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Peter MacDonald Eggers QC and Sandra Healy successfully obtain interim anti-suit injunction for excess reinsurances

15th Apr 2021

Axis Corporate Capital UK II Limited and Others v Absa Group Limited and Others [2021] EWHC 225 (Comm); [2021] EWHC 861 (Comm)

By an application dated 25th January 2021, the Claimants (the “Reinsurers”) applied for, inter alia, an interim anti-suit injunction against the Defendants restraining them from pursuing proceedings in South Africa which seek any determination of claims as against the Reinsurers under primary, first and second excess, and aggregate retention policies of reinsurance by which the Reinsurers reinsured ABSA Manx for the 2008-2009 year and the 2009-2010 year, in respect of professional indemnity risks (respectively, the “Primary Reinsurances”, the “Excess Reinsurances” and the “Aggregate Retention Reinsurances” and collectively, the “Reinsurance Contracts”).

At an urgent ex parte hearing on 2nd February 2021, Mr Justice Calver granted the interim anti-suit injunction and gave a reasoned judgment: [2021] EWHC 225 (Comm) (the “Calver, J Judgment”). At a subsequent inter partes return date hearing, Mr Nicholas Vineall QC, sitting as a Deputy High Court Judge determined the Defendants’ application to set aside the interim anti-suit injunction and the Reinsurers’ cross-application to continue the interim anti-suit injunction.  The decision was delivered in a judgment dated 13th April 2021: [2021] EWHC 861 (Comm) (the “Judgment”).

The effect of the Judgment is that the interim anti-suit injunction has been continued in respect of the Defendants’ claims in South Africa under the Excess Reinsurances, which represent the bulk of the Defendants’ claims, but not the Defendants’ claims in South Africa under the Primary Reinsurances.

The applications raised some interesting issues as to the proper construction of the relevant jurisdiction provisions and as to the circumstances in which contractual and non-contractual anti-suit injunctions may be granted. The decision is of significance to the insurance/reinsurance market where policies structured over primary and excess layers are common and where the various layers may not always contain identical jurisdiction provisions across the layers, but is also of wider commercial significance as a case in which the bounds of the discretion as to whether to grant a so-called ‘non-contractual’ anti-suit injunction were examined.

The key arguments and findings with regard to the construction of the jurisdiction agreements in the Reinsurance Contracts were as follows:

  • The Judge held that the Choice of Law and Jurisdiction provision in the Excess Reinsurances includes an exclusive English jurisdiction clause (para. 76 of the Judgment). The Judgment is the latest in the modern authority to conclude that the distinction between transitive and intransitive clauses is of little assistance, preferring instead to adopt a more rounded approach to the question whether a jurisdiction agreement is exclusive or non-exclusive (see paras. 73 to 75 of the Judgment).
  • With regard to the Primary Reinsurances, the Reinsurers argued that in circumstances where the Excess Reinsurances (and, for good measure, the Aggregate Retention Reinsurances) contain exclusive English jurisdiction provisions, upon the true construction and/or by an implied term of the Primary Reinsurances where a claim has impacted or would impact the Excess Reinsurances and/or the Retention Reinsurances, as well as the Primary Reinsurances, the Reinsurers and the Defendants have agreed that such disputes are to be subject to the exclusive jurisdiction of the English courts. The essential basis for this argument is that in circumstances where the claim impacts the excess layers (under which the financial exposure was 14 times higher than under the primary layer), the parties would plainly have intended all disputes to be subject to the more restrictive exclusive English jurisdiction regime in the excess layers and for that regime to prevail over the non-exclusive regime in the primary layer in order to avoid the inconvenient and commercially undesirable scenario where essentially the same reinsurance claim is being litigated in multiple jurisdictions, with consequent risk of inconsistent decisions and increased
  • The Judge agreed that the various layers of the reinsurance fell to be construed together (para. 45 of the Judgment), however, the Judge did not accept the Reinsurers’ argument as to the jurisdiction agreement in the Primary Reinsurances (para. 52 and 60), where this argument had found favour with Calver, J (para. 59-60 of the Calver, J Judgment).

Having determined the issues of contractual construction relating to the jurisdiction regime in the relevant contracts, the Judge then considered whether to continue the interim anti-suit injunction.  In this regard, the key arguments and findings may be summarised as follows:

  • In view of the Judge’s decision on the construction of the jurisdiction agreement in the Primary Reinsurances, the question whether to restrain the claims under the Primary Reinsurances in South Africa fell to be treated as a ‘non-contractual case’. The Reinsurers contended that the claims under the Primary Reinsurances in South Africa ought to be restrained on the basis inter alia that: (i) the South African proceedings are vexatious, oppressive and/or unconscionable – the central basis for this contention being that as the Excess Reinsurances contained an exclusive English jurisdiction agreement and, therefore, the practical effect of the claims in South Africa under the Primary Reinsurances was to force 6 out of the 7 Reinsurers that subscribed to the Primary Reinsurances and the Excess Reinsurances to litigate essentially the same reinsurance claim in two jurisdictions; (ii) England is the natural forum for these disputes – the central basis for this being that the Primary Reinsurances (and, for that matter, the Excess Reinsurances) are governed by English law and that England is the only forum where all of the disputes may lawfully be tried together; and (iii) it is in the interests of justice to grant an interim anti-suit injunction restraining the claims in South Africa under the Primary Reinsurances.
  • The Judge did not grant the interim anti-suit injunction on this basis, considering that the “high hurdle” of demonstrating that the claims under the Primary Reinsurances in South Africa were vexatious or oppressive had not been met (para. 83 of the Judgment), that England was not clearly the more appropriate forum for a claim under the Primary Reinsurances (para. 85 of the Judgment) and that the mere fact that there will, on any view, be proceedings on the Excess Reinsurances in this jurisdiction does not render it necessary in the interests of justice to stop the proceedings under the Primary Reinsurances in South Africa (para. 86 of the Judgment).
  • In contrast, on the ex parte application, Calver, J had been prepared to restrain the claims under the Primary Reinsurances in South Africa on the basis advanced by the Reinsurers (para. 75, 77-80 and 83-87 of the Calver, J Judgment). Unlike the Judge, Calver, J considered that England is in any event clearly the more appropriate forum for the trial of the disputes under the Primary Reinsurances (para. 64-72 of the Calver, J Judgment).  Further, Calver, J did not consider that the links between the underlying claims and South Africa were sufficient to displace the other factors which strongly indicated that England is the more appropriate forum (para. 70, 72, 92 and 95 of the Calver, J Judgment).
  • Having concluded that there was an exclusive English jurisdiction agreement in the Excess Reinsurances, the question whether to restrain the claims under the Excess Reinsurances in South Africa resolved to a question of whether the fact that there will continue to be proceedings in South Africa with claims under the Primary Reinsurances constitutes a strong reason for refusing to restrain the claims under the Excess Reinsurances in South Africa. The Judge concluded that there were no strong reasons not to grant the injunction (para. 93-97 of the Judgment). The decision reached by the Judge is consistent with the wealth of authority in this area which shows that the “strong reasons” threshold sets a high bar, which is understandable in circumstances where the parties have freely agreed an exclusive English jurisdiction agreement.

As the Judge acknowledged (para. 98 of the Judgment), the end result is not ideal in that it leaves two sets of proceedings on foot in respect of essentially the same claim.  However, the reality of the present determination is that this represents a success for the Reinsurers.  Five of the Reinsurers did not participate in the Primary Reinsurances so they have successfully obtained an injunction restraining all foreign proceedings.  Additionally, the vast bulk of the quantum of the Defendants’ claims under the Reinsurance Contracts falls within the scope of the claims under the Excess Reinsurances so with regard to the claims that matter most – from the perspective of quantum – the foreign proceedings will have been successfully restrained.

Peter MacDonald Eggers QC and Sandra Healy represented the Reinsurers and were instructed by Simon Goldring, Ben Gold and Matthew Wood of RPC.

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