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Court asserts its jurisdiction in marine insurance dispute

Insights / 29-06-2020

Generali Italia SpA and others v. Pelagic Fisheries Corporation and another (Kapitan Veselkov) [2020] EWHC 1228 (Comm)

In an insurance coverage dispute, the English Commercial Court has held that the insurers had much the better of the argument that the policies in question incorporated an exclusive English Court jurisdiction clause. The Court, therefore, declined to stay its proceedings pending a final determination by the Italian courts on their own jurisdiction. The case highlights the type of issue that can arise where a cover note incorporates different terms of cover and potentially conflicting jurisdiction provisions. 

The background facts

The vessel, a pelagic freezer stern trawler, was part of a fleet managed by Fairport. The vessel sank in February 2017, resulting in claims under the hull and machinery and increased value policies taken out by Fairport on behalf of the owners.

The insurances of vessels in the fleet had been led by Italian insurers, Generali, for a number of years. The Fleet Policy in this case, to which a number of insurers subscribed, incepted in May 2015. The various insurers were provided with cover notes reflecting the terms on which they subscribed. When the Fleet Policy was renewed in November 2016, the brokers provided the insureds with a composite cover note.

The cover note provided to Generali by the brokers provided for English law and jurisdiction (the Jurisdiction Condition). However, it also referred to the “Camogli Policy”, a printed form of marine insurance policy used in the Italian market. The Camogli Policy provided for Italian law and Italian court jurisdiction (Article 3). Some of the cover notes provided to other participants were on the same terms as the Generali cover note, as was the composite cover note. Other cover notes, however, provided only for English law and jurisdiction, with no reference to the Camogli Policy.

The vessel owners had commenced proceedings in Treviso, Italy against Generali and a number of the other insurers (Treviso insurers), submitting that the relevant policies were subject to an agreement providing for Italian Court jurisdiction. The Treviso insurers contended that the policies were governed by an exclusive English Court jurisdiction provision. The first instance Italian Court stayed its proceedings pending an English Court determination on the issue. The owners’ appeal from this decision was pending and had not been determined at the time of the judgment under review.

In the meantime, all the insurers commenced English Court proceedings, seeking declarations of non-liability and purporting to avoid the policies for, among other things, misrepresentation and non-disclosure. The insureds asked the Court to declare that it had no jurisdiction to hear the Treviso insurers’ claims, alternatively to stay those claims pending the Italian Court’s determination on whether the Treviso policies were subject to an Italian jurisdiction clause. The Court was also asked to stay the claims of the remaining (non-Treviso) insurers, pending the final determination of the Italian proceedings. This was on the basis that it would be expedient for all the claims to be heard together.

The Commercial Court decision

Under the Recast Brussels Regulation, where there is, or found to be as here, an exclusive Article 25 choice-of-court agreement and proceedings are commenced in a non-designated court; that court should stay its proceedings as soon as the designated court is seised of proceedings (even if they are commenced later) and allow the designated court to rule on its own jurisdiction. In other words, the designated court has priority to decide on the validity of the jurisdiction agreement and on the extent to which the agreement applies to the dispute before it.

Here, there was arguably an exclusive English Court jurisdiction clause. There was by contrast no argument that there was an exclusive Italian Court jurisdiction clause, only a prima facie case that the English and Italian courts both had non-exclusive jurisdiction. The Court decided that it should proceed to determine whether there was an exclusive jurisdiction clause in its favour rather than await a ruling on jurisdiction from the Italian Court. Indeed, the Italian Court had already stayed its proceedings to allow the English Court to rule on the issue. The Court, therefore, rejected the insureds’ argument (under Article 31(2) of the Regulation) that it should stay the English process until the Italian Court had finally determined that it did not have jurisdiction.

As to whether the Treviso policies were subject to an exclusive English Court jurisdiction clause, the principal issue here was whether the reference to English jurisdiction in the Jurisdiction Condition prevented Article 3 in the Camogli Policy from being incorporated into the Treviso policies (as the Treviso insurers submitted), or whether the clauses could and should be read together so as to provide for the English and Italian courts both to have jurisdiction (as the insureds submitted).

The Court stated that where a contract contains specifically negotiated terms, and also incorporates a pre-existing set of standard or printed terms, the former will prevail over the latter to the extent of any inconsistency. In certain cases, and where possible, the Court should seek to read the specifically negotiated and the incorporated terms together. In this case, however, the Court found that there were a number of factors which, cumulatively, led to the conclusion that the Jurisdiction Condition was intended to operate as a standalone provision, rather than one whose contractual effect depended on reading it together with Article 3. In particular:

  1. The Jurisdiction Condition was a bespoke provision specifically agreed for the Treviso policies, and was set out in terms on the face of the cover notes. On the other hand, Article 3 was a printed term in a set of standard terms and was not specifically referred to in the contractual documentation.
  2. The way in which the contractual wording referred to the two different provisions suggested that the Jurisdiction Condition was intended to have higher contractual status (similar to a condition) as compared with reference to the Camogli Policy as a “form”.
  3. The contractual documentation in this case was of the type that the parties would expect to set out the key contractual provisions, without requiring them to look at printed terms incorporated by reference to ascertain the meaning and effect of those provisions.
  4. The Jurisdiction Condition would normally confer exclusive jurisdiction on the English courts, providing a single and certain jurisdiction in which all parties were required to bring claims. The fact that other subscriptions to the vessel's cover were subject to exclusive English jurisdiction, and that the other insurers were bound to follow Generali's claims lead, strongly supported the exclusive nature of the Jurisdiction Condition. Reading the Jurisdiction Condition in conjunction with Article 3 would result in different courts having jurisdiction, and the possibility of different insurers or the insureds commencing proceedings in different jurisdictions in respect of the same casualty, even though the other insurers had agreed to follow Generali's claims lead. This would produce an inherently uncommercial outcome of splintering the resolution of coverage disputes.
  5. The choice of English law in conjunction with the reference to English jurisdiction was a powerful factor in favour of construing the choice of English jurisdiction as exclusive.
  6. It was, therefore, more likely that the parties intended the express jurisdiction choice in the bespoke terms to apply to the exclusion of any inconsistent provision in the printed terms (rather than for the two to be read together to achieve an outcome which neither would have on its own).

The Court concluded that its jurisdiction had been established and it declined to stay the English proceedings.

Comment

The Court clearly thought that it was undesirable to have related and parallel proceedings in different jurisdictions in respect of the same incident. It is important to finalise such jurisdictional disputes to prevent the pitfall of what the Court called an Alphonse and Gaston “no; after you” cycle of cases The dispute highlights the importance of contracting parties checking carefully that their contractual documentation does not contain actual or potentially conflicting jurisdiction provisions, particularly where bespoke clauses are combined with standard terms and conditions.

Paul Griffiths

Paul Griffiths Partner

Reema Shour

Reema Shour Professional Support Lawyer

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Maritime