KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
SITTING AS A JUDGE OF THE HIGH COURT
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TYSON INTERNATIONAL COMPANY LIMITED |
Claimant |
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- and - |
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GIC RE, INDIA, CORPORATE MEMBER LIMITED (sued as the sole corporate member for Syndicate 1947 at Lloyd's of London for the 2021 and 2022 years of account) |
Defendant |
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Peter MacDonald Eggers KC and Tim Jenns (instructed by RPC) for the Defendant
Hearing dates: 6 December 2023
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Crown Copyright ©
Christopher Hancock KC :
I INTRODUCTION.
II RELEVANT BACKGROUND.
"This Reinsurance shall be governed by and construed according to the Laws of England and Wales. The Courts of England and Wales shall have exclusive jurisdiction of the parties hereto on all matters relating to this insurance."
(1) The documents are headed, and "Agreement" is defined as, "Agreement of Facultative Reinsurance (the "Agreement")". The Faculative Certificates comprise a section headed "Declarations" and a section headed "Terms and Conditions".
(2) Page 1 under the Declarations includes a provision "Reinsurances have made the following amendments to this Reinsurance Certificate:- … 2) RI slip to take precedence over reinsurance certificate in case of confusion".
(3) Clause 2 of the Terms and Conditions contains the reinsurance provision stipulating that the basis of cover is as set out in the Reinsurance Agreement:
"2. Reinsurance Agreement
In consideration of the payment of the premium and subject to the terms, conditions and limits of liability set forth in this Agreement, in the Declarations and any endorsements made a part of this Agreement, the Reinsurer does hereby reinsure the Company [TICL] …"
(4) Clause 13 of the Terms and Conditions headed "Arbitration" contains a detailed arbitration agreement in eight sub-paragraphs including:
"13. Arbitration
a. As a condition precedent to any right of action hereunder, any dispute arising out of the interpretation, performance or breach of this Agreement, including the formation or validity thereof, shall be submitted for decision to a panel of three arbitrators. Notice requesting arbitration will be in writing and sent certified or registered mail, return receipt requested. …
f. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Unless the panel agrees otherwise, arbitration shall take place in New York, but the venue may be changed when deemed by the panel to be in the best interest of the arbitration proceeding. Insofar as the arbitration panel looks to substantive law, it shall follow the law of New York in accordance with the dictates of the Governing Law Clause. The decision of any two arbitrators when rendered in writing shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate."
(5) The reference to the "Governing Law Clause" in Clause 13(f) is to Clause 17 which provided:
"17. Governing Law and Jurisdiction
Insofar as the panel looks to the law of a jurisdiction as governing law, it will apply the substantive law of the State of New York without reference to that state's choice or conflict of laws rules; provided, however, that the substantive law of the State of New York shall not be used to supplant or override underlying court or other judicial body final decisions concerning the claim(s) at issue."
(6) Clause 19 is headed "Service of Suit" and sets out a non-exclusive jurisdiction clause in favour of any court of competent jurisdiction within the United States, and stipulates that service may be made on the New York firm Mendes & Mount (as stated in the Declarations). Clause 19 applies to reinsurers (such as GIC) which are not domiciled or authorised in the United States. Clause 19 is expressly made subject to Clause 13 (arbitration): "The foregoing is not intended to conflict with or override the obligation of the Parties hereto to arbitrate their disputes as provided in the Arbitration Clause".
(7) Clause 26 contains an entire agreement clause in these terms:
"26. Entire Agreement
This Agreement, including any duly executed written amendments and endorsements thereto, and appendices, schedules or other attachments made part thereof or expressly incorporated by reference, and the Policy and any written endorsements, modifications, alterations and cancellations thereto, and waivers and interpretations thereto but only with respect to the claim in dispute, all as permitted under Reinsurance Agreement Clause 2 and Reinsurance Accepted Clause 3, shall constitute the entire agreement between the Parties and shall supersede all contemporaneous or prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof provided, however, that this Clause 26 shall not override or take precedence over Clause 3 hereof."
(8) The final page of each Facultative Certificate is an Endorsement on Lockton headed paper, stating the same unique market reference numbers as stated on the Slip Policies/MRCs. It bears the title (at the bottom of the page) "Market Endorsement – Security Details", which GIC contends means that the Facultative Certificate took effect as an amendment and endorsement to the Slip Policies/MRCs. It provides, among other things, "Endorsement Name Reinsurance Certificate"; "Agreement Practice GUA A" (a reference to the General Underwriters Agreement); "Agreement Instructions Endorsement agreement parties only" (i.e. TICL and GIC); a heading "Confirmation of Agreement by required agreement parties" under which it is stated "Agreed 09 Jul 2021 0938" followed by GIC's details as the underwriter company and the name of its underwriter, Mr Sameer Gupta.
"Pursuant to section 37 of the Senior Courts Act 1981, until the return date, or further Order, the Defendant, whether by itself, its servants, agents or otherwise, is restrained (save as is otherwise addressed in this paragraph) from commencing or prosecuting or continuing or taking any steps in or otherwise participating in proceedings in any court or tribunal other than in the Courts of England and Wales, against the Claimant in respect of all matters relating to the reinsurance provided by the Defendant to the Claimant for the period 1 July 2021 to 1 July 2022. This includes the motion filed in the United States District Court for the Southern District of New York with Docket Number 1:23-cv-09175, Doc. Nos. 1-5. For the avoidance of doubt nothing in this paragraph shall prevent GIC from serving a notice of arbitration on TICL pursuant to clause 13(a) of the Facultative Certificates, albeit GIC may not seek anti-suit relief or equivalent in any form from any Court, forum or arbitral tribunal such that may be constituted."
III THE LAW.
(a) Anti-Suit Relief.
"i) The Court has the power to grant an interim injunction "in all cases in which it appears to the court to be just and convenient to do so": section 37(1) of the Senior Courts Act 1981 ("SCA 1981"). "Any such order may be made either unconditionally or on such terms and conditions as the court thinks just": section 37(2).
ii) The touchstone is what the ends of justice require: Emmott v Michael Wilson & Partners Ltd [2018] 1 Lloyd's Rep 299 at [36] per Sir Terence Etherton MR.
iii) The Court has jurisdiction under section 37(1) of the Senior Courts Act 1981 to restrain foreign proceedings when brought or threatened to be brought in breach of a binding agreement to refer disputes to arbitration: Ust-Kamenogorsk Hydropower Plant JSC v AES Kamenogorsk Hydropower Plant LLP [2013] 1 WLR 1889 (SC).
iv) The jurisdiction to grant an anti-suit injunction must be exercised with caution: Société Nationale Industrielle Aérospatiale v Lee Kui Jak [1987] UKPC 12, [1987] AC 871, 892E per Lord Goff.
v) As to the meaning of "caution" in this context, it has been described thus in The "Angelic Grace" [1995] 1 Lloyd's Rep 87 at 92:1 per Leggatt LJ: "The exercise of caution does not involve that the Court refrains from taking the action sought, but merely that it does not do so except with circumspection."
vi) The Claimant must therefore demonstrate such a negative right not to be sued. The standard of proof is "a high degree of probability that there is an arbitration agreement which governs the dispute in question": Emmott at [39]. The test of high degree of probability is one of long standing and boasts an impeccable pedigree going back to Colman J in Bankers Trust Co v PT Mayora Indah (unreported) 20 January 1999 and American International Specialty Lines Insurance Co v Abbott Laboratories [2003] 1 Lloyd's Rep 267 and has been recently affirmed on the high authority of Christopher Clarke LJ in Ecobank v Tanoh [2016] 1 WLR 2231 at 2250.
vii) The Court will ordinarily exercise its discretion to restrain the pursuit of proceedings brought in breach of an arbitration clause unless the Defendant can show strong reasons to refuse the relief: The Angelic Grace [1995] 1 Lloyd's Rep 87; The Jay Bola [1997] 2 Lloyd's Rep 279 (CA) at page 286 per Hobhouse LJ.
viii) The Defendant bears the burden of proving that there are strong reasons to refuse the relief: Donohue v Armco Inc [2002] 1 All ER 749 at [24]-[25] per Lord Bingham."
"The legal principles governing this primary basis for Aon's application were largely common ground before me. The authorities in this area generally do not distinguish between interlocutory and final relief, perhaps because in many anti-suit cases, the interlocutory decision will for practical purposes be final."
(b) Contractual Interpretation.
"25. The applicable principles were not in dispute. The principles to be derived from Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 ; Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 ; Re Sigma Finance Corp [2010] 1 All ER 571 ; Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 ; Arnold v Britton [2015] AC 1619 ; and Wood v Capita Insurance Services Ltd [2017] AC 1173 were helpfully distilled into a single paragraph by Popplewell J (as then was) in The Ocean Neptune [2018] EWHC 163 (Comm) at [8] . This one paragraph summary is reproduced by the editors of Chitty on Contracts (34th edition, 2022) at paragraph 15-053:
"The court's task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement. The court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. The court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to the objective meaning of the language used. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. Interpretation is a unitary exercise; in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest; similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. It does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each."
26. As to the role of "commercial common sense" in interpretating contracts under English law, there are three key points which emerge from the case law:
a. If there are two possible constructions, the court is entitled to prefer the construction which is more consistent with business common sense and to reject the other – see BNP at [100] citing Lord Clarke in Rainy Sky SA v Kookmin Bank [2011] UKSC 50 and Adaptive Spectrum and Signal Alignment Inc v British Telecommunications Plc [2023] EWCA Civ 451 (26 April 2023) at [19] per Birss LJ and at [50] per Nugee LJ.
b. Commercial common sense should not be invoked retrospectively, or to rewrite a contract in an attempt to assist an unwise party, or to penalise an astute party see BNP at [101] citing Lord Neuberger in Arnold v Britton [2015] UKSC 36 .
c. There is no class or type of contract for which commercial common sense is irrelevant. Evidence of commercial context and commercial consequences are both part of the iterative process of interpretation under English law: "Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements" per Lord Hodge in Wood v Capita [2017] UKSC 24 at [13] ."
(c) London Market Practice and the MRC.
TICL's case.
"The Market Reform Contract (MRC) is now the standardised form of agreement used in the London market. The slip has in principle disappeared, but it is still common for draft contracts put forward for comment by brokers to be described as "slips". When a risk is presented by the broker to the market, the presentation consists of an introductory section setting out the most important details of the risk (which more or less corresponds to the old slip) but attached to this document is a "schedule" which sets out the terms of the policy. The effect, therefore, is that all of the documents are prepared up-front, and when the underwriters scratch the documents the contract is in its entire form.
An MRC must contain the details set out in the published guidance. The MRC consists of a series of sections:
(1) Risk details, consisting of unique market reference; type of policy; name and address of assured; period; the interest insured; monetary limits; geographical scope; conditions; choice of law and jurisdiction; amount of premium and premium payment terms; any taxes payable by the assured and administered by the insurers; storage of information; and documentation including a copy of the contract document or policy.
(2) Information, consisting of any information provided to insurers to support the assessment of the risk at the time of placement, either in full or, if inappropriate, clearly referenced and made available to all subscribing insurers.
(3) Security details, consisting of the subscriptions of subscribing insurers in percentage terms of the financial limits; terms of signing down (so that if a line is written "to stand" it may not be signed down). It is not permitted to include a line condition "wording to be agreed": all wording must be agreed before the insurer commits to the contract.
(4) Subscription agreement: this establishes the rules to be followed for processing and administration of post-placement amendments and transactions. The name of the slip leader must be clearly identified, any leading underwriter agreement must be specified and the claims agreement procedure is to be specified.
(5) Fiscal and regulatory: issues specific to the insurers involved in the risk must be shown, in particular, taxes which are deducted from the premium retained by the insurer.
(6) Broker remuneration and deductions: information relating to brokerage, fees and deductions from premium." [Emphasis added]
"49. Each of the 4 policies began with a number of pages which started with the heading "Risk Details". The background to the form of these policies is described in Merkin: Colinvaux's Law of Insurance 12th Edition paragraphs 1-082 – 1-094. In summary, the position is that prior to reforms resulting from steps taken between 2004-2007, the typical procedure in Lloyd's and the London market was for the broker to prepare a "slip" which contained brief details of the risk and its terms. Formal policy wording would be prepared at a later stage. On occasion, and particularly at the reinsurance level, the parties might agree that no formal policy was to be issued, in which case the slip was referred to as a "slip policy". However, in many cases there was no policy wording in existence at the time when the contract came into effect (ie when the slip was signed), which Merkin describes as one of the "weaknesses in the system".
50. Following intermediate reforms, the insurance regulator (the FSA) challenged the London market to find a solution to the problem of inadequate documentation. This resulted in the formation of two working groups in the London market. This included the Subscription Market Reform Group, whose work is relevant to policies such as those in the present case. Codes of Practice were later issued. This work resulted in the "Market Reform Contract", which is now the standardised form of agreement used in the London market. There is no longer any reference to the "slip". Instead, as Merkin describes:
"... when a risk is presented by the broker to the market, the presentation consists of an introductory section setting out the most important details of the risk (which more or less corresponds to the old slip) but attached to this document is a "schedule" which sets out the terms of the policy. The effect therefore is that all of the documents are prepared up-front, and when the underwriters scratch the documents the contract is in its entire form."
51. A Market Reform Contract must contain the details set out in the published guidance. It consists of a series of sections, including Risk details. The Risk details include, for example, the unique market reference, the type of policy, the interest insured, the monetary limits and the choice of law and jurisdiction." [Emphasis added]
GIC's case.
(1) The Captive Policy set out the terms and conditions between the insured (Tyson Foods) and insurer (TICL). GIC had sight of the Captive Policy wording when agreeing the Slip Policies/MRCs and, accordingly, was aware of the cover being afforded to the insured by the reinsured (TICL). The Captive Policy is referred to in the Reinsurance.
(2) TICL's broker, Lockton, submitted the Slip Policies/MRCs to reinsurers setting out the particulars of the risk proposed for insurance. Since June 2007 the standard placing document/slip is the Market Reform Contract (MRC). The MRC is a pro-forma document that the broker completes with the relevant information including details of the risk and the underlying policy. The Slip Policies/MRCs included the reference number of the original policy wording to refer to the original basis of cover.
(3) The Slip Policies/MRCs evidence the outline of cover effected by the facultative reinsurance broker and the reinsurers. GIC said that the Slip Policy/MRC is not typically shared with the cedant. It is a document (either physical or digital) that contains a summary of the pertinent information regarding the risk and the insurance terms and conditions that the broker submits to the underwriters on risk.
(4) The Slip Policies/MRCs do not, at least not on their own, constitute the binding contract of reinsurance or policy wording. Rather, GIC said, it is akin to a cover note, which is then superseded by the issuance of a facultative reinsurance certificate / reinsurance agreement which sets out the specific terms that govern the contract between the reinsured and each reinsurer.
(5) The Slip Policies/MRCs set out the terms of the Captive Policy which were incorporated into the Reinsurance. Thus, the Slip Policies/MRCs provide under "Conditions" that "LPO348C(MRC) (Amended) Excess Physical Damage Form, following terms, clauses and endorsements of the Original Policy Wording (being Policy Number PRPNA2103094 issued by Certain Underwriters at Lloyd's), including the following and as detailed herein", and then set out a list of such clauses and endorsements including the Property Cyber and Data Endorsement and the Sanction Limitation and Exclusion Clause which comprise part of the Original Policy Wording.
(IV) GIC's APPLICATION TO SET ASIDE THE INTERIM ASI.
GIC's submissions at the hearing.
(1) The Faculative Certificates supersede the Slip Policies/MRCs, with the result that the New York arbitration agreement is applicable to any dispute between TICL and GIC.
(2) Clause 13(a) is a Scott v Avery Clause so that any proceedings, even proceedings in England and Wales, would not be permitted until the conclusion of the arbitration.
(3) If the English Court has any jurisdiction, it is an auxiliary jurisdiction in respect of the agreed New York arbitration.
The Faculative Certificates supersede the Slip Policies/MRCs.
(1) The Faculative Certificates were presented by TICL's broker for acceptance and agreement by GIC and were duly agreed by GIC on 9 July 2021, some 9 days after the Slip Policies/MRCs had been concluded.
(2) Although it is ultimately a question of construction, there is a general presumption in the London market that if policy wording is issued after a reinsurance slip it is intended to supersede it. As Rix LJ observed in HIH Casualty and General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ 735; [2001] 2 Lloyd's Rep 161, "I would, however, agree that in the absence of a plea of rectification a slip could not be used to alter or contradict the construction of a policy which had superseded a slip … In the insurance market … it may well by now be possible to talk of a general presumption that a policy is intended to supersede a slip" (at [92]-[93]).[2]
(3) The reference on the final page of the Faculative Certificates (the Endorsement) to the General Underwriter's Agreement "(GUA)" and the statement that both parties had agreed the terms at 0938 on 9 July 2021 indicate that the parties intended the Faculative Certificates to take effect as an amendment to the earlier contract terms by way of agreed endorsement and therefore take priority over the terms of the Slip Policies/MRCs.
(4) The Faculative Certificates cover the same subject matter as the Slip Policies MRCs. As referred to above, unlike the Slip Policies/MRCs, the Faculative Certificates were full and complete contracts of reinsurance which expressly incorporated the clauses and endorsements identified in the Slip Policies/MRCs as being part of the Captive Policy: see Clauses 1, 2 and 3. It is plain from the terms of the Faculative Certificates and the manner of their agreement and execution that they were intended to have contractual force.
(5) The Faculative Certificates contain an entire agreement clause which makes clear that they "shall supersede all contemporaneous or prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof". Therefore, subject to one exception, the parties expressly agreed that the terms of the Slip Policies/MRCs are superseded by the Faculative Certificates.
(6) The exception is that there is a limited carve out from the entire agreement clause provided by the provision "RI slip to take precedence over reinsurance certificate in case of confusion". However, the reference to "confusion" does not mean inconsistency or conflict.[3] If it had been so intended, the words "inconsistency" or "conflict" would have been used in this provision (as they often are in a real hierarchy clause),[4] but they were not. GIC submitted that the hierarchy clause was not a conflict hierarchy clause. The purpose of that provision is not that conflicting clauses in the Faculative Certificates must give way to the terms of the Slip Policies/MRCs. Rather, the Faculative Certificates, including their extensive law and jurisdiction provisions should apply in full, without reference to the Slip Policies/MRCs, unless there is a lack of clarity or uncertainty as to the meaning or operation of the terms of the Faculative Certificates. In the case of such a lack of clarity or uncertainty, then it would be permissible to refer to the Slip Policies/MRCs, but not otherwise. GIC argued that if TICL's reading of this provision were correct, a highly implausible situation would result, namely that only 9 days after agreeing the Slip Policies/MRCs, the parties consciously agreed to a detailed New York arbitration agreement, identified as one of the "Required Terms and Conditions", which on TICL's case would then (bizarrely) be removed - along with the New York governing law clause - by reason of the "confusion" provision.
(7) There is no lack of clarity and no uncertainty, and therefore no confusion, as to the meaning or operation of the arbitration agreement and therefore the arbitration agreement stands. Accordingly, the provisions in the Slip Policies/MRCs as to law and jurisdiction afford no assistance. As Rix LJ said in HIH Casualty and General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ 735; [2001] 2 Lloyd's Rep 161 at [83], there are limits on the utility of using an antecedent contract or document as an aid to construction of a later contract and such is the case here (with bold emphasis added):
"… where the later contract is intended to supersede the prior contract, it may in the generality of cases simply be useless to try to construe the later contract by reference to the earlier one. Ex hypothesis, the later contract replaces the earlier one and it is likely to be impossible to say that the parties have not wished to alter the terms of their earlier bargain. The earlier contract is unlikely therefore to be of much, if any, assistance. Where the later contract is identical, its construction can stand on its own feet, and in any event its construction should be undertaken primarily by reference to its own overall terms. Where the later contract differs from the earlier contract, prima facie the difference is a deliberate decision to depart from the earlier wording, which again provides no assistance."
Accordingly, since there is no confusion or uncertainty, as a matter of construction, no reference is to be made to the Slip Policies/MRCs.
Clause 13(a) is a Scott v Avery clause.
The English Court has auxiliary jurisdiction over the New York arbitration.
"(a) Whilst the exercise is ultimately one of routine construction, where possible the Court should strive to give effect to an arbitration clause in the presence of a competing jurisdiction clause. It has latitude to do so where there is infelicitous drafting but cannot do so where the clauses are in direct conflict with each other and wholly irreconcilable, so that no sense whatever can be given to the intention of the parties.
(b) Unless they expressly and clearly say otherwise, there is a strong presumption that parties are assumed to have agreed on a single tribunal for the determination of all their disputes, at least when there is only one agreement between them. Dispute resolution clauses require certainty so parties know where they should go when a dispute arises.
(c) Where there are two agreements each containing different provisions for dispute resolution, the outcome may depend on the nature of the second agreement and its relationship to the first. A second agreement which varies the first one will probably be regarded differently from a second agreement which makes a clean break from the first one. The desire for one-stop shopping means that, where possible, the clauses should be regarded as mutually exclusive in their scope of application, rather than overlapping. However, some degree of fragmentation may be inherent in what has been agreed, in which case the centre of gravity of a given dispute will be relevant.
(d) Where a contract contains a hierarchy or conflicts clause, there should be no predisposition to find or not find a conflict between two clauses. The ordinary rules of construction should first be deployed and only if those result in a conclusion that the two provisions are irreconcilable is recourse to the conflicts clause required. I did not understand Mr Constable to dispute this approach."
"But the principle of liberal interpretation in favour of arbitration encourages, as it seems to me, not only an expansive reading of what an arbitration clause includes but also a restrictive reading of any other clause which is said, notwithstanding an arbitration clause providing for all disputes to be referred to arbitration, to exclude particular disputes from arbitration … without expressly saying so."
(1) The English Courts have on numerous occasions read arbitration clauses broadly and competing jurisdiction clauses contained in the same or separate contracts restrictively in order to give effect to the principles of one-stop shop adjudication and in favour of arbitration.
(2) Such a construction will not lead to commercial absurdity. In Sul America Cia Nacional de Seguros SA v Enesa Engenharia SA,[11] the High Court and Court of Appeal saw no difficulty in concluding that a policy condition which provided for exclusive jurisdiction of the Brazilian Courts and Brazilian law did not also mean that an arbitration agreement mandating London arbitration governed by English law should not be given effect. This is in accordance with "the strong legal policy in favour of arbitration".
(3) Here, the parties have agreed that arbitration shall take place in New York and be governed by New York law.[12] The English Courts may retain auxiliary jurisdiction, for example to compel arbitration or enforce any award.
(4) Any dispute between the parties as to which governing law is to be applied is not a matter for the English Court to decide, but rather for the Arbitral Tribunal pursuant to Clause 13(a) of the Certificates.
(5) If the consequence of the parties' agreement is that some fragmentation of the dispute may occur e.g. under other policies of reinsurance, that is a consequence of the parties' agreement. In the matter of arbitration, party autonomy is key.[13]
TICL's submissions at the hearing.
The supersession argument and GIC's narrow reading of the Hierarchy Clause.
(1) Only TICL's construction was consistent with the ordinary and natural meaning of the Hierarchy Clause. The clause refers to the Slip Policy/MRC taking "precedence" rather than merely being an interpretative aid. In order for one document to take "precedence" over another, it is self-evident that the two documents must be being read together.
(2) TICL's construction also made sense when considering the objective context. The MRC is, as addressed above, the fundamental document to the placement of insurance and reinsurance in the London Market. Once it is agreed, the reinsurance is in final form. Given this, it would be surprising if it were, without clear explanation, to be relegated to a mere interpretative aid.
(3) The Facultative Certificate contains a choice of New York law, whilst the Slip Policy/MRC is subject to English law. The end point of GIC's construction is that the English law terms of the Slip Policy/MRC are used as an interpretative aid where the seemingly New York law governed terms of the Facultative Certificate are opaque. It is not clear how that is intended to work in practice and such a result appears logically (not to say commercially) non-sensical.
Reference in the arbitration clause to a "condition precedent" is immaterial.
The forum selection clauses cannot be read together.
(1) The Slip Policy/MRC provides that the Reinsurance shall be governed by a single law, English law, and disputes resolved in a single jurisdiction, the Courts of England and Wales. The parties clearly intended to link the applicable law to the forum of resolution.[15] GIC's argument attempts to disturb this commercially sensible (and obvious) conclusion in favour of an uncertain hybrid approach.
(2) To read the jurisdiction clause in the Slip Policy/MRC as referring to only a supervisory jurisdiction is not consistent with the clear wording of the clause and would require a fundamental change in its natural meaning and effect. The clause clearly refers to the Courts of England and Wales having exclusive jurisdiction "on all matters relating to this insurance". A narrower reading of this clause which refers only to supervisory jurisdiction does quite some violence to the obviously broad and expansive words on the page.
(3) Further, the context of the Slip Policy/ MRC is important. Each Slip Policy/MRC may be underwritten by more than one reinsurer. That did not in fact happen here, but it is a clear possibility in the use of the Slip Policy/MRC format that one Slip Policy/MRC can be subscribed to by multiple reinsurers. If GIC was right that the clauses could be read together to provide for a mere supervisory jurisdiction of the English Court it would mean that there was the potential for issues under the Slip Policy/MRC to be litigated in arbitration with GIC and (in respect of a following market) in the English Court thus giving rise to "splintering".[16] This serves to demonstrate the commercial good sense in including the hierarchy clause; explains why the parties likely adopted the robust form of wording that appears in the Slip Policies'/MRCs' jurisdiction and choice of law clause; and makes clear the extreme difficulty in attempting to read the clauses together such as to provide for a mere supervisory jurisdiction.
(4) Where a document contains an "inconsistency clause", one should "approach the documents in a cool and objective spirit to see whether there is inconsistency or not"; see Alexander v West Bromwich Mortgage Company Ltd [2016] EWCA Civ 496 at [35]). Further, inconsistency is not confined to cases of literal contradiction, but extends to where clauses "cannot "fairly" or "sensibly" be read together; not merely cases where they cannot literally be read together. One should approach that question having due regard to considerations of reasonableness and business common sense." (Alexander at [41]). The Court should not strive to avoid inconsistency where there is a hierarchy clause. The forum selection clauses in the Facultative Certificate and Slip Policy/MRC are inconsistent, and the hierarchy clause provides the path through such inconsistency. The position is a fortiori where the clause speaks not of "inconsistency" but merely "confusion".
Exchanges after the hearing.
(1) There was no wording equivalent to the Hierarchy Clause in that case. This clause made clear that the earlier wording was intended to be the governing wording in case of confusion. The simple solution adopted by the judge in Partner Re could not therefore be adopted in the current case.
(2) There were two other distinctions between the cases which indicated that, whilst in Partner Re, the parties had intended to replace the earlier agreement with the later one, this was not the case in the current case. These other distinctions were as follows:
(a) The Certificate in the case before me described itself as a Certificate, whilst in Partner Re the document was referred to as an agreement;
(b) Weight was placed by Mr Houseman KC on the fact that in Partner Re the certificate was signed by a representative of Partner Re, whilst here the certificate was not signed or stamped.
(1) The Court's determination in TICL v Partner Re of the issues which are common to both sets of proceedings are striking, in particular Mr Houseman KC's decision that the English law/jurisdiction clause in the Slip Policy/MRC was replaced by the New York law/arbitration agreement in the MURA/Certificate.
(2) As in the present case, the Slip Policy/MRC and the Facultative Certificate in TICL v Partner Re "cover precisely the same risk, period and parties. Each of them could or would be a self-standing and self-sufficient contract if viewed in isolation from the other".
(3) The Certificate in TICL v Partner Re was agreed just 8 days after (9 days in the present case) the agreement of the Slip Policy/MRC and, as here, the substantive dispute was whether the Facultative Certificate varied or superseded the Slip Policy/MRC.
(4) As in the present case, the Facultative Certificate was foreshadowed by the brokers in correspondence as forthcoming and the premium would not be administered until the later document was executed.
(5) The Court in TICL v Partner Re determined the issue of construction in Partner Re's favour on a final basis.
(6) There then followed the Court's assessment and rejection of a series of objections advanced on behalf of TICL. TICL's objections by and large mirrored TICL's submissions before this Court. In addition, the Court recorded TICL's contention that the MURA (the Certificate) was an administrative document, but the Court plainly did not accept that submission.
(7) One of TICL's objections was that the Certificate did not comply with the GUA change of contract mechanism contained in the MRC. The Court held that it did not matter whether the change of contract process was followed, the parties "exercised such sovereignty to replace the MRC with the MURA, at least to the extent of the forum selection and governing law provisions". Of course, in the present case, to the extent that it matters, it is common ground the Certificate did comply with the change of contract provisions in the Slip Policy/MRC.
(8) The Court concluded that the Certificate superseded the Slip Policy/MRC and the parties therefore agreed to refer their disputes to arbitration in New York.
(1) The parties have agreed to a replacement of the English law/jurisdiction clause with the New York law/arbitration agreement. This is so whether or not both parties or either party read or digested the contents of the documents; indeed, the Court should assume that the parties had understood the contents of the document to which they had agreed.
(2) That agreement of the New York law/arbitration provisions in the Certificate was reached only 9 days after the Slip Policy/MRC was agreed.
(3) There was no uncertainty in the Certificate, at least in respect of the New York law/arbitration agreement. As Mr Houseman KC said in paragraph 39 of his judgment, "no such uncertainty or complexity has been identified".
"I am satisfied that, however unlikely or unusual it is for contracting parties to replace one specific agreement with another specific agreement in the space of a week or so, there is nothing problematic with them doing so. It all depends on what they said and did. Here, as summarised above, the contracting parties concluded a new legally binding contract of reinsurance on the terms of the MURA. This was contemplated in advance, albeit different from what they did in the prior year, for what it is worth."
(V) THE FUTURE CONDUCT OF THE ACTION IN THE LIGHT OF MY DECISION.
GIC's contentions.
(1) The factual assertions on which TICL relies and in respect of which TICL adduces evidence may not be supported at trial.
(2) The market practice to which Mr Whitcombe and Mr Cook attest may be different from any market practice the Court decides exists or does not exist on an interlocutory application.
(3) The circumstances in which the Slip Policies/MRCs and Certificates were agreed may alter once there has been full disclosure, which might well lead to additional allegations (e.g. estoppel).
(1) In The Eras Eil Actions [1995] 1 Lloyd's Rep 64 at 74, Potter J said:
"in a case where an anti-suit injunction is applied for in relation to proceedings in which the issue sought to be litigated abroad is already before the English Court for determination, the Court would be unlikely to grant relief of a truly final nature, in that there would be express or implied "liberty to apply" in the event of a change of circumstances which resulted in that issue being withdrawn from the English Court, or whereby, for any other reason, the oppression originally complained of were relieved".
(2) In Navigation Maritime Bulgare v Rustal Trading Ltd [2002] 1 Lloyd's Rep 106 at [123], Aikens J held:
"There was some debate at the hearing on whether any injunction granted should be interlocutory or final. Mr. Baker invited me to determine finally the existence of the arbitration agreement and dispose finally of the claim for an injunction. I have decided that the injunction should be interlocutory. I accept that it is unlikely that further contested facts concerning the first to fifth defendants' attitude to the London arbitration proceedings will emerge. However the grant of the injunction is dependent on the conclusion that there is an arguable case that the arbitration agreement is binding between the claimants and the defendants. Formally that issue has yet to be determined in a final way. It seems wrong to grant a final injunction when the basis for that relief has itself not been either conceded or finally determined. So for the present I will make the order interlocutory."
TICL's contentions.
(1) The application was not properly brought and cannot be made at this stage;
(2) It would not be appropriate to "entertain" TICL's application for final anti-suit relief pending determination of any jurisdiction challenge that may be brought by GIC.
(3) It would not be appropriate to grant TICL's application for relief prior to (i) the filing and service of statements of case (ii) the exchange of disclosure (iii) the exchange of evidence and (iv) trial. This is said to be "because further documentary and factual evidence will inevitably become available, and because the circumstances may change between now and trial."
each of these points is ill founded.
(1) The Court has the power to make the application final pursuant to s37 of the Senior Courts Act. If TICL's case is accepted, and there is an exclusive jurisdiction clause in favour of England and Wales, it follows that TICL has an exclusive contractual right to litigate in England and Wales, which should be enforced.
(2) The essential dispute between TICL and GIC is straightforward. There are two competing forum clauses, and a hierarchy clause in respect of which GIC raises various points of construction. GIC has not alleged that there is any issue of factual evidence that requires disclosure or cross-examination at trial. It is hard to see why disclosure, and a trial is required to develop these points further. The reference to a need for a trial appears simply as a transparent attempt to delay that which is inevitable. The position in this respect is similar to the recent judgment of Butcher J in RSM Production Corporation v Gaz Du Cameroun SA [2023] EWHC 2820 (Comm), where at the return date of an ASI, the Judge granted a continuation of the anti-suit relief and further provided at [50] and [51] that:
"Having considered all the points made by GdC, I am of the view that the ASI should be continued. Specifically, and to repeat, I am satisfied to a high degree of probability that there is an arbitration agreement which governs the dispute in question. I do not consider that there are strong reasons not to grant an injunction restraining its breach.
I can see no good reason why the relief granted should not now be final. There does not seem to be a real prospect of evidence hereafter coming to light that would make a significant difference to the issues to be decided." [Emphasis added]
(3) GIC's argument that the Court should delay until the resolution of any putative jurisdiction challenge is similarly without merit in circumstances where GIC has continually failed to identify any basis for a "jurisdiction challenge" other than the points already made in the set aside argument. It cannot be the case that GIC simply wish to delay final anti-suit relief to re-run points which have already failed.
VI DISCUSSION AND CONCLUSIONS.
(1) What was the test that I should apply to the question of whether I should grant an ASI?
(2) To what extent would the duration of such ASI be of relevance to the first issue?
(3) Applying that test, which parties' submissions should I prefer on the substantive issue, namely whether the contract included an English exclusive jurisdiction clause, on the one hand, or a New York arbitration clause, on the other?
(4) What remedy should be granted in the light of my conclusions on the third issue?
(5) Is it open to me to grant such remedy in the light of GIC's procedural point, which was that a claim had to be brought by way of Claim Form rather than application notice?
The relevant test.
"I refer to the judgment of Colman J. on 20 January 1999 in Bankers Trust Company, Bankers Trust International Plc v. P.T. Mayora Indah, unreported (see below). In the course of his judgment Colman J. said:
"... at this stage the court has to be satisfied that there are strong grounds for believing that the relief sought by the plaintiff is relief to which it must in fact be entitled. This is not merely an American Cyanamid test; it goes beyond that because the injunctions which the plaintiff seeks are intended to continue until after the hearing of any arbitration pursuant to the arbitration clause and therefore have the effect of enforcing that arbitration agreement as distinct from preserving the status quo pending a trial prior to the arbitration going any further.
"If the orders are granted an arbitration will take place and if the orders granted are obeyed by my order the arbitration will have taken place before any proceedings in Indonesia can be pursued. I must therefore be satisfied that the plaintiff has established a high degree of probability that its case against Mayora is right and that it is indeed entitled as of right to restrain Mayora from taking proceedings by way of action in Indonesia."
See further the Supreme Court Practice 1999, para.29/L/15, "Whether an exception to American Cyanamid" and the cases there cited."
"The required strength of Midgulf's case
36. This is a case where an anti-suit injunction is sought at the interlocutory stage of proceedings. However, if the injunction is granted its effect is likely to be final because it will end the Tunisian proceedings and enable the arbitration proceedings to be completed. In such circumstances this court has required the applicant for an anti-suit injunction to establish "a high degree of probability" that its case against the respondent is right and that it is indeed entitled as of right to restrain the respondent from taking proceedings abroad; see Bankers Trust v Jakarta Int. [1999] 1 Lloyd's Rep. 910 at p.913, and American International Speciality Lines Insurance v Abbott Laboratories [2003] 1 Lloyd's Rep 267 at p.275. It was not suggested that I should apply any higher test (cf Sheffield United v West Ham United [2009] 1 Lloyd's Rep 167 at paragraphs 8-10). In oral submissions it may have been suggested that a lesser test should be applied but it was not clear to me what that was. I consider that I should follow the approach adopted in Bankers Trust v Jakarta Int. and American International Speciality Lines Insurance v Abbott Laboratories ."
"Discussion
37. Midgulf's case that the fax dated 7 July was an acceptance of the offer contained in the fax dated 2 July is certainly arguable. The language of "confirmation" and "conclusion" is a clear indication that the deal had been done. For that to be so GCT must have accepted all of the terms in Midgulf's offer, including the incorporation of "the contract dated 27 June" amongst which was the London arbitration clause. On this construction the reference to "the following conditions" in the fax dated 7 July was simply a summary of the principal terms agreed. Of course, if the written exchanges are construed in the context of Midgulf's case as to the telephone conversation of 4 July Midgulf's case gains strength.
38. But GCT's case that its fax dated 7 July, notwithstanding the use of the language of "confirmation" and "conclusion", was a counter offer, accepted by Midgulf's fax dated 9 July, is also arguable. The fax is, on objective analysis, to be regarded as a counter offer because it introduced a condition regarding drafts and the list of conditions on the basis of which GCT stated that it was willing to contract did not include an incorporation of the "contract dated 27 June." The contract formed by the acceptance of that counter offer on 9 July was one which contained only the main terms of the agreement, with the detailed terms, including law and jurisdiction, to be agreed later; see Pagnan v Feed Products [1987] 2 Lloyd's Rep. 601 at p.619 (principles (4)-(6)). It is possible that this argument derives some support from GCT's account of the telephone conversation of the 4 July.
39. Had the terms of the July contract depended solely on the construction of the written exchanges between the parties this court would have been able to determine whether Midgulf had established to a high degree of probability that its case was correct. Indeed the court could have determined whether the July contract contained a London arbitration clause. But the content of the conversation of 4 July has, or may have, an important bearing upon the correct objective construction of the written exchanges in their context (because that context must include that conversation which took place between the faxes dated 2 and 7 July). The court is not therefore able to reach the conclusion that Midgulf has established "a high degree of probability" that its case against GCT, that the July contract included a London arbitration clause, is right and that it is therefore entitled as of right to restrain GCT from taking proceedings in Tunisia. I accept that Midgulf has a strongly arguable case to that effect but that is not sufficient in the present context for the reasons stated in Bankers Trust v Jakarta Int. and American International Speciality Lines Insurance v Abbott Laboratories.
40. That would suggest that the anti-suit injunction granted ex parte on notice by Burton J. must be refused.
41. I confess to a sense of unease in reaching that conclusion because the Tunisian court has refused to decide whether the parties had agreed a London arbitration clause. I suggested to counsel that if this court refused to grant an anti-suit injunction and the decision of the Tunisian court were upheld on appeal there would be a stalemate. Neither court would determine whether the July contract contained a London arbitration clause. However, counsel for GCT said that the Tunisian court will determine whether the July contract contained a London arbitration clause if, as it is said will be the case, that question is raised in the damages action in Tunisia regarding the July contract. Counsel further said that if GCT loses on that issue it will arbitrate in London. It was therefore said that there is no risk of a stalemate.
42. However, it is not clear to me that the Tunisian court will decide the question if it is raised in the damages action. It may nevertheless say that it is a matter for the arbitral tribunal on the principle of kompetenz kompetenz. The doubt arises from the uncertainty as to the reasons for the Tunisian court's decision and as to what the Tunisian court of appeal will do. There is therefore a risk of stalemate.
43. In those circumstances I consider that the just and appropriate course is, on case management grounds, to order a speedy trial of the issue as to the terms on which the July contract was agreed (at which trial oral evidence can be given as to the conversation of 4 July) and to continue the anti-suit injunction only until such time as that issue is determined. Once that issue is decided the court can then decide whether or not to appoint an arbitrator and continue the anti-suit injunction indefinitely. This course reflects the third of the four possible courses identified in Al-Nami v Islamic Press [2000] 1 Lloyd's Rep 522 at p.524 where a stay of proceedings is sought."
The relevance of the duration of the ASI.
The merits of the substantive arguments.
(1) The Slip Policy/ MRC was, in my view, a binding contract at the moment it was issued. There was no requirement, on the face of things, for any further contractual document. The MRC identified all the necessary matters for a valid and binding contract, including the jurisdiction clause, which provided for exclusive jurisdiction to be vested in the Courts of England and Wales.
(2) However, that Slip Policy/MRC was followed by a further agreement in the form of the Certificate. If the market evidence is left out of account and, if the hierarchy clause was not included in the later document, then I would respectfully agree with the conclusion of Mr Houseman KC in the Partner Re case (which I would regard myself as bound by, in any event). In particular, the process following the issuance of the MRC contract followed the practice for contractual variations, as I understand the evidence, with the result that it would be anticipated that the later agreement would vary or indeed replace the earlier one. This is also in accord with the provisions of the GUA.
(3) The simple question is thus whether the later agreement did indeed operate to entirely replace the earlier one. Again, leaving out of account market evidence, this depends on the true construction of the hierarchy clause. Here, the parties' respective cases were (as I have set out above) essentially simple. TICL focussed on the use of the words "take precedence over" as informing the meaning of the word "confusion", and indicating that the earlier agreement was to take precedence over the later one in case of inconsistency; conversely GIC focussed on the word "confusion" as meaning ambiguity, and pointing to the need for an ambiguity in the later agreement to justify resort to the earlier agreement.
(4) For my part, I did not find the reference to the earlier cases, which dealt with the issue of the admissibility of slips as aids to policy construction, against the background of a market where the slip was in general replaced by the policy, of any real assistance. It seemed to me that the issue was, as Mr Houseman KC indicated, really one of simple contractual construction (absent market evidence).
(5) Viewed in this way, I was inclined to prefer the submissions of TICL. In my judgment, its submissions on the Hierarchy Clause were correct. Thus, the jurisdiction provisions of the earlier agreement took precedence over the arbitration provisions of the later agreement.
The Scott v Avery clause.
Supervisory jurisdiction?
The duration of the ASI.
Note 1 See also RSM Production Corporation v Gaz Du Cameroun SA [2023] EWHC 2820 (Comm) at [21] read with [51] [Back] Note 2 See also Youell v Bland Welch & Co Ltd [1992] 2 Lloyd’s Rep 127 and Punjab National Bank v De Boinville [1992] 1 Lloyd’s Rep 7, to which Rix LJ referred at [2001] EWCA Civ 735; [2001] 2 Lloyd’s Rep 161, [73]-[77]. [Back] Note 3 The Oxford English Dictionary does not support the meaning of conflict. Instead, the word “confusion” conforms with the OED’s definition no. 8 (“The quality of being confused, indistinct, or obscure …”). [Back] Note 4 Foxton J noted with respect to the word “confusion” during the hearing of the without notice application: “It is an odd word. One would have expected inconsistency”. [Back] Note 5 See B v S [2011] EWHC 691 (Comm); [2011] 2 Lloyd’s Rep 18 at [68]-[70]; Chitty on Contracts (35th ed., 2023) at [35-047]; Russell on Arbitration (24th ed., 2015) at [2.023]. [Back] Note 6 Which, GIC submitted, makes the position clear beyond doubt. But the Courts have recognised that a binding dispute resolution procedure need not be expressed as a condition precedent to be given effect to so long as it is a mandatory obligation that was suf?ciently clear and certain by reference to objective criteria: Kajima Construction Europe (UK) Ltd v Children’s Ark Partnership Ltd [2022] EWHC 1595 (TCC); affirmed [2023] EWCA Civ 292. Clause 13 satisfies that test. [Back] Note 7 Sul America Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638; [2012] 1 Lloyd's Rep 671; Enka Insaat ve Sanayi AS v OOO “Insurance Company Chubb” [2020] UKSC 38; [2020] 1 WLR 4117. [Back] Note 8 See also Paul Smith Ltd v H&S International Holding Inc [1991] 2 Lloyd's Rep 127; Adactive Media Inc v Ingrouille [2021] EWCA Civ 313; [2022] 1 Lloyd's Rep 235, at [40]-[44]; Melford Capital Partners (Holdings) LLP v Wingfield Digby [2021] EWHC 872 (Ch). [Back] Note 9 Fiona Trust & Holding Corp v Privalov [2007] UKHL 40; [2008] Lloyd's Rep 254; Surrey CC v Suez Recycling and Recovery Surrey Ltd [2021] EWHC 2015 (TCC); [2021] BLR 625 at [92]. [Back] Note 10 Sul America Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWHC 42 (Comm); [2012] 1 Lloyd's Rep 275 at [48]-[50]; affirmed [2012] EWCA Civ 638; [2012] 1 Lloyd's Rep 671; ACE Capital Ltd v CMS Energy Corporation [2008] EWHC 1843 (Comm); [2009] Lloyd's Rep IR 414 at [82]; Surrey CC v Suez Recycling and Recovery Surrey Ltd [2021] EWHC 2015 (TCC); [2021] BLR 625 at [92]. [Back] Note 11 [2012] EWHC 42 (Comm); [2012] 1 Lloyd's Rep 275 at [48]-[50], [2012] EWCA Civ 638; [2012] 1 Lloyd's Rep 671. [Back] Note 12 The Supreme Court’s judgment in Enka Insaat ve Sanayi AS v OOO “Insurance Company Chubb” [2020] UKSC 38; [2020] 1 WLR 4117 does not mandate a different conclusion as to the proper law of the arbitration agreement, which has been clearly expressed as New York law (in Clause 17). [Back] Note 13 Merkin, Arbitration Law, (Informa), [1.4]. [Back] Note 14 And as noted above, TICL submits that the ordinary and natural meaning of the clause is that it applies where there is confusion when reading the Slip Policy/MRC and Facultative Certificate alongside each other. That might arise where there are inconsistent provisions in the two documents but it is not limited to inconsistency. “Confusion” has, as a matter of ordinary and natural language, a broader meaning. Where “confusion” occurs, the hierarchy clause directs that the Slip Policy/MRC is where the answer is to be found. [Back] Note 15 See Global Maritime Investments Cyprus v OW Supply & Trading A/S [2015] EWHC 2690 (Comm) [Back] Note 16 See Generali Italia SpA v Pelagic Fisheries Corp [2020] EWHC 1228 (Comm) at [92] and [93] [Back] Note 17 Masri v Consolidated Contractors International (UK) Ltd [2008] EWCA Civ 625; [2009] QB 503 at [57]; 2023 White Book at [25.1.9]; Raphael, The Anti-Suit Injunction (2nd ed., 2019) at [3.32]. [Back] Note 18 Skype Technologies SA v Joltid Ltd [2009] EWHC 2783 (Ch); [2011] IL Pr 8 at [42]. [Back]