England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBCMI 1998/0761/3

(MR JUSTICE CRESSWELL )

Royal Courts of Justice

Strand

London WC2

Friday, 28th May 1999

B e f o r e:

LORD JUSTICE BELDAM

LORD JUSTICE BROOKE

LORD JUSTICE MUMMERY

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GAN INSURANCE COMPANY LIMITED & ANR

CLAIMANTS/RESPONDENTS

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TAI PING INSURANCE COMPANY LIMITED

DEFENDANT/APPELLANT

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(Transcript of the handed down judgment of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

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MR J LOCKEY (Instructed by Messrs Stephenson Harwood, London EC4M 8SH) appeared on behalf of the Appellant

MR C EDELMAN QC with MR C WYNTER (Instructed by Messrs Dibb Lupton Alsop, London EC3R 7XW) appeared on behalf of the Respondents

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J U D G M E N T

(As approved by the Court )

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©Crown Copyright

Friday, 28th May 1999

J U D G M E N T

Lord Justice Beldam: The appellants, Tai Ping Insurance Co. Ltd. (Tai Ping), appeal from the order of Cresswell J. of 28th April 1998 dismissing Tai Ping’s application under O.12, r.8(1), to set aside service of the writ in these proceedings. The respondent, Gan Insurance Co. Ltd. (“Gan”), had obtained leave to serve the proceedings out of the jurisdiction from Mance J. on 4th September 1997. The proceedings were served on 19th September 1997.

Gan carries on reinsurance business in the London market. Tai Ping is an insurance company based in Taiwan. In February 1996 Tai Ping issued an erection all risks (EAR) policy of insurance covering the erection of a large factory for the manufacture of electronic wafers in Taiwan for Winbond Electronic Corporation (“Winbond”). In its English translation cl.22 of the policy provided:

“Matters not stipulated in this Policy shall be handled in accordance with the provisions of insurance law and regulations.”

The risk accepted by Tai Ping was substantial and it sought facultative reinsurance on the London and other markets. Through London brokers Jenner, Fenton, Slade (“JFS”), Tai Ping presented the reinsurance risk to Gan in London. On 21st March 1996 a slip policy was subscribed by Gan for its due proportion. By the terms of the policy, Gan agreed to reinsure the defendant in respect of its liability as insurers of Winbond under the EAR and third party liability insurance covering the works. Gan contends that the reinsurance policy contained a stipulation that Tai Ping would co-operate with reinsurers in the investigation and assessment of any loss or circumstances giving rise to loss and that it would make no settlement or compromise or admit liability without its prior approval. JFS received their instructions from Tai Ping’s brokers in Taiwan. In a Fax dated 5th December 1997 Tai Ping’s brokers said:

“A review of our placing file indicates that Gan specifically asked about fire protection and as a result of that enquiry we were provided with an underwriting package which included the Angel engineering drawings and a reference to six separate fire protection systems.”

Gan say that these documents were presented to them by brokers and that the risk they reinsured was thus represented as having the benefit of extensive fire fighting precautions in accordance with the specification stated on the drawings.

On 14th October 1996 Winbond’s plant was seriously damaged by fire giving rise to a claim by Winbond under the EAR policy issued by Tai Ping. Tai Ping initially sought to avoid liability, relying on cl.17 of its policy which in its English translation provided:

“The Insured or its agent shall, at the time of entering into this Insurance Contract, provide true explanations in response to questions on the application form for this insurance and Tai Ping’s written inquiries. Tai Ping may rescind this Contract if there is deliberate concealment, false representation, omission through fault, non-disclosure of facts to the knowledge of the Insured/its agent or misrepresentation on the part of the Insured or its agent which is sufficient to vary or diminish Tai Ping’s assessment of the risk.”

However Tai Ping’s representatives had personally visited the erection site and had seen the fire precaution installations. They did not rely upon the statements in the drawings.

In July 1997, after negotiations with Winbond, Tai Ping entered into an agreement to settle Winbond’s claim under the EAR policy. Gan contends that Tai Ping failed to co-operate in the investigation of the circumstances of the loss and settled Winbond’s claim without its approval or consent. Gan received information that the plant and works had not been protected by the extensive fire fighting precautions specified in the drawings. It sought to avoid the reinsurance policy because it had been induced to accept the risk by material non-disclosure or misrepresentation. Further Gan contended that, in settling Winbond’s claim, Tai Ping were in breach of a condition precedent to any liability of Gan under the policy of reinsurance. Accordingly, on 8th September 1997 Gan sought leave to issue and serve on Tai Ping out of the jurisdiction a writ endorsed with points of claim, claiming declarations that it was not liable under the reinsurance policy. As previously stated, Mance J. gave leave and on 23rd October Tai Ping issued its summons under O.12, r.8.

It was common ground between Tai Ping and Gan that the EAR policy issued by Tai Ping was governed by the law of Taiwan. The reinsurance slip subscribed by Gan provided:

“TYPE: Erection All Risks and Third Party Liability Reinsurance as original.

FORM: Slip Policy NMA 1779 following original - original wording as agreed Leading Reinsurance Underwriter.

REASSURED: The Tai Ping Insurance Company and/or as agreed Leading Underwriter only.

ASSURED: Winbond Electronics Corp. as Principal and/or as Contractor and/or Sub-Contractors and/or Suppliers and/or all other interested parties as original.

PERIOD: ...

INTEREST: In respect of the Erection for Machinery in FAB III new plant Contract/project and all ancillary works and/or as more fully described in the original policy wording.

SUM INSURED: ...

CONDITIONS: Full Reinsurance Clause NMA 416 (ex. retention).

Claims Co-operation Clause:

... NMA 464 unless war and civil war exclusion clause contained in original policy wording. NMA 1685.

ORIGINAL CONDITIONS: all risks as per local standard EAR policy wording as approved clauses as follows: ...

INFORMATION: As on file with Jenner Fenton Slade including separate exhibits seen.”

It was agreed that the words “full reinsurance clause NMA 416” meant the full reinsurance Clause No. 1 (approved by Lloyds Underwriters Fire and Non-marine Association):

“Being a Reinsurance of and warranted same gross rate, terms and conditions as and to follow the settlements of the ... Company.”

The claims co-operation clause was in the standard London Market claims co-operation clause SCOR (U.K.) cl. 012 4/83. This provided:

“Notwithstanding anything contained in the Reinsurance Agreement and/or Policy wording to the contrary, it is a condition precedent to any liability under this Policy that:

(a) The Reinsured shall, upon knowledge of any circumstances which may give rise to a claim against them, advise the Reinsurers immediately and in any event not later than 30 days;

(b) The Reinsured shall co-operate with Reinsurers and/or their Appointed Representatives subscribing to this Policy in the investigation and assessment of any loss and/or circumstances giving rise to a loss;

(c) No settlement and/or compromise shall be made and liability admitted without the prior approval of Reinsurers.

All other terms and conditions of this policy remain unchanged.”

In its ex parte application for leave, Gan claimed declarations that it was entitled to rescind the contract of reinsurance or to obtain relief in respect of breach of a condition of the contract which:

(i) Was made within the jurisdiction and

(ii) Was made through brokers carrying on business within the jurisdiction on behalf of Tai Ping who were out of the jurisdiction and

(iii) That the contract of reinsurance was by its terms or by implication governed by English law.

The relief sought was therefore within R.S.C. O.11, r.1(1)(d).

At the hearing of Tai Ping’s summons to set aside service, Cresswell J. set out the principles governing leave to serve out of the jurisdiction and relevant to the exercise of his discretion in deciding whether to set service aside, including the principles on which he should decide whether an English court was the convenient forum to decide Gan’s claim. I propose at this point only to summarise the principles he set out in his judgment. They were:

(1) that Gan had to establish a good arguable case that its claims were within one of the sub-paragraphs of O.11, r.1(1);

(2) that it had to demonstrate that there was a serious issue to be tried on the merits of the claim;

(3) that the English courts were the convenient forum;

(4) that it was a proper case in which the court should exercise its discretion to grant leave and

(5) the fundamental principle is that the court will choose the forum in which the case can be tried most suitably in the interests of all the parties and to serve the ends of justice.

Gan were required to show not merely that the English court was an appropriate forum for the trial of the action but that it was clearly the appropriate forum taking into account the nature of the dispute, the legal and practical issues involved, availability of witnesses and expense. The aim is to achieve substantial justice for all the parties in the appropriate forum.

Tai Ping accepted that the court had jurisdiction under O.11, r.1(1)(d)(i) and (ii) but disputed that English law governed the reinsurance policy. In view of the significance of this question, Cresswell J. considered it at the start of his judgment. Tai Ping submitted that the contract was governed by the law of Taiwan; Gan argued that the proper law was English law. The judge decided in favour of English law and his decision is challenged in this appeal. Tai Ping conceded that there was a serious issue to be tried to enable the court to exercise its discretion to grant leave but submitted that Gan’s claim was essentially for negative declarations and that such claims had to be viewed with great caution when there was a possible conflict of jurisdiction, particularly if the claim smacked of an improper attempt to obtain the advantage of a more favourable forum.

The judge thought it essential to decide whether Gan were seeking relief for a valid purpose and not merely as an attempt to pre-empt a jurisdiction which might otherwise be convenient. He said:

“Whilst the relief sought in this case is declaratory and negative, in the sense that its object is establishing that the plaintiffs are not liable to the defendants in respect of the claim made under the reinsurance, the relief is confined to issues on which the burden of proof rests with the plaintiffs (i.e. avoidance and non-compliance with a condition precedent). The plaintiffs are therefore natural plaintiffs on those issues. The relief sought is useful in that it will determine the two threshold issues raised by the plaintiffs that stand in the way of the defendants’ recovery under the reinsurances of their outlay to the assured. The relief is neither premature nor hypothetical. On the contrary, it addresses live issues which had arisen between the parties prior to the commencement of the proceedings.”

As English law was the proper law of the contract, he said that negative declaratory relief was the only form of relief available to Gan and seeking that relief in England was the only way in which it could ensure that its rights were determined in the jurisdiction of the proper law of the contract. He considered the justification for seeking relief and whether it was appropriate for Gan to seek the declarations in a separate action. He concluded that Gan had established a good arguable case that it had good reason for seeking the relief, that the relief was useful, that a solid practical benefit would ensue and that the declarations were sought for a valid and valuable purpose.

The judge’s decision that English law was the proper law of the contract obviously had a significant effect on his decision whether to exercise his discretion in favour of Gan and on his decision whether the English courts were the appropriate forum.

The importance of the choice of law is highlighted by the differences in the rules permitting avoidance of a contract of insurance. Article 64(1) of Taiwanese Insurance Law requires that, when entering into a contract of insurance, the proposer must truthfully explain written enquiries from the insurer who cannot repudiate the contract for misrepresentation unless he has invited explanation by written enquiries and then only if the fact misrepresented relates to the peril in question (Article 64(2)). Clause 17 of the EAR policy is, according to the appellant’s evidence, substantially to the same effect. Thus if Taiwanese law applied to the contract of reinsurance, Gan could not avoid the contract on the ground that Tai Ping had misrepresented the extent of the fire protection available to the building insured unless it had submitted written enquiries which had been untruthfully answered. Tai Ping argued that the use of the words “as original” on the slip, resulted in the importation into the policy of reinsurance of cl.22 of the EAR policy and accordingly the application of Taiwanese law. The case was argued before the judge and before this court on the basis of the opinion of Mr Cheng-sheng Liao, a Taiwanese solicitor, that cl.17 of the EAR policy essentially followed the same wording as Article 64(1) of the insurance law and that the second part of cl.17 would “also generally be regarded as referring to the explanations to written enquiries in the first sentence of cl.17. Further, if they were to be construed more widely, they could not be so construed as to modify the policy unfavourably to the insured”.

Tai Ping further argued that serious factual issues could arise on the issue whether Gan had suffered any loss by breach of the alleged condition precedent of co-operation. Thus it could not be said that taking into account all the relevant circumstances, including the need for witnesses from Taiwan and even elsewhere, the English courts were clearly shown to be the most convenient forum. The judge analysed the issues likely to arise and the witnesses who might be required to give evidence but, after weighing all the considerations, he concluded that in the circumstances Gan had shown that England was clearly the appropriate forum. He therefore dismissed Tai Ping’s application.

In presenting his argument for Tai Ping, Mr Lockey identified as of fundamental importance the judge’s conclusion that English law and not Taiwanese law was the proper law of the contract of reinsurance. This question he said was crucial to the judge’s determination that Gan had established a proper case for service out of the jurisdiction and that England was the most appropriate forum for the trial. He emphasised that Tai Ping in seeking reinsurance of its liability under the EAR policy needed indemnity against its liability to Winbond for loss occurring during the construction and erection of the electronics plant in Taiwan. Tai Ping’s liability to its insured was governed by Taiwanese law. The effect of the provisions in the slip that the form of the policy was described as “following original”, that it incorporated conditions stated to be “full reinsurance cl.NMA 416” reinforced the conclusion that the conditions of the Taiwanese policy were to be taken to be included in the reinsurance slip. He pointed to the words used in NMA 416 “being a reinsurance of and warranted same gross rate terms and conditions as and to follow the settlements of the -------- company.” Further from the very nature of the cover sought by reinsurance Tai Ping were seeking “back to back” cover. Relying on the decision in Forsik. Vesta -v- Butcher [1989] AC 852, he said the presumption must be that the reinsurance is on identical terms to those of the policy.

Mr Lockey pointed out that in Vesta -v- Butcher the original policy did not contain a choice of law clause comparable with cl.22 of the policy issued by Tai Ping. He submitted that the effect of the words in the slip was to incorporate the original terms of the policy issued by Tai Ping, including cl.22. The case of Vesta -v- Butcher had proceeded on the assumption that all terms were included. His argument followed the basis of the opinions of four members of the House of Lords. On this basis the proper law of the reinsurance contract was Taiwanese law. The parties by incorporating the terms of Tai Ping’s policy had made an express choice of Taiwanese law demonstrated with reasonable certainty within Article 3(i) of the Rome Convention.

He submitted that even if the parties had not made an express or real choice nevertheless the contract of reinsurance was most closely connected with Taiwan. The judge had placed too much reliance on the fact that the policy of reinsurance was a Lloyds policy effected using an English form. He had overlooked the evidence of Steven Lowe in his affidavit of 25th March 1998 that it is common in Taiwan for reinsurance contracts to be written in English and for them to include standard or internationally recognised clauses such as the NMA clauses. The judge was wrong to hold that the reinsurance contract was most closely connected with England. The subject matter of the reinsurance was the risk assumed by a Taiwanese insurer to a Taiwanese insured in respect of property situated in Taiwan. In short he submitted that the judge should have found either that the parties had made an express choice that Taiwanese law should apply to the contract of reinsurance or alternatively that the contract of reinsurance was most closely connected with Taiwan.

Even if the words “as original” were limited to ensuring that the risk assumed by reinsurers was “back to back” with the risk undertaken in Taiwan by Tai Ping, the choice of law clause, cl.22, could not be regarded as a separate provision. The choice of law clause was an integral part of the scope of the cover provided. It was not merely ancillary but materially affected the rights of both parties.

Mr Edelman Q.C. for Gan supported the judge’s decision and reasons. The reinsurance was placed in London and it did not follow that, whenever there was a choice of law clause tucked away in an insurance policy effected in an overseas country, the parties to a reinsurance contract in London must be taken to have chosen a foreign law. Moreover when brokers presented the risk to reinsurers they will have proceeded on the basis that the duty of good faith applied. They would certainly have had no notice that reinsurance could only be avoided for misrepresentation on the basis of written enquiries. The London market operates on the premise of the application of English law to the contract and that the duty of good faith applies. He supported the conclusion that the words “as original” applied only to define the risk and could not be interpreted as intended to incorporate every condition in the Taiwanese policy whether it was applicable to a reinsurance or not. The case of Vesta illustrated that it is not necessary to hold that the parties intended to apply all the terms of the underlying contract of insurance.

He submitted that there was no clear and precise demonstration of choice of Taiwanese law which would satisfy Article 3(1) of the Rome Convention. By the use of the words “as original” the parties could not be taken to have intended to include every clause in the original policy and certainly not a clause which would be at variance with the general understanding of the parties to the contract of reinsurance. The judge was right to rely on the similarity with the example of a Lloyds policy of marine insurance known to be governed by English law cited in the Guiliano-Lagarde Report as pointing to an implied choice of English law with reasonable certainty. The slip referred to standard form clauses used in this jurisdiction in which they were developed. It is not unreasonable to suggest that they should be interpreted in the courts of this jurisdiction.

The criticism that the judge did not pay sufficient regard to the extent the relevant facts would be in dispute at the trial was misplaced. He considered the nature of evidence likely to be needed on both issues.

The underlying question is whether, from the use of the words “as original” in the reinsurance slip, an intention should be attributed to the brokers presenting the slip and Gan subscribing it that the contract of reinsurance should include the terms of Tai Ping’s EAR policy and, in particular, cl.22. If so, it would mean that any matters which were not expressly dealt with in the reinsurance policy should be dealt with in accordance with Taiwanese law.

The difficulty of reconciling the terms and conditions of a policy of insurance effected in an overseas country by an overseas insurer with the stipulations ordinarily found in a reinsurance policy placed by brokers on the London market was succinctly stated by Lord Hobhouse, then Hobhouse J., in Vesta’s case (supra) reported at first instance 1986 2 Lloyds Rep. 179 at page 193 where he said:

“Where a contract such as the present provides that its terms and conditions are to be the same as those of another contract and where its clear commercial purpose is to provide a corresponding cover to that provided by the other contract then unless some other powerful consideration is to intervene the conclusion must be that there is an intention that both contracts are to be governed by the same law. However there remains something surprising and improbable about the conclusion that the Lloyds slip and the Lloyds policy are governed by anything other than English law ...”

He concluded that the legal effect of the clauses defining the cover should be the same in the reinsurance and the original insurance but declined to hold that the relevant law (in that case Norwegian law) was intended to be the proper law of the reinsurance contract.

On appeal this court [1989] AC 852 rejected as “unrealistic” the suggestion that the whole contract of reinsurance should be governed by Norwegian law and upheld Lord Hobhouse’s solution as the only one which made commercial sense.

On further appeal the House of Lords, whilst confirming that cover under the two policies was indeed “back to back”, did not go so far as to suggest that English law was not the proper law of the reinsurance contract. Lord Griffiths, with whom Lord Bridge concurred, referred at page 896 to the wording of the reinsurance in that case which included the phrase “warranted same gross rate terms and conditions.” He interpreted this provision as meaning that the insurer had given a warranty that he had placed the risk on the same terms as he had disclosed to reinsurers indicating that at the time the slip was completed the policy terms were available to the reinsurer to demonstrate the nature of the risk he was accepting. Thus the warranty to reinsurers was that the policy had been or would be written in those terms. Lord Griffiths continued:

“A contract of insurance will almost inevitably contain terms that are wholly inappropriate to a contract of reinsurance. The two contracts are dealing with entirely different subject matter. The original policy is concerned to define the risk that the insurer is prepared to accept. The contract of reinsurance is concerned with the degree of that risk as defined in the policy that the reinsurer is prepared to accept.”

Mr Lockey accepted that the House of Lords had stopped short of holding that English law was not the proper law of the contract of reinsurance in that case. Mr Lockey expanded his submissions to argue that cl.22 ought properly to be regarded as a term of the EAR policy which defined the nature of the risk and precluded Gan from avoiding the reinsurance policy for misrepresentation of the extent of the fire protection. If this argument is correct, the result would be that underwriters would be taken to have granted back-to-back cover even if the risk as presented to them was materially different from the risk accepted by the reinsured.

In the present case it is clear that Tai Ping’s brokers were instructed to present the risk to reinsurers on the basis of the statement of fire protection contained on the drawings. According to brokers this was in response to a specific enquiry by Gan though not apparently in writing. In my view, where by its express terms, the risk presented to underwriters is materially different from that assumed by the reinsured, it cannot reasonably be presumed that underwriters intended to afford back-to-back cover.

In his analysis and conclusions of the proper law of the reinsurance contract, Cresswell J. cited sec.2(1) of the Contracts (Applicable Law) Act 1990 providing for the incorporation into the law of the United Kingdom of the Rome Convention. Article 3(1) of the Convention under the heading “Freedom of choice” provides:

“A contract shall be governed by the law chosen by the parties. The choice must be express or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract.”

Article 4, headed “Applicable law in the absence of choice”, provides:

“1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected. Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that other country.

2. Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or uncorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated ....

5. Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country.”

The judge relied on the example given in Guiliano-Lagarde Report as a circumstance which could demonstrate an inferred intention, of the case of a contract in a standard form which is known to be governed by a particular system of law even though there is no express statement to this effect, such as a Lloyds policy of marine insurance. The judge said that the reinsurance contract was placed in London on the London market, the terms of the slip and the claims co-operation clause pointed to an implied choice of English law “demonstrated with reasonable certainty by the terms of the contract/the circumstances of the case”. He considered that the words “as original” were intended to ensure that the risk undertaken by reinsurers was identical as to period, geographical limits and nature of the risk with the risk undertaken by Tai Ping as direct insurer. He relied on the case of Pine Top -v- Unione Italiana [1987] 1 Lloyds Rep. 90, a decision of Gatehouse J., and the observations of Neill L.J. in Forsik. Vesta -v- Butcher (supra).

In my judgment Mr Lockey’s argument involves a departure from the usual course of business on the London reinsurance market which could only be justified if the terms of the reinsurance policy unequivocally pointed to an intention that the proper law should be Taiwanese law. If the terms are construed as a whole, they fall a long way short of demonstrating such an intention. Three descriptive phrases appear in the slip: “as original”, “following original” and “as more fully described in the original policy wording”. In describing the form of the reinsurance policy the description is “Slip Policy NMA 1779 following original - original wording agreed Leading Reinsurance Underwriter”. It is common ground that NMA 1779 is an English non-marine policy form. There is further difficulty in interpreting the words “as original” in the way Mr Lockey suggests because the slip draws a clear distinction between “Conditions” which plainly refer to the conditions of the reinsurance:

“Full Reinsurance Clause NMA 416 ... NMA 464 unless war and civil war exclusion clause contained in original policy wording ...”

and “Original Conditions”:

“... all risks as per local standard EAR policy.”

I do not think it is possible to infer from the terms of the slip that the parties to the reinsurance intended to incorporate all the terms of the EAR policy.

In my view where a contract of reinsurance is made in London between London underwriters and brokers their agreement is based on the well known duty of disclosure and the right of an insurer to avoid a policy for misrepresentation. Cl.22 of the EAR contract would introduce a term of Taiwanese law in conflict with this basis. On principle, in the absence of express agreement, I would hold that it cannot reasonably be imputed to the parties that they intended cl.22 to apply. At the most, scope for the words “as original” and “in the original policy wording” could be given by its application to the provisions of the EAR policy which defined the extent of the risk insured.

In any event, where matters were expressly dealt with on the slip, the provisions of cl.22 would not apply. A term could only be implied in the reinsurance policy if it did not conflict with its express terms. In this context the words “Information: as on file with Jenner, Fenton, Slade, including separate exhibits seen”, did expressly refer to the information about the fire protection systems as stated in the broker’s Fax of 5th December 1997.

I am fortified in this view by the many decisions which have limited similar phrases in reinsurance policies. So in Hong Kong Borneo Services Co. Ltd. and Ors. -v- Pilcher (1992) 2 Lloyds Reports 593 in construing the words “as per primary insurance” in an excess of loss insurance policy, Evans L.J., then Evans J., held that they were intended to identify the scope of the excess cover with that of the underlying club cover. In Municipal Mutual -v- Sea Insurance [1996] LRLR 265 Waller L.J., then Waller J., construed the words “Conditions as underlying ...” as not necessarily meaning that one must write into the terms of the reinsurance all the underlying terms adapting them to the reinsurance. In Pine Top -v- Unione Italiano [1987] 1 Lloyds LR 476 Gatehouse J. said:

“The only sensible intention I can attribute to the parties is that they were concerned to make sure that the risk undertaken by reinsurers was identical as to period, geographical limits and nature of the risk with the risk undertaken by the primary insurer.”

I would therefore reject Mr Lockey’s submission that the express terms of the reinsurance policy included a clause making Taiwanese law the proper law of the contract. In my opinion the judge was correct to hold that there was an implied choice of English law “demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case as required by Article 3”. The judge pointed to the reference to “slip policy NMA 1779”, “full reinsurance clause NMA 416”, “claims co-operation clause NMA 464, NMA 1685” and the claims co-operation clause itself as demonstrating a choice of clauses commonly found in contracts of reinsurance placed on the London market. Moreover the procedure adopted was to place the business in London using London brokers who presented the risk to reinsurers in the conventional way in concluding a contract of reinsurance governed by English law. In my view the judge was also right to hold that, in the absence of express choice, the applicable law was English law.

Mr Lockey argued that even if English law was the proper law of the contract the judge ought nonetheless to have held that Taiwan was the convenient forum. Policies of insurance and reinsurance are frequently written in English in Taiwan, the courts of Taiwan were conversant with the standard terms referred to and a Taiwanese court could apply English law in the same way as English law applies foreign law where it is the proper law of a contract. It would be necessary to investigate whether the fire protection systems were different from those referred to in the drawings and on the issue whether Gan had suffered any loss by breach of the condition precedent on which it relied Tai Ping would need to call evidence to show that it was in any event liable under the terms of its policy.

The judge considered these submissions in detail. He concluded that if any factual evidence was required from Taiwan it was likely to be within relatively narrow limits and even if Tai Ping’s arguments proved to be correct he did not consider that the extent of the evidence needed from overseas would be significant. He said:

“In all the circumstances I conclude that the plaintiffs have shown not merely that England is the appropriate forum for the trial of the action(s) but that it is clearly the appropriate forum”.

Attractively though Mr Lockey’s submissions were presented, he did not persuade me that the judge had made any error in the exercise of his discretion which would entitle this court to review the decision he reached. Accordingly I would dismiss this appeal.

Lord Justice Brooke: I agree.

Lord Justice Mummery: I also agree.

ORDER: Appeal dismissed with costs; leave to appeal to the House of Lords refused; minute of order to be provided by counsel. ( This order does not form part of the approved judgment )