Category: Brexit

EU top court: no avoiding the bar on intra-Europe ASIs by bringing a damages claim instead. But how far does it matter post-Brexit?

Don’t say it too loudly, especially when there’s a European listening, but yesterday’s CJEU decision in The Alexandros T (C-590/21) [2023] EUECJ C-590/21 might make some English lawyers a bit more relieved that Brexit happened. Put simply, the EU court has held that just as under EU law you can’t get an anti-suit injunction in an EU court preventing suit elsewhere in Europe, you equally can’t sue a litigant for damages for bringing suit there in breach of contract. But this will not affect any ost-2021 proceedings here.

The Alexandros T, a Capesize bulker of 172,000 dwt, will be familiar to most readers. She sank off South Africa in 2006, taking with her 26 crew and a large cargo of Brazilian iron ore destined for China. Her hull insurers were initially not entirely convinced about the resultant claim against them, but around Christmas 2007 paid a sum in settlement under an agreement governed by English law. That agreement provided for a release of the underwriters and everyone associated with them and contained a London jurisdiction clause in respect of any dispute.

Little did the underwriters know that this was not the end, but – this being well before Brexit – rather the beginning of a massive game of juridical Euro-ping-pong.

Four years after the settlement, Alexandros T’s owners Starlight brought proceedings in Greece against the underwriters and also Charles Taylor, a marine insurance consultancy that had acted for them. They claimed big money on the basis that the underwriters and others had indulged in skulduggery in defending the claim, and had acted tortiously in blackening Starlight’s name and causing it serious losses.

Unable to get an anti-suit injunction because of settled EU law based on the full faith and credit principle, the underwriters countered by suing Starlight in England for damages for breach of the settlement agreement (i.e. the costs of defending, and anything they were forced to pay under, the Greek suit). Starlight attempted to invoke the Greek proceedings to stop these latter proceedings in their tracks under the lis alibi pendens provisions of what was then Art.27 of Brussels I (now Art.29 of Brussels I Recast). However they failed, it being held by the Supreme Court that the claims were merely related and did not involve the same subject-matter, and that the new claims should be allowed to go forward. (See The Alexandros T [2013] UKSC 70; [2014] 1 Lloyd’s Rep. 223.) The underwriters duly proceeded, and Burton J’s judgment giving damages against Starlight was upheld by the Court of Appeal in July 2014 in Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG [2014] EWCA Civ 1010; [2014] 2 Lloyd’s Rep. 544.

Having got this judgment, the underwriters took the battle to the enemy and sought to have it recognised in Greece. The Piraeus Court of Appeal refused recognition, holding in 2019 that it would be manifestly contrary to public policy under Art.34 of Brussels I (Recast Art.45). The Areios Pagos, the Greek Supreme Court, sought the opinion of the CJEU.

Yesterday that court, in a short (by EU standards) judgment, went against the underwriters. It said, first, that a claim for damages for suing in another EU court, being dissuasive of the maintenance of EU proceedings and aimed at impeding them, was no more permissible under the Brussels I scheme than a claim for an anti-suit injunction (see [25]). It then went on to say that this factor provided ample justification for a court in the EU to say that to enforce or recognise a judgment arising out of such a claim was manifestly contrary to EU (and hence national) public policy. It therefore gave a green light to the Greek courts to refuse recognition of the 2014 judgment, something which will no doubt formally take place in the not too distant future.

Fairly predictable was the holding that claims for damages for suing in an EU court were prohibited by Brussels I, contrary to English decisions the other way – notably West Tankers Inc v Allianz SpA [2012] EWHC 854 (Comm); [2012] 2 Lloyd’s Rep. 103. A combination of post-Brexit Schadenfreude, the court’s highly sensitive political antennae, and its ingrained instinct for centralisation of power Brussels-ward whenever possible, saw to that. But in respect of post-Brexit proceedings it is not now very important: such actions for damages continue available in England whatever Brussels says, and the betting must now be that the UK will never again sign up to any jurisdictional framework in the Brussels-Lugano mould.

That leaves the holding that judgments obtained here for damages are not portable to Europe by way of recognition. This raises two issues.

First, it will make the enforcement of judgments like that in The Alexandros T slightly harder – though perhaps this difficulty should not be exaggerated, since most of those involved in international trade will at some time want to deposit monies in London which can then be the subject of execution proceedings.

Secondly, there is a nice issue whether the EU position would survive a UK ratification of the 2019 Hague Judgments Convention, which by Art.7(1)(c) contains a similar public policy let-out. You might think it did: but matters aren’t as simple as that. Unlike Brussels I, the Hague Convention is not an EU instrument and it is therefore not automatically subject to overriding EU public policy considerations to the same extent. It is certainly possible that the EU would be in breach of Hague if the CJEU decided that judgments given in non-EU courts for damages for suing in EU courts were automatically excluded from its ambit as they are from Brussels I. We’ll just have to wait and see.

A DAY TO REMEMBER: THE 2019 HAGUE JUDGMENTS CONVENTION ENTERS INTO FORCE

At last, we no longer lack functional global rules for the recognition and enforcement of judgments. Only a couple of days ago, on 1 September 2023, the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC) entered into force. This is a momentous event for private international law and a real game-changer for international dispute resolution. With its entry into force, the HJC can now be utilised by commercial parties and contribute to a swift resolution of disputes by shortening expenses and timeframes for the recognition and enforcement of a foreign judgment in other jurisdictions. Having adopted the HJC, the Hague Conference achieved its target to guarantee the effectiveness of court judgments similar to arbitral awards as ensured by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

A year ago and almost around the same time we provided some comments on the provisions of the Convention determining the procedure for becoming effective (see here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog). According to Articles 28 and 29 of the HJC, the Convention shall enter into force on the first day of the month following the expiration of the twelve months after the second State has deposited its instrument of ratification, acceptance, approval, or accession. On this occasion, the Convention was ratified by Ukraine and the EU on 29 August 2022, and now has a force of law for both. In addition, Uruguay ratified the treaty on 1 September, and it will come into force for the latter 12 months later.

The HJC provides recognition and enforcement of judgments given in cross-border civil and commercial cases, excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. That being said, the HJC is not an ideal framework and does not include every issue that might arise from civil and commercial cases. Yet, it complements the HCCCA not only by sharing the same objectives but also by covering judgments given by non-exclusively designated courts; therefore, it indeed serves party autonomy and ensures the effectiveness of an entire range of choice of court agreements.

The Convention further contributes to certainty and access to justice post-Brexit since it is the only international treaty providing rules for the recognition and enforcement of judgments in cross-border commercial disputes. However, the UK has not ratified the Convention yet and even if it does, the Convention will enter in and for the UK only twelve months after the date it deposits an instrument of ratification. Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. Indeed, if ratified, the HJC will not only contribute to access to justice and effectiveness of judgments involving EU-related civil and commercial cases but also the UK’s global judicial cooperation with the other Hague Contracting States will be enhanced. For the previous post related to the UK’s plans to ratify the HJC see: The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog.

Yet, we must admit the HJC leaves significant matters unresolved. Besides excluding extremely important commercial matters from its application scope, the Convention does not contain any specific regulation of parallel proceedings, lis pendens, and related actions – the famous yet infamous Brussels terminology. In this regard, there is a hope that the Hague Conference will succeed in its Jurisdiction Project. Indeed, if the latter is achieved the three Conventions might well function together and provide safeguards for international commercial parties and global justice.

About turn on the Retained EU Law (Revocation and Reform) Bill

The Retained EU Law (Revocation and Reform) Bill originally proposed sunsetting all retained EU law by the end of 2023 unless a case was specifically made for its retention. After pressure from the House of Lords the Government has recently tabled an amendment which will replace the automatic revocation of all retained EU law on 31 December 2023, with the production of a list of 600 pieces of retained law that are to go by into the sunset at the end of the year. So what retained law in the maritime sphere is on the list?

The Port Services Regulation (EU) 2017/352 is to go – no surprise there.

Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU not surprisingly goes as well.

Various EU legislative instruments relating to compliance with the STCW have gone as they have been superseded by the Merchant Shipping (Standards of Training, Certification and Watchkeeping) Regulations 2022.

The Merchant Shipping (Flag State Directive) Regulations 2011 (S.I. 2011/2667) go as they have become inoperable as the UK is no longer an EU state.

Rome I and Rome II and legislation around the Environmental Liability Directive 2004 and the Offshore Safety Directive 2013 are NOT on the list.

The Ball is Rolling: The UK to ratify the Hague Judgments Convention?

On 15 December 2022, the UK government published a public consultation paper on the possible ratification of the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). With the UK-wide call open in all three jurisdictions by 9 February 2023, the Government is seeking expert views from practitioners, academics, businesses, and any other persons with an interest in or who may be affected by cross-border civil and commercial litigation in the UK on its very welcome plan to become a Contracting State to the Convention. Besides the open call and public responses, the officials including experts from the Lord Chancellor’s Advisory Committee on Private International Law will get involved in the consultation before the publication of the outcomes.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, to guarantee the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

In August 2022, with the subsequent ratifications of the Convention by the EU and Ukraine, its entry into force became a long-awaited reality and indeed, the Convention is about to enter into force from 1 September 2023 (see my earlier blog post here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog).

As the jurisdiction is well-known for its strong legal traditions and robust private international law rules, the UK instantly enhances its routes of international judicial cooperation to ensure certainty and predictability for citizens and businesses involved in cross-border commercial relationships. Most likely, the EU’s opposition to the UK’s application to ratify the Lugano Convention will impede the ratification of the HJC for the provision of continuing civil judicial cooperation.

The HJC provides recognition and enforcement of judgments given in civil and commercial cases excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serve legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment, and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for mutual recognition and enforcement of judgments in civil and commercial disputes. It will significantly contribute to legal certainty in the post-Brexit era with its sister instrument HCCCA. Indeed, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU.

Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

Further details of the paper and consultation questions are available here: Consultation on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk).

ANTI-SUIT INJUNCTIONS: BACK IN STOCK?

On 18 November 2022, the English High Court handed down a judgment in Ebury Partners Belgium SA v Technical Touch BV [2022] EWHC 2927 (Comm) in favour of an anti-suit injunction against the Belgian proceedings breaching the English exclusive jurisdiction agreement. Mr. Justice Jacobs provided some welcome clarification and confirmation of the principles applicable upon breaches of exclusive jurisdiction agreements in the altered legal landscape post-Brexit. Indeed, the decision might be considered a continuing development following the anti-suit injunction granted by the English Commercial Court against the Spanish court proceedings in QBE Europe SA/NV and another v. Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm).

A brief glimpse of the factual background

The dispute arose between Ebury Partners Belgium SA/NV (Claimant) and Technical Touch and Jan Berthels (Defendants) in April 2021 following their Relationship Agreement for foreign exchange currency services which was consented to electronically through the claimant’s website. The hyperlink attached to the box ticked by Mr. Berthels (director of the company) would have taken onto the webpage containing a pdf file with the terms and conditions of the claimant applicable to their business dealings. Indeed, Clause 27 entitled “Other important terms” included governing law and exclusive jurisdiction clauses as follows:

“[27.11] This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims) shall be exclusively governed by and construed in accordance with the laws of England and Wales.

[27.12] Each party irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims). For such purposes, each party irrevocably submits to the jurisdiction of the English courts and waives any objection to the exercise of such jurisdiction. Each party also irrevocably waives any objection to the recognition or enforcement in the courts of any other country of a judgment delivered by an English court exercising jurisdiction pursuant to this Clause 27.12.”

The parties further concluded a Guarantee Agreement signed by Mr. Berthels as a guarantor regarding TT’s obligations to Ebury. The latter agreement also contained English law and choice of court clauses as follows:

“[15] This guarantee and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the law of England and Wales. If any provision hereof or part thereof shall be held invalid or unenforceable no other provisions hereof shall be affected and all such other provisions shall remain in full force and effect.

[16] Each party irrevocably agrees that subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this guarantee or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of Ebury to take proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.”

When TT failed to pay a margin call and further sums under their Relationship Agreement and no amicable settlement was achieved, TT brought the Belgian proceedings to seek negative declaratory relief and challenge the validity of the two agreements under Belgian law. In response to the Belgian proceedings, Ebury brought an action in England as agreed between the parties. In addition, Ebury also applied for a grant of an anti-suit injunction in breach of the exclusive jurisdiction clause.

A short recap of the judge’s legal reasoning and decision

As expressed by Mr. Justice Jacobs, the arguments brought by the parties – Ebury’s application for an anti-suit order, and the Defendants’ applications challenging the court’s jurisdiction or inviting the court not to exercise it, were pretty much different sides of the same coin.

Indeed, by considering the claimant’s application first, the judge swept away the defendant’s counter arguments. It was emphasised that, while it would not have been possible to grant an anti-suit relief upon the presence of the proceedings at an English and any other European Member State court pre-Brexit, the principles applicable upon such a request were already well-settled. In this context, the court particularly underlined Mr. Justice Foxton’s reasonings in QBE Europe SA/NV v Generali España de Seguros Y Reaseguros [2022] EWHC 2062 (Comm) at para [10]. Indeed, the judgment was based on Section 37(1) of the Senior Courts Act 1981 giving power to the court to grant an anti-suit injunction for restraining foreign proceedings when it was required by the ends of justice, therefore, was “just and convenient”, furthermore, a “high degree of probability” about the existence of a jurisdiction was established.

Being the touchstone of the reasoning, and referring to already established prior authorities, the judge rejected the defendants’ application challenging the English court’s jurisdiction and seeking a stay or a relief to that end. It was confirmed that there was a good arguable case for service out (in line with CPR 6.33 (2B) (b), also pursuant to the application of the Hague Convention on Choice of Court Agreements 2005) and the English court had exclusive jurisdiction per the agreements between the parties.  Accordingly, there were no strong reasons for the English court to decline its jurisdiction – in contrast, the court was bound to accept its jurisdiction per Article 5 of the Convention.

Significance of the judgment

This decision is of high importance for several reasons: It reiterates the emphasis that has been traditionally placed on party autonomy and authentic consent in English law and practice be it in a conventional or an electronic form by incorporation of the standard terms and conditions which would bring a useful reference point for businesses.  Indeed, the Court asserted the principles of English law regarding the dealings in e-commerce and particularly click-wrap agreements.

The judgment also reasserts the termination of the prior authorities preventing the English courts from granting anti-suit injunctions against the proceedings at the European Member State courts (re: West Tankers and Turner Grovit). Indeed, the judgment follows up the Qbe reasoning which was a grand opening of a fresh chapter for anti-suit reliefs post-Brexit. It is worth noting that the availability of such reliefs might also stimulate the European courts to issue similar orders against the English courts bringing the effects of a double-edged sword.

Last but not least, the high value of the judgment derives also from the fact that it addresses the Hague Choice of Court Agreement 2005. While there is still an unreasonable lack of relevant authorities referring to this global convention, the judgment brings hope about more case law and precedents built upon by virtue of the HCCCA 2005.   

Brexit the endgame. Part 2. EU retained law in the maritime sphere.

Further items of maritime EU law that amount to retained law which were implemented through a statutory instrument pursuant to the powers given to the Secretary of State under s2(2) of the European Communities Act 1972.

– The Merchant Shipping (Oil Pollution) (Bunkers Convention) Regulations 2006  SI 2006/ 1244 which implemented the Bunkers Convention

– the Merchant Shipping (Carriage of Passengers by Sea) Regulations 2012 which implemented the Protocol to the Athens Convention, pursuant to the powers given to the Secretary of State under s2(2) of the European Communities Act 1972, and also applied it to domestic voyages within the UK on board Class A ships on or after 30 December 2016 and Class B ships on or after 30 December 2018.  When the Protocol entered into force internationally on 23 April 2014, the UK ratified the Protocol by means of the Merchant Shipping (Convention relating to the Carriage of Passengers and their Luggage by Sea) (Amendment) (Order) 2014 no 361 in exercise of the powers conferred by sections 183(4) and (6) and 184(1) and (3) of the Merchant Shipping Act 1995, and therefore the Protocol itself will remain part of the law of the UK after Brexit. The provision relating to domestic voyages within the UK does, however, constitute retained EU law.

– The Environmental Damage (Prevention and Remediation) (England) Regulations 2015 SI 2015/810 (and equivalent Regulations in Northern Ireland, Scotland and Wales);

– The Merchant Shipping (Compulsory Insurance of Shipowners for Maritime Claims) Regulations 2012, SI 2012 No. 2267.

These will all be subject to the sunset provisions of the Retained EU Law (Revocation and Reform) Bill 2022 unless restated by regulation by a relevant national authority no later that 23 June 2026 (the tenth anniversary of the EU referendum).

Brexit, the endgame. The Retained EU Law (Revocation and Reform) Bill 2022.

On 22 Sept 2022 the UK Government introduced The Retained EU Law (Revocation and Reform) Bill 2022 which provides for two sunset dates for existing retained EU law. On 31st December 2023, all retained EU law will expire, unless otherwise preserved. Any retained EU law that remains in force after this date will be assimilated in the domestic statute book, by the removal of the special EU law features previously attached to it. The Bill provides a second sunset date by including an extension mechanism for delaying the expiry of specified pieces of retained EU law until 2026. The Bill will also reinstate domestic law as the highest form of law on the UK statute book. In case of conflict with retained EU law domestic law will prevail.

There is very little by way of retained EU law that is relevant to the maritime practitioner. The Brussels Regulation and Lugano Convention both ceased to have effect as at the end of the implementation period. The Port Services Regulation survived but is currently on death row and is the subject of a government consultation as to its repeal.

What does remain, however, are the two conflicts of law regulations, Rome I for contracts and Rome II for tort/delict, both now suitably domesticated as UK law, and also the Rome Convention 1980 which was brought into UK law by the Contracts Applicable Law Act 1990, now amended so that it will continue to apply to existing contracts entered into between 1 April 1991 (the date on which the Rome Convention came into force) and 16 December 2009 (after which Rome 1 replaced the Convention in the relevant EU Member States). 

It is likely that these three pieces of retained law will either be specifically retained, or their expiry delayed until the end of 2026, but who knows? Should they disappear into the sunset, conflicts of law will return to the common law rules for contracts made after the sunset date and the rules in Part III of the Private International Law (Miscellaneous Provisions) Act 1995 for torts committed after the sunset date.

Hague Judgments Convention to enter into force!

On 29 August 2022, the European Union deposited its instrument of accession to the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). On the same day, Ukraine ratified the Convention.

According to Articles 28 and 29 of the HJC, the Convention shall enter into force on the first day of the month following the expiration of the twelve months after the second State has deposited its instrument of ratification, acceptance, approval, or accession. On this occasion, the Convention has already two Contracting States, and as a practically effective tool, it will be utilised by commercial parties for the swift resolution of international disputes from 1 September 2023.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, with the aim of guaranteeing the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

The HJC provides recognition and enforcement of judgments given in civil and commercial cases, excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serves legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for the mutual recognition and enforcement of judgments in civil and commercial disputes and it will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. Now, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU. Indeed, the EU’s opposition to the UK’s application to ratify the Lugano Convention will most likely impede the ratification of the HJC for the provision of the continuing civil judicial cooperation.

Insurance and P&I: life in Europe just got easier

Whatever you think of Brexit, there can be little doubt that English P&I Clubs have reaped a substantial dividend from it when it comes to jurisdiction. A discreet bottle or two will no doubt be cracked open as a result of Foxton J’s judgment today in QBE Europe SA v Generali España de Seguros y Reaseguros [2022] EWHC 2062 (Comm).

The facts will be entirely familiar to any P&I claims handler. The Angara, a small superyacht insured against P&I risks by QBE UK under a policy later transferred to QBE Europe, allegedly damaged an underwater cable linking Mallorca and Menorca to the tune of nearly $8 million. The cable owners’ underwriters Generali brought a subrogated claim in the Spanish courts against QBE, relying on a Spanish direct action statute (Arts. 465-467 of the 2014 Ley de Navegación Marítima). QBE pointed to a London arbitration clause requiring disputes between insurer and assured to be arbitrated in London, said that if Generali wanted to enforce the policy they had to take the rough with the smooth. This being a post-Brexit suit, they sought an ASI.

Generali resisted. They argued that they were enforcing a direct delictual liability under Spanish law, and that in any case since the arbitration clause merely referred to assured and insurer (and indeed the whole policy excluded any third party rights under the Third Parties (Rights against Insurers) Act 1999) they were unaffected by it.

Pre-Brexit, QBE’s position would have been fairly hopeless: intra-EU ASIs were banned, and furthermore the effect of Assens Havn (Judicial cooperation in civil matters) [2017] EUECJ C-368/16 (noted here in this blog) would have largely pre-empted the matter in the Spanish courts.

But in this, one of the first post-Brexit P&I cases to come to the English courts, QBE won hands down. Solid first instance authority had extended the rule in The Angelic Grace [1995] 1 Lloyd’s Rep 87 (i.e. that very good reasons had to be shown for not granting an ASI to halt foreign proceedings brought in blatant breach of contract) to cases where the person suing was enforcing transferred rights, as where a subrogated insurer sought to take advantage of contractual provisions between its insured and the defendant. That line of decisions applied here: and Foxton J duly followed it, confirmed it and lengthened it by one.

He then asked whether, properly characterised, Generali’s suit was a tort claim or in substance a claim to piggy-back on the policy QBE had issued. His Lordship had no doubt that it was the latter. True, the Spanish direct action provisions disapplied certain limitations in the policy, such as pay to be paid provisions and a number of defences based on misconduct by the assured; but the matter had to be viewed in the round, and overall the cause of action arising under the 2014 Spanish law, being based on the existence of a policy and limited to sums assured under it, was clearly contract-based. It remained to deal with Generali’s further point based on the limited wording of the arbitration clause. Here his Lordship accepted that parties could provide that an arbitration clause in a contract did not apply to those suing under some derivative title, but said that much more would be required to demonstrate such an intent: the mere fact of reference to the original parties to the contract was not nearly enough.

And that was it: having failed to show any substantial reason why the ASI should not go, Generali were ordered to discontinue the Spanish proceedings.

What messages can P&I clubs and other insurers taker away? Three are worth referring to. One is that the enforcement of jurisdiction and arbitration clauses in a European context is now fairly straightforward. Another refers to the specific case of Spain, which altered its direct action statute in 2014: the QBE case has confirmed that under the new dispensation, as much as under the old, an attempt to use direct action as a means of getting at insurers abroad will continue to be be regarded as essentially an attempt to enforce the insurance contract. And third, judges in the UK are unlikely to be very receptive to attempts by claimants desperate to litigate at home to give arbitration or jurisdiction clauses an unnaturally narrow meaning.

Life, in short, has got a good deal easier for P&I interests. Now, where’s that bottle of cava?