Firstly, it is one of the first cases to come before the English courts in relation to claims arising out of the attacks on commercial shipping transiting through the Red Sea.
Secondly, it deals with an asymmetric jurisdiction clause in a marine insurance policy, which is quite uncommon as such clauses are more usually found in finance documentation and guarantees.
The background facts
The judgment is short on facts because the Court concentrated on construction of the jurisdiction clause. What is apparent, however, is that the claimant is a Lebanese registered insurance underwriter, Berytus Insurance & Reinsurance Company SAL, and the defendant is its assured, Golden Adventure Shipping SA, a one-ship company registered in the Marshall Islands.
The underwriter sought a declaration of non-liability under the relevant marine insurance policy because, it argued, the total loss of the assured’s vessel Rubymar was due to an event that was expressly excluded under the policy. Therefore, it contended that it should not have to indemnify the assured for the loss.
The claimant had obtained leave to serve the proceedings on the defendant out of the jurisdiction in the Marshall Islands. The defendant indicated in its acknowledgment of service that it intended to contest the English Court’s jurisdiction over the dispute and sought to have the claim form set aside.
The policy underwritten by the claimant was contained in a cover note dated 20 July 2022. It provided for English law to govern the policy. The jurisdiction provision stated as follows:
The claimant contended that, pursuant to [3], it was entitled to commence proceedings in any court that had jurisdiction over the matter and that the English Court had jurisdiction in this case because the policy was governed by English law and practice.
The defendant, on the other hand, argued that the effect of the clause if read as a whole was that only the Cypriot courts had jurisdiction or primary jurisdiction in respect of any claim the claimant brought against the defendant under the policy. To the extent that the Cypriot Court had primary but not exclusive jurisdiction, then the defendant argued that English law principles obliged the claimant to show very strong reasons for departing from what had otherwise been agreed as to the jurisdiction of the Cypriot courts.
Asymmetric jurisdiction clauses
An asymmetric or unilateral jurisdiction clause obliges one party to bring proceedings in a specific court while permitting the counterparty to commence proceedings in that court or in any other competent court.
Although such clauses are most commonly found in finance documentation, they can also appear in other types of commercial contract. Their validity or otherwise depends on the jurisdiction in which a party seeks to enforce them. Some jurisdictions are reluctant to uphold asymmetric jurisdiction clauses because they are by their very nature unequal in terms of allowing the parties to choose where to bring suit. Under English law, however, they are in principle valid and enforceable.
Under the Brussels I Regulation, they have been held to be valid, enforceable and (unless expressly stated otherwise) exclusive. The Regulation no longer applies in the UK, post-Brexit.
The defendant, however, sought to rely on the Hague Convention on Choice of Court Agreements 2005 (Hague Convention) to support its case on the scope of the asymmetric jurisdiction clause in the policy.
The Hague Convention obliges contracting states (including the UK and Cyprus) to give effect to exclusive jurisdiction clauses, such that the courts of the chosen forum cannot decline jurisdiction in favour of another contracting state on the basis of forum non conveniens. However, the Hague Convention does not apply to non-exclusive jurisdiction clauses.
The Commercial Court decision
The tripartite test for establishing whether the English Court has jurisdiction over a claim against defendants situated outside the jurisdiction is as follows:
1. Whether the claimant has a good arguable case that one of the “jurisdictional gateways” applies.
2. Whether there is a serious issue to be tried on the merits.
3. Whether England is clearly and distinctly the appropriate forum for the trial.
Here, the fact that the policy was governed by English law established the required jurisdictional gateway. Additionally, the reference to English “practice” arguably meant the practice in the London marine insurance market, given the factual and contractual context.
There was also clearly a dispute to be resolved concerning coverage, with the claimant having shown at least a seriously arguable case that the loss came within the express terror or war risks exceptions applicable to the policy.
Furthermore, the defendant was contractually estopped, pursuant to [4], from arguing forum non conveniens.
On its true construction, the asymmetric jurisdiction clause in this case was non-exclusive. The Hague Convention was, therefore, irrelevant because it only applied to exclusive choice of court agreements.
The Court added that, while in the case of symmetrical non-exclusive jurisdiction clauses there might be a strong presumption that a party had to show very strong reasons for not commencing proceedings in the chosen (non-exclusive) forum, this did not apply with similar force to a non-exclusive asymmetric jurisdiction clause that incorporated an express agreement permitting the claimant to commence proceedings against the defendant elsewhere and where the forum non conveniens issue was the subject of an express waiver.
The Court accepted that there were limited circumstances in which the defendant could avoid the effect of its forum non conveniens waiver by reference to convenience issues that were not foreseeable at the date the cover was agreed, but did not think that the risk of parallel proceedings was sufficient reason for preventing the claimant from commencing English court proceedings as it was contractually entitled to do.
Nor did the possibility that the claimant had only commenced English court proceedings to pre-empt Cypriot court proceedings by the defendant justify staying the English court proceedings.
In any event, the Court stated that the defendant had not been deprived of any legitimate juridical or other advantage by the commencement of the English court proceedings because it could counterclaim in these proceedings for a declaration that it is entitled to be indemnified under the policy.
The defendant’s application was, therefore, dismissed.
Comment
From a non-marine perspective, the decision is interesting because the Court clarified the distinction between symmetrical and asymmetric jurisdiction clauses in the forum conveniens context.
From a marine perspective, the marine insurance industry will be eagerly awaiting further developments in this litigation.
Source: Hill Dickinson
