06th Nov 2013
In an important judgment upholding the integrity and effectiveness of exclusive jurisdiction clauses generally and settlement agreements specifically, the Supreme Court, reversing the decision of the Court of Appeal, has held inter alia that a claim for breach of a settlement agreement and/or an exclusive jurisdiction clause will not attract a mandatory stay under Article 27 of the Judgments Regulation.
In May 2006, the “Alexandros T” sank off-shore South Africa; her owners, Starlight Shipping Co., commenced proceedings in the Commercial Court against the vessel’s insurers for an indemnity. Starlight’s claims were settled by agreements concluded in December 2007 and January 2008, and the English proceedings were stayed pursuant to consent Tomlin orders. Previously, Starlight had applied for permission to amend its particulars of claim, to plead a claim for damages for late payment of the insurance indemnity; Tomlinson J refused permission on the basis of the rule in Sprung v Royal Insurance  Lloyd’s Rep IR 111, that an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim.
More than three years later, in April 2011, Starlight and various affiliated companies and individuals commenced nine actions, pleaded in materially identical terms, against the insurers and their legal representatives, amongst others. Starlight’s claims in Greece were for damages for alleged breaches of the Greek Civil and Criminal Codes relating to the insurers’ handling of Starlight’s claim under the insurance policies and to the insurers’ conduct in defending the prior Commercial Court proceedings.
In turn, the insurers applied for relief within the original English proceedings, which had been stayed by the Tomlin orders save for bringing the terms of the underlying settlement agreements into effect. The insurers claimed (a) under the indemnity provisions contained in the settlement agreements and (b) for damages for breach of the settlement agreements and the exclusive jurisdiction clauses in the settlement agreements and the insurance policies. Starlight applied for the insurers’ applications to be stayed pursuant to Article 28 of the Judgments Regulation, yet expressly disclaimed any reliance on Article 27. At first instance, Burton J granted the insurers the relief sought, and dismissed Starlight’s application for a stay under Article 28.
The Court of Appeal, however, concluded that the English and Greek proceedings involved the same cause of action and the same parties, that the English court was second seised, and that it was accordingly required to stay the English proceedings pursuant to Article 27 of the Judgments Regulation. The insurers and their legal representatives appealed, and Starlight cross-appealed under Article 28.
The Supreme Court, reversing the Court of Appeal, held that (with the possible exception of certain claims for declaratory relief) the English and Greek proceedings did not involve the same cause and the same objet, and so Article 27 did not bite. Further, the Supreme Court held that it would not grant a discretionary stay under Article 28, even were the English court not first seised (which the Court, following Stribog, strongly doubted). Moreover, the Court indicated that it would have held that Starlight’s claim under Article 27 was made too late: albeit that the Court of Appeal had a discretion to hear an appeal on a novel point of law, the time limit for making an application for a stay under Article 27 pursuant to CPR 11(4), as varied by CPR 58.7(2), had long since passed by the time the case came before the Court of Appeal, and the Supreme Court indicated that such a time limit was not incompatible with EU law. In the result, and in circumstances where Starlight had (it transpires, rightly) disclaimed any reliance on Article 27 at first instance, the Supreme Court was of the view that the Court of Appeal should not have exercised its discretion to extend time pursuant to CPR 3.1(2)(a), although if this point were essential to its decision the Court recognised (reluctantly) that the matter was not acte clair, and indicated that a reference to the CJEU would have been made accordingly.
To view the judgment click here.