19th May 2020
Peter MacDonald Eggers Q.C. and Marcus Mander acted for 23 insurers under hull and machinery and increased value policies in successfully resisting challenges to the English court’s jurisdiction under Article 29(1) of Brussels I Recast. The hearing was conducted remotely using Skype for Business.
Following the loss of its pelagic freezer stern trawler the “Kapitan Veselkov” in the Gulf of Guinea in 2017, Pelagic sought payment of US$50m from insurers. When insurers questioned the claim, Pelagic brought proceedings against some of the insurers, including the leader Generali Italia SpA, in Treviso in Italy seeking payment injunctions (“the Treviso Insurers” and “the Treviso Proceedings”).
All of the insurers then avoided the policies and commenced proceedings in England against Pelagic and the vessel’s manager claiming declarations of non-liability in reliance on policy conditions providing (in the case of most of the policies) “English Jurisdiction. Subject to English law and practice” which they argued constituted an exclusive English jurisdiction agreement for the purposes of Article 25 of Brussels I Recast. The Treviso Insurers also challenged the Italian court’s jurisdiction.
In response, Pelagic applied to stay the claims of the Treviso Insurers in England under Article 29 on the basis that the Italian court was first seised, and to stay the claims of the other insurers under Article 30(2) pending the outcome of the Treviso Proceedings (it being common ground that the policies of the non-Treviso insurers contained exclusive English jurisdiction agreements). Subsequently, the Treviso court stayed the Treviso Proceedings under Article 31(2) of Brussels I Recast pending a determination by the English court as to whether the policies contained exclusive English jurisdiction agreements for the purposes of Article 25. Pelagic then appealed the Treviso court’s decision to stay the Treviso Proceedings to the Italian Supreme Court.
In the English proceedings, Pelagic argued that the English courts did not have exclusive jurisdiction. In the case of all policies except one (“the Italian Policies”), it argued that the policies incorporated an Italian policy form (the Camogli Policy – Edition 1988) which provided for Italian law and exclusive Italian jurisdiction. It argued that the effect, when combined with the clause providing for English jurisdiction in the policy conditions, was that both the English and Italian courts had non-exclusive jurisdiction. In the case of the remaining policy (“the India Policy”), Pelagic relied on the fact it contained conflicting English and Italian jurisdiction clauses as follows, “Law: English Jurisdiction: English This contract shall be governed and construed in accordance with Italian law and subject to Italian jurisdiction”, the effect of which was to confer non-exclusive jurisdiction on both courts. It contended that, provided the English court was satisfied that Pelagic had a prima facie case that the Italian court had jurisdiction in relation to the claims against the Treviso insurers, Article 31(2) required the English court to stay the English proceedings until the Italian court had determined its jurisdiction as the court first seised or pending the outcome of Pelagic’s appeal to the Italian Supreme Court.
Foxton J. decided that Article 31(2) required him to determine whether the English court had exclusive jurisdiction or not, for which purpose insurers were required to show a good arguable case that it did. If Pelagic had been arguing that the Italian court had exclusive jurisdiction, Recital 22 to Brussels I Recast showed that there was scope for consideration by the court second seised of the potential application of two exclusive jurisdiction agreements and it might have been enough in those circumstances for Pelagic to show an arguable case that the Italian court had exclusive jurisdiction. However, that was not the position in the present dispute.
Foxton J. then proceeded to consider whether on their correct construction the policies contained exclusive English jurisdiction agreements for the purposes of Article 25 and concluded that they did. The judge approached that question applying English law, which he concluded was the applicable law of the policies as well as the lex fori. He concluded that the case was one where the specially negotiated policy conditions providing for English jurisdiction took precedence over the incorporated terms in the Camogli form and that it was not appropriate to seek to read the conflicting clauses together so as to provide for non-exclusive jurisdiction in both courts. As in a case such as The Starsin  UKHL 12, the parties would not expect to have to look at incorporated terms in order to understand the meaning of key contractual provisions set out in the policy conditions. In the case of the India Policy, Foxton J. decided that the reference to Italian law and jurisdiction was the result of a clear mistake in the drafting which he was entitled to correct through the process of interpretation. He concluded that the insurers had a good arguable case that the English jurisdiction agreements were exclusive for the purposes of Article 25 under all policies.
In the circumstances, the question of staying the claims of the non-Treviso insurers under Article 30(2) did not arise. However, Foxton J. said that he would have declined to stay their claims even if he had concluded that he should stay the claims of the Treviso Insurers. The fact that their policies contained exclusive English jurisdiction agreements was a powerful factor against a stay, and any fragmentation of proceedings was the result of Pelagic’s own decision to bring proceedings in Italy, where jurisdiction could not be established against the non-Treviso insurers, instead of bringing proceedings against all insurers together at the same time in England.
Peter MacDonald Eggers QC and Marcus Mander were instructed by Kennedys.
A copy of the judgment can be found here.