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Insurance Law Monthly
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ILM 11 4 (10)
Conflict of Laws — Anti-Suit Injunctions in Insurance Cases
iNSURANCE
(Commercial Union Assurance Co plc v Simat Helliesen & Eichner Inc, October 1998, unreported)
A regular theme of insurance disputes involving London market insurers covering overseas assureds is a jurisdictional battle. Doubtless, for the same reasons, assureds and insurers have greater trust in their local courts. In a typical case London market insurers will seek declaratory relief from the English courts, to the effect that they are not liable under the policies. If there is a threat of legal proceedings by the assured in his own local courts, the insurers' application may also be coupled with a request for an injunction preventing the assured from commencing or continuing parallel proceedings.
It is now established that the English courts will assert jurisdiction where negative declaratory relief would be 'useful', but it is also established that the grant of an anti-suit injunction is reserved for exceptional circumstances. The relevant principles were restated by Mr Justice Cresswell in Commercial Union Assurance Co plc v Simat Helliesen & Eichner Inc, October 1998, unreported.
Commercial Union: the facts
The plaintiff insurers were the primary and excess layer professional indemnity insurers of D. D had been appointed by the Department of Treasury, representing Oregon Public Employees' Retirement Board (OPERB), to advise the Treasury in relation to an investment proposal – aircraft maintenance hangars – for which funding had been sought from the Treasury. Acting on D's advice, the investment went ahead and the hangar facility was built, although it ceased to operate within a few months.
The proceedings
In October 1996 the State of Oregon commenced proceedings against D in Oregon, alleging breach of fiduciary duty, misrepresentation and negligence. On 4 August 1998 P commenced proceedings against D in England, seeking a declaration that, as a matter of construction of the insurances, P was not liable to D. P's claim also included an application for rectification of the insurances to meet the actual intentions of the parties. Leave for service outside the jurisdiction was granted on 7 August 1998, and on 6 October 1998 D served points of defence and counterclaimed for indemnification under the policies. In the meantime, on 10 August 1998 D commenced proceedings in respect of the policy against P in Oregon. The claim by OPERB was settled on 19 August 1998, subject to the condition that coverage proceedings in respect of the policy were not to be abandoned unless there was 70% or greater chance of an adverse ruling.
Later events
On 7 October 1998 D's solicitors wrote to P's solicitors. By this time P had applied for injunctive relief seeking to prevent D from continuing with the Oregon proceedings. D's solicitors confirmed that D did not intend to take any further steps to continue the Oregon proceedings, although D reserved its right to resurrect those proceedings on 14 days' notice. Its reason for this reservation was the possibility that the settlement with the Treasury might be adversely affected by a withdrawal of the Oregon proceedings, given that#p#分页标题#e#指导essay law the Treasury was effectively a beneficiary of the policy proceedings and that it had been agreed as part of the settlement that the policy coverage claim would not be abandoned. The fear was, therefore, that the settlement agreement with the Treasury might not be executed if D discontinued the Oregon action. P's solicitors responded that D had submitted to the jurisdiction of the English courts and that unless D withdrew the Oregon proceedings P would continue to seek injunctive relief against D; D's response to this communication was effectively a rejection of P's position. The result was that Mr Justice Cresswell in the present action was required to consider whether (a) it was appropriate for the matter to be heard in England rather than Oregon; and (b) it was appropriate for injunctive relief to be granted to P. Both questions were answered in the affirmative.
(a) Forum
Mr Justice Cresswell accepted P's arguments in favour of England being the natural forum for the resolution of issues arising under the insurance policies. There appear not to have been choice of law clauses in the policies, but as the contracts had been negotiated and made in London they were governed by English law. Moreover, the construction questions to be resolved, including the rectification claim, involved evidence from the persons who had negotiated the terms of the cover, and they were resident or working in London. The final point was that D had submitted to the jurisdiction of the English courts.
(b) Anti-suit injunction
Mr Justice Cresswell, relying on the principles set out by the Privy Council in Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] 1 AC 871, held that injunctive relief was available only to counter oppressive or vexatious proceedings commenced by the other party, and even then it was necessary to consider whether the grant of an injunction would give rise to injustice. On the facts before him Mr Justice Cresswell decided that it was appropriate to grant an injunction. He emphasised that the policy of the law was to ensure that litigation occurred in only the appropriate forum, and that concurrent litigation elsewhere gave rise to a risk of injustice and oppression. As had been pointed out by P in its arguments to the court, in the absence of an injunction it might be necessary to contest the jurisdiction of the Oregon court, and pending the determination of that issue there would have to be expensive pre-trial procedures (depositions and the like) in preparation for a possible jury trial. Mr Justice Cresswell was unpersuaded that D's offer to stay the Oregon proceedings subject to a reservation of the right to recommence them on notice provided sufficient protection to P.
The only unique feature of the present dispute concerned the possibility raised by D that the Oregon Treasury would refuse to proceed with the settlement. Mr Justice Cresswell's view of that point was that it would be extremely surprising if there was any attempt by the Treasury to argue that a decision of the Commercial Court fell outside the terms of the settlement agreement.#p#分页标题#e#
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