XL Insurance Company SE (formerly XL Insurance Company Ltd) v Axa Corporate Solutions Assurance
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Waksman,HH Judge Waksman |
| Judgment Date | 27 November 2015 |
| Neutral Citation | [2015] EWHC 3431 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Claim No: 2015 Folio 109/CL-2015000124 |
| Date | 27 November 2015 |
[2015] EWHC 3431 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
His Honour Judge Waksman QC
(sitting as a Judge of the High Court)
Claim No: 2015 Folio 109/CL-2015000124
Alexander Layton QC and Marie Louise Kinsler (instructed by Ince & Co. LLP, Solicitors) for the Claimant
Veronique Buehrlen QC and Dr Louise Merrett (instructed by Reynolds Porter Chamberlain LLP, Solicitors) for the Defendant
Hearing dates: 4 and 5 November 2015
INTRODUCTION
This is an application by the Defendant, AXA Corporate Solutions Assurance ("AXA") a French insurance company, disputing the jurisdiction of the English Court to hear and determine proceedings brought by the Claimant insurance company, XL Insurance Company SE ("XL"), a European insurance company domiciled here.
XL and AXA are co-insurers of a Delaware company called Connex Railroad LLC ("Connex"), an affiliate of Veolia Environment SA ("Veolia"), part of the French Veolia Group. On 12 September 2008 in Chatsworth, California, there was a serious collision between a freight train and a passenger train operated by Connex on behalf of the Southern Regional Rail Authority trading as Metrolink. 24 people died and many more were injured. Proceedings on behalf of the victims were commenced in California against Metrolink and Connex. XL had insured Metrolink pursuant to three policies of insurance dated 23 September and 13 and 22 October 2008 for the purposes of which Connex was an insured party. AXA insured Violia and its associates which also included Connex pursuant to a policy dated 1 July 2008 ("the AXA Policy")
On behalf of the victims and within the California proceedings, a Federal Interpleader Fund of $200m was established ("the Fund"), this being the limit of the defendants' liabilities under federal law. Once it was established, the Court would allocate the Fund across the victims and their claims against Metrolink and Connex would be at an end. Metrolink's insurers (including XL) paid $146m into the Fund, of which $65m came from XL. AXA was requested to pay into the Fund also but refused on the basis that Clause 2.9.2.2 of the AXA Policy relieved it of any liability where the amount of indemnity due from "local" insurers exhausted the total liability (of $200m).
XL claims that this is a case of double insurance and seeks a contribution from its co-insurer AXA in the sum of $7.8m being the amount which it says AXA should have paid in, but which instead XL was obliged to pay, having regard to the proportions of the risk insured by each. If XL's claim is allowed to continue here, the issue of whether AXA has a defence as against its insured, will be litigated here.
Since these proceedings were commenced after 15 January 2015, questions of jurisdiction are governed by the "recast" Brussels Regulation 1215/2012. This replaced (with significant amendments in some areas), the previous Brussels Regulation 44/2001. I shall refer to the former as Brussels I Recast and the latter as Brussels I.
AXA contends that as a French – domiciled defendant, it should have been sued in France pursuant to Article 4 of Brussels I Recast. XL says that it is entitled to sue here because of the operation of Article 7 (2), alternatively Article 7 (1) thereof. It accepts that it has the burden of showing that there is a good arguable case that it is right on one or other count.
THE ISSUES
Article 4(1) of Brussels I Recast provides that
"Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State."
Article 7 provides that:
"A person domiciled in a Member State may be sued in another Member State:
(1)(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;
(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:
— in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,
— in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided;
(c) if point (b) does not apply then point (a) applies;
(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;"
Article 7 (1) and (2) reproduce in materially the same form Articles 5 (1) and (3) of Brussels I. For obvious reasons all of the cases discussed below (save Iveco SpA and Iveco Limited v Magna Electronics [2015] EWHC 2887) concerned Articles 5 (1) and (3). References to those articles are therefore in the context of Brussels I.
AXA contends that a contribution claim of the kind made here by XL is a "matter relating to a contract" within Article 7 (1), namely the underlying insurance contracts between XL and AXA and their insureds respectively but if so, the place of performance of the "obligation in question" is not England. And if not within Article 7 (1), the claim is not a matter relating to tort, delict or quasi-delict within Article 7 (2). Or if it is, on any view the place where the relevant "harmful event" occurred was not England. On any analysis therefore, the derogations from Article 4 (1) do not operate and AXA must be sued in France.
For its part, XL contends that its claim does not fall within Article 7 (1) but it does fall within Article 7 (2) as to which, the place where the harmful event occurred is England. If, contrary to that, the claim is not within Article 7 (2), then (and very much as a longstop argument) XL contends that if the claim was within Article 7 (1), the place of performance of the relevant obligation is England.
It is not necessary to delve into the facts in any more detail.
SOME GENERAL PRINCIPLES
The following general principles derive from Recitals 15 and 16, and Article 4 of Brussels I Recast and the case-law and are not controversial:
(1) The general rule is that the Defendant should be sued in its country of domicile;
(2) The exceptions to this rule as provided in Brussels I Recast (including Article 7 (1) and (2)) must be interpreted restrictively as they are derogations from that general rule;
(3) The exceptions (where they operate) are justified because there is a close connecting factor between the claim made and the court concerned which should ensure legal certainty and reasonable foreseeability on the part of the Defendant as to where it might be sued, other than in its place of domicile;
(4) The general rule in Article 4 means that, save where otherwise provided, Brussels I Recast should not be interpreted in a way which might lead to recognition of the jurisdiction of the courts of the Claimant's domicile so as to allow it to determine the competent court by reference to his domicile;
(5) But that said, if the proper application of one of the exceptions leads to the conclusion that the court which has jurisdiction is the court of the Claimant's domicile, that is no reason to preclude the Claimant from relying upon it.
At some points in her arguments, Ms Buehrlen QC for AXA appeared to suggest that apart from the relevant provisions the Court should also take into account some supervening requirement of "close connection" akin to "forum conveniens". There is no basis for that gloss, however. See the observations of Christopher Clarke LJ in AMT Futures v Marzillier [2015] 3 WLT 282 at para. 33. Either an exception (properly construed) applies or it does not. If it does, that is the end of the matter and the relevant Court has jurisdiction without more.
IS THE CLAIM WITHIN ARTICLE 7 (1)?
It is common ground that any contract that might be relevant is not one for the sale of goods or provision of services, and so only Article 7 (1) (a) is relevant. Two questions arise:
(1) Is the claim a matter relating to a contract?
(2) If so, where is the place of performance of the obligation in question?
Is the claim a matter relating to a contract?
As a matter of broad analysis, this claim "relates" to a contract, in fact two contracts because it arises out of the fact that both XL and AXA are liable (or in AXA's case allegedly liable) to Connex as their insured under the insurance polices. However there is no contract of any kind between XL and AXA. Although the right of a co-insurer's contribution in cases of double insurance has sometimes been referred to as an "equitable" right of contribution, it is probably more accurate to say that it arises by operation of law, the object being to ensure that the co—insurers are put in the position they would have been in, had the insured claimed against both of them, instead of going against only one. It arises once a co-insured has paid out more than his share, as against the other co-insured, or to put it another way, once he has "overpaid". See the judgment of Lord Mance in International Energy Group v Zurich Insurance [2010] EWHC 773 at para. 15. See also McGillivray Insurance Law 12th Ed para. 24–032 which states that:
"Where there are two or more insurances covering the same rights and interests in any risk, the principle of contribution applies as between the different insurers. Apart from any condition in the policies, any one insurer is bound to pay to the assured the full amount for which he would be liable if his policy stood alone; but, having paid, he is entitled to an equitable...
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