27/04/2016

Insurance Policies and Jurisdiction – AXA Corporate Solutions SA v Weir Services Australia Pty Ltd

The Commercial Court’s decision in this case (Axa v Weir  [2016] EWHC 904 (Comm)) late last week provides a useful restatement of the jurisdictional position concerning insurance written on the London market.

The case, confirms the English Court’s willingness to find that England is the natural forum in such cases even where (as here) there has been no express choice of jurisdiction.  It also shows a willingness to allow parties to continue related foreign proceedings and, if appropriate, to stay the English proceedings (see also, e.g. my post on Blue Tropic and Josephine Davies’ post on Jong v HSBC).

The Claimant Insurers (“AXA”) are a major insurance company. Their London office had issued two types of policies to the insured:(i) global liability policies issued in England covering companies in the insured’s group, including an Australian subsidiary (The Defendant, “Weir”), and (ii) a “broadform” liability policy issued in Australia in favour of Weir and other subsidiaries in the group.  A dispute arose between the parties as to the extent of the Weir’s insurance coverage.

AXA issued proceedings in England seeking declaratory relief in relation to the global policies.  Weir subsequently issued proceedings in Australia (New South Wales), seeking an indemnity under both the global policies and the Australian policy. The Australian proceedings were brought as soon as Weir became aware of the English proceedings.

Alexander Layton QC of 20 Essex Street appeared for Weir.

The Jurisdiction related applications

Two parallel applications were brought before the English court simultaneously.

AXA sought an anti-suit injunction to restrain the Australian proceedings insofar as they related to the global policies. It submitted that the Australian proceedings, insofar as they related to the global policies were vexatious, oppressive, designed to frustrate the English proceedings and should be restrained.

Weir sought to set aside permission to serve out for the English proceedings. Weir accepted that there were grounds for service out, due to the global policies being governed by English law and the contracts being made here. However, Weir argued that AXA bore the burden of proving that England was the proper place to bring the claim.

Should Weir be successful, then AXA’s anti-suit application would necessarily also fall away.

The Decision of Blair J

… that the English Court had jurisdiction over global policies dispute

The global policies did not contain a jurisdiction clause but instead stated that “The Insurer proposes that the policy will be governed by the laws of England and Wales, unless the Insured and the Insurer agree otherwise”.    Applying the jurisdiction clause (and the fact that the parties had reached no contrary agreement) meant that English law was the applicable law.   Indeed, it was common ground between the parties that the global policies were governed by English law.

Further, it was not disputed that, absent choice, the policies were governed by English law since they were issued by the English branch of AXA pursuant to Articles 4 and 19 of the Rome I Regulation.

After a “relatively balanced debate”, Blair J concluded that England was the appropriate forum to hear the claims under the global policies. He considered that the decisive factor was the global policies were effectively subject to English choice of law. The form of the policy was widely used, and generally governed by English law. In this instance, the global policies stood at the apex of a worldwide network of policies. It was desirable that the key provisions of these policies be determined by English law.

Blair J was influenced by previous jurisprudence and commentary, including Dicey, Morris & Collins, to the effect that, in cases where insurance was written on the London market, and governed by English law, England was the natural forum.

Blair J considered that Weir’s strongest argument was that the New South Wales Court would be able to hear the entire dispute, whereas the English court could only take jurisdiction in respect of the global policies. Nevertheless, he did not consider that this factor outweighed the English law applicable to the global policy.

Weir’s application to set aside permission to serve out the English proceedings therefore failed.

… that no anti-suit injunction would be granted to AXA

However, AXA’s application for an anti-suit injunction also failed. Where there is no English jurisdiction clause in the contract, the court’s power to grant an anti-suit injunction depends on the applicant showing that pursuing the proceedings before the foreign court would be unconscionable, vexatious or oppressive. That Weir brought the Australian proceedings in a tactical manner did not make them vexatious or oppressive.

Thus, both the English and Australian proceedings were left live to run in parallel. However, as a matter of case management, the English proceedings were to be stayed, pending prior resolution of the Australian issues.