banco di Napoli in the period 13 – 16 October 2014 by TRG's president and CEO, Mr Antonio Somma, but the appeal is limited to the issue of jurisdiction.
Mr Samek QC, on behalf of TRG, submitted that, in this case, the issue of jurisdiction is determined by the proper construction of the Framework Agreement. He argued that the judge was wrong in law and in fact to find that the ToBA was not superseded by the Framework Agreement but "continued as an agreement after the Framework Agreement" without amendment. In a nutshell (see [20ff] below for a fuller summary), TRG's case is that the Framework Agreement is a single complete agreement governing the parties' relationship, including the terms of the ToBA which are scheduled to it and subordinate to it. Mr Samek relied on clause 1.4(b) of the Framework Agreement, set out at §3 of the Appendix to this judgment, which states that ATEL and TRG "shall modify the [ToBA] currently in force between them to the extent necessary to reflect the terms hereunder". He also relied on clauses 5.5 and 5.9 of the Framework Agreement, set out at §7 of the Appendix, which respectively provide that "this Agreement, including its Schedule, constitutes the entire agreement between the Parties with respect to the transactions contemplated herein, and supersedes any prior understanding … with respect to such transactions…" and that the recitals and the Schedule "are an integral part" of "this Agreement".
The effect, Mr Samek submitted, is that where there is conflict between the documents, the terms of the Framework Agreement, in particular the choice of law and jurisdiction clauses, displace those in the ToBA. To regard the ToBA and the Framework Agreement as two separate contracts, as the judge did, leads to different dispute regimes governing the same issues and, in relation to exclusivity, to conflicting provisions. It would have been odd for the parties to have agreed to what he claimed to be an uncommercial and over-complex arrangement. The correct approach was to apply the "one-stop" "one jurisdiction" presumption formulated by Lord Hoffmann in Fiona Trust & Holding Corporation v Primalov [2007] UKHL 40 reported at [2008] 1 Lloyd's Rep. 254 at [13]. The presumption, he argued, "applies all the more where there are apparently contradictory jurisdiction and dispute resolution provisions within the same agreement, both purporting to apply to the whole agreement (as opposed to distinct and carefully defined obligations of the agreement)": skeleton argument §31. He submitted that the judge erred in concentrating on a textual analysis of some of the individual clauses (in particular clause 3(a)), but not giving proper weight to others (in particular clauses 1.4(b), 5.5 and 5.9 of the Framework Agreement) and not standing back and assessing the arrangement as a whole.
ATEL's case is that the ToBA and the Framework Agreement deal with different aspects of the relationship between the parties. The ToBA dealt with premiums and provides for payment of commission by ATEL to TRG for brokering the insurance contracts. The Framework Agreement provided for exclusivity in the Italian market and provided for a payment by TRG to ATEL as consideration for the exclusivity. Mr Downes QC submitted that the judge was correct to conclude (judgment, [50(3)]) that different choices of law and jurisdiction clauses are "rational" in such a situation. He submitted that the difficulties of overlap and conflict relied on by TRG are either imaginary or, in the case of exclusivity, capable of resolution. He also relied on the statements in a number of decisions, most recently in VTB Capital Plc v Nutritech International Corp. [2013] UKSC 5, reported at [2013] 2 AC 337 at [69], [97] – [98] and [156], that appellate courts should be slow to interfere with a first instance judge's assessment at the interlocutory stage of the merits on a jurisdiction point. An appellate court should not, in the light of these statements, interfere unless satisfied that the judge made a significant error of principle or a significant error in the considerations taken or not taken into account.
In sections II and III of this judgment I summarise the factual background and the decision of the judge. Section IV provides a fuller summary of TRG's case than that at [4] – [5] above. Section V contains my reasons for concluding that ATEL has satisfied the "good arguable case" requirement which, in this context, includes what has been described as the " Canada Trust gloss" 1 of "a much better argument on the material available", and that this appeal should be dismissed.
II. The background
The material parts of the factual and procedural background are stated in [8] – [28] of the judgment below. Those relevant to the issue of jurisdiction can be summarised as follows. The ToBA (Appendix, §1) is a standard London-form agreement governing relations between an insurer and a broker. It provided for payment of commission by the insurer, ATEL, to the broker, TRG. It also provided that, where the broker holds monies as cover holder or for onward payment to the insurer's agents or representatives in respect of claims adjustment and legal and similar professional fees, the broker shall hold such monies "as agent and trustee of the Insurer" (ToBA, clause 6.2). Two endorsements to the ToBA were subsequently agreed, respectively making provision in the event that a sub-broker was appointed, and establishing Trust Risk Iberica as a sub-broker in the Spanish medical malpractice insurance market.
The Framework Agreement (Appendix, §§2 – 10) consists of recitals, the terms of the agreement, and a Schedule containing the terms of the ToBA. Recital D states that ATEL and AmTrust, together with other insurance companies owned or controlled by them, defined as "AmTrust", "intend to develop their insurance business in Italy with reference to the medical malpractice ('MedMal') insurance risks, by entering into an exclusive relationship with the TRG insurance group in respect of MedMal insurance risks". Recital E states that the TRG Group (TRG and other companies and/or brokers owned or controlled by TRG) "intends to enter into an exclusive relationship with AmTrust with respect to MedMal insurance risks in Italy".
The exclusivity provisions in the Framework Agreement are in clauses 1.1 and 1.2. Clause 1.1 provides that AmTrust agreed that it would accept insurance proposals for such risks only if they have been submitted by the TRG Group, but (by clause 1.2) it has discretion to accept or decline any risk so submitted. Clause 1.2 also obliges the TRG Group "to submit all its insurance proposals for MedMal risks in the Italian market exclusively to AmTrust".
There were two endorsements to the Framework Agreement. The first, dated 18 January 2012, extended the duration of the agreement from 5 years to 15 years. The second, dated 2 June 2014, replaced Recitals D and E, and a number of other clauses, to reflect the acquisition by Mr...
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