In Al Mana Way of life Buying and selling LLC & Ors v United Constancy Insurance coverage Firm PSC & Ors [2023] EWCA Civ 61 the Court docket of Attraction thought-about the jurisdiction of the English court docket to listen to claims introduced by the Claimant policyholders in opposition to their insurers for indemnities for enterprise interruption losses (BI) arising from the Covid-19 pandemic. In doing so, the court docket needed to take into account whether or not a jurisdiction clause that each events agreed was “not a mannequin of drafting” was unique or not.

The Court docket of Attraction reversed the primary occasion resolution and located that the English court docket didn’t have jurisdiction to listen to the claims. In a cut up resolution, the vast majority of the Court docket of Attraction discovered that the clause gave unique jurisdiction to the courts within the nation by which every coverage was issued (within the Center East). Provided that the jurisdiction of the native court docket was not out there would the courts of England and Wales have jurisdiction.

BACKGROUND

The Claimants shaped a part of the Al Mana Group, an enterprise which incorporates companies within the meals and beverage and retail sectors working within the Center East and Gulf area. There was no enterprise in England or Wales.  The Defendant insurance coverage firms operated inside Gulf Cooperation Council nations. The First Defendant had its headquarters positioned within the United Arab Emirates, the Second Defendant was positioned in Qatar and the Third Defendant in Kuwait.

The Claimants sought an indemnity within the area of US$40m associated to alleged BI losses in the course of the Covid-19 pandemic below a collection of seventeen “Multi-Dangers” insurance coverage insurance policies underwritten by the Defendants (the Insurance policies). It was frequent floor that the Insurance policies have been issued respectively within the UAE, Qatar and Kuwait.

The principal situation was whether or not or not the Insurance policies contained a jurisdiction settlement entitling the Claimants to convey their claims earlier than the English courts. Every of the Insurance policies contained the next Relevant Regulation and Jurisdiction Clause (the Clause):

“APPLICABLE LAW AND JURISDICTION:

In accordance with the jurisdiction, native legal guidelines and practices of the nation by which the coverage is issued. In any other case England and Wales UK Jurisdiction shall be utilized,

Below legal responsibility jurisdiction will probably be prolonged to worldwide excluding USA and Canada.”

The Claimants argued that the Clause permitted proceedings to be introduced in both:

• the nation the place every of the Insurance policies was issued (on this case, the UAE, Qatar or Kuwait); or
• within the courts of England and Wales.

The Defendants’ case was that the Clause must be interpreted as an unique jurisdiction clause such that disputes have to be submitted to the courts of the nations by which the Insurance policies have been issued (the UAE, Qatar and Kuwait), with a fallback for English and Welsh jurisdiction within the occasion that the native court docket doesn’t have or wouldn’t settle for jurisdiction

The Claimants argued that their building was the plain and pure which means of the primary and second sentences of the Clause and their building gave correct impact to each. They submitted that:

• The Defendants’ proposed building launched a situation precedent to the operation of the second sentence that isn’t there and quantities to a rewriting of the availability.
• “In any other case” must be learn as equal to “alternatively”.
• Their building mirrored the London market scheme and made good business sense in opposition to the business background by which every of the Insurance policies was issued together with the others as a part of a collection offering complete protection for the Al Mana Group’s operations in quite a few jurisdictions.

The Defendants argued the next taking every of the three key elements of the Clause in flip:

“In accordance with the jurisdiction, native legal guidelines and practices of the nation by which the coverage is issued”

In respect of this facet, the Defendants contended that:

• The phrases “In accordance with” have been crucial and listing, notably when learn alongside the title of the clause and must be learn as equal to “topic to”.
• This building was in line with the pure objective of the phrases, relying upon Hin-Professional Worldwide Logistics v Compania Sud Americana De Vapores SA [2015] EWCA Civ 401.
• It makes apparent sense to make regulation and jurisdiction a compulsory matching pair.
• The absence of the phrase “unique” is just not decisive (counting on Continental Financial institution NA v Aeakos Compania Naviera SA [1994] 1 Lloyd’s Rep 505).

“In any other case England and Wales UK Jurisdiction shall be utilized”

The Defendants argued that this element associated solely to jurisdiction and was akin to the phrases “If however the foregoing” thought-about by the Court docket of Attraction in Hin-Professional. In Hin-Professional, the next regulation and jurisdiction clause was thought-about:

“This Invoice of Lading and any declare or dispute arising hereunder shall be topic to English regulation and the jurisdiction of the English Excessive Court docket of Justice in London. If, however the foregoing, any proceedings are commenced in one other jurisdiction, such proceedings shall be referred to bizarre courts of regulation…”

In that case, it was discovered that the usage of the phrase, “if, however the foregoing, any proceedings are commenced in one other jurisdiction” within the jurisdiction clause, recognised that the primary sentence required litigation in England as a matter of contract.

“Below legal responsibility jurisdiction will probably be prolonged to worldwide excluding USA and Canada“

The Defendants contended that this was irrelevant to the current dispute, being a reference to Part 5 of the duvet (Public and Product Legal responsibility).

FIRST INSTANCE DECISION

Within the Excessive Court docket, Cockerill J agreed with the Claimants’ case and located that the clause offers, whichever social gathering needs to convey a declare, a selection of bringing proceedings both within the native court docket or in England and Wales. She famous that the native regulation provision was a consider favour of the Defendants’ competition, however it have to be thought-about with the opposite arguments. Cockerill J didn’t concur with the Defendants’ competition that the phrases “in accordance with” have been equal to the phrases “topic to” and due to this fact crucial and listing. She additionally highlighted that the primary two elements of the Clause didn’t run collectively as a sentence however they did in formatting. She felt that in actuality this wording, with obligatory or quasi-mandatory components in each elements, offered extra naturally to a reader as an “both/or.”

She additionally disagreed with the Defendants that “In any other case” was synonymous with “or”. She famous that, allowing for the eccentricities of the drafting, one wouldn’t be minded to position an excessive amount of stress on why one phrase (say “in any other case”) was used as a substitute of one other (corresponding to “or”).

Cockerill J concluded:

“Each as a query of impression and on detailed evaluation I take into account that the higher view is that the clause offers for non-exclusive jurisdiction – a real various“. I settle for that the clause is to some extent odd, however this result’s much less odd and creates fewer difficulties than the strategy urged by the Defendants. A non-exclusive jurisdiction clause greatest harmonise(d) the wording and the commercialities of the clause within the context of the broader factual matrix.”

COURT OF APPEAL DECISION

The Court docket of Attraction, by a majority (Males LJ and Nugee LJ), allowed the attraction discovering the Clause gave unique jurisdiction to the courts within the nation by which every coverage was issued (within the Center East). Provided that the jurisdiction of the native court docket is just not out there would the courts of England and Wales have jurisdiction.

Males LJ emphasised that the start line must be how the phrases of the Clause could be understood by an inexpensive policyholder. His sturdy first impression was that the primary sentence within the Clause stipulates the events’ selection of main jurisdiction, with a fallback for English or Welsh jurisdiction within the second sentence. He stated that this impression was confirmed by the evaluation within the events’ submissions.

The Court docket famous that the primary sentence within the Clause offers not solely with jurisdiction, but additionally with the governing regulation (i.e. the native regulation) and the necessity to apply native practices, whereas the second sentence is confined to jurisdiction. This strongly means that the primary sentence is meant to comprise the first rule, with the second sentence working as a fallback. Thus, even when the second sentence applies and English jurisdiction is invoked, the English court docket could be required to use the native regulation and practices and it was clearly preferable for an area court docket, somewhat than a court docket of England and Wales to contemplate problems with native regulation, as they might be accustomed to native practices. The phrases “in accordance with” have been obligatory.

Males LJ acknowledged that always punctuation doesn’t assist help a specific building of a clause however that it will probably assist to tell the query of how a provision could be learn by the bizarre reader. With regard to the development of the Clause, the capital letter on “In any other case” and the complete cease on the finish of the primary sentence he thought prompt that the primary and second sentences are unbiased somewhat than being learn as a single composite provision. Due to this fact, when the reader involves the second sentence, they’ve already understood the primary sentence to offer that the relevant regulation would be the native regulation of the place of situation, that native practices are to be utilized, and that the courts of that place are to have unique jurisdiction.

On the which means of the phrase “In any other case” within the second sentence (“In any other case England and Wales UK Jurisdiction shall be utilized”) Males LJ held that the Clause have to be thought-about as a complete. He held that “In any other case” on its pure which means signifies that the second sentence units out the fallback i.e. if the native court docket is just not out there (wouldn’t settle for jurisdiction) then English and Welsh jurisdiction is. Nugee LJ agreed and held that “In any other case” on this context means “Failing that” indicating that the second sentence (England and Wales jurisdiction) applies the place the stipulation within the first sentence fails (i.e. if the native court docket doesn’t or wouldn’t settle for jurisdiction).

The Claimants additionally objected to the attraction of their submissions by posing the next:

• that both there aren’t any/very restricted circumstances by which the native court docket wouldn’t settle for jurisdiction, by which case the second sentence serves no objective; or
• there are more likely to be disputes about whether or not the native court docket would settle for jurisdiction, resulting in uncertainty for the Claimant about the place it ought to situation proceedings.

Males LJ believed the above to symbolize a false dilemma. On the primary level, whereas Males LJ accepted that the circumstances by which the native court docket wouldn’t settle for jurisdiction are very restricted or, maybe, even non-existent, there was no motive why events mustn’t conform to confer jurisdiction on one court docket, with one other as a fallback in case the first court docket chosen is just not out there. This provides the events the consolation of understanding that if, for any motive, their main selection is just not out there, there’s an alternate with which they’re comfy, and is a wise settlement to make. On the second level, he thought such a dispute was unlikely to come up and that on any building, there was a component of uncertainty inherent within the Clause.

In her dissenting judgment, Andrews LJ thought-about {that a} affordable individual would perceive the Clause to imply that if, for no matter motive, the proceedings usually are not introduced within the courts of the nation the place the coverage was issued, they have to be introduced in England and Wales. She disagreed that sentence 2 might be thought-about a ‘fallback’ provision, arguing that it might not have been troublesome to have began the second sentence with the choice phrases corresponding to: “If that court docket declines jurisdiction”, “If that court docket is unavailable” or “If that isn’t attainable”. None of those phrases is synonymous with “in any other case”, which is the phrase that the events used. Moreover she thought there was lack of any reasonable sensible utility of a “fallback clause” in contrast with the potential advantages to the events of agreeing on a restricted selection of jurisdictions by which to resolve their disputes.

COMMENT

The judgment is a vital reminder of the necessity for cautious drafting of jurisdiction clauses. Certainly, the Claimants, Defendants and judges in each courts agreed on one level referring to building of the Clause, specifically that it was ‘not a mannequin of drafting.’ Good drafting ensures that the events’ intentions are correctly recorded at inception of the coverage and minimises the danger of satellite tv for pc jurisdiction disputes.

KEY CONTACTS