England and Wales Court of Appeal (Civil Division) Decisions

i)                    What is the evidential standard to be adopted by the Court as to whether it has jurisdiction under the Brussels Regulation Recast (Regulation (EU) 1215/2012) (“Brussels Recast”)? (“Issue I: The evidential standard”)

ii)                   Whether the Court has jurisdiction pursuant to the exclusive English jurisdiction clause contained in the Settlement Agreement dated 6 August 2013 (“the Settlement Agreement”)?    (“Issue II: The Settlement Agreement”)

iii)                Whether the Court has jurisdiction pursuant to the exclusive English jurisdiction clause contained in the Hull and Machinery Insurance Policy for the period of 12 months from 15 October 2012 to 15 October 2013 (“the Policy”)?   (“Issue III: The Policy”)

iv)                Whether Underwriters’ claims are matters relating to insurance within Chapter II, Section 3 (“the Insurance Section”) of Brussels Recast?  (“Issue IV: Matters Relating to Insurance”)

v)                  If the answer to Issue IV is “yes”, whether the Bank is entitled to rely on the Insurance Section if it is not the economically weaker party within the meaning in Recital (18) of Brussels Recast?  (“Issue V: Economic Imbalance”)

vi)                Whether Underwriters’ claims for damages for misrepresentation are matters relating to tort, delict or quasi-delict under Art. 7(2) of Brussels Recast, or, alternatively are matters relating to contract within the meaning of Art. 7(1) thereof (“Issue VI:  Damages for Misrepresentation”)

vii)              Whether Underwriters’ claims for restitution are matters relating to tort, delict or quasi-delict under Art. 7(2) of Brussels Recast?  (“Issue VII: Restitution”).

THE FACTS  

“4. By a loan agreement dated 9 March 2010 (but subsequently amended) the Bank lent $38.2m to the Owners and to Capella Shipping Limited, the owners of the ATLANTIK GLORY, to re-finance the purchase of the Vessel and the ATLANTIK GLORY. The loan was secured by a first mortgage on both vessels and by a deed of assignment which included an assignment of the insurances on the vessels….

5. By a further loan agreement (entitled Framework Credit Agreement) dated 14 March 2011 the Bank lent $3.5m to the Owners for working capital and enabling overdraft.  This loan was secured by a second mortgage and a second deed of assignment.

6. At the beginning of April 2013 the debt against the Vessel under the first loan was just under $10m, namely $9,990,158, and under the second loan just under $3.9m, namely $3,899,704.86. The debt against the ATLANTIK GLORY under the first loan was just under $25m, namely $24,906,136.39. Those sums included missed repayment of principal in the sum of $723,280 and missed repayment of interest in the sum of $685,068.”

“This insurance shall be governed by and construed in accordance with the law of England and Wales and each party agrees to submit to the exclusive jurisdiction of the courts of England and Wales.”

“….GIVE NOTICE that, by an assignment in writing dated 11 February, 2013, we assigned to ….[the Bank]…, a company incorporated under the laws of the Netherlands acting through its Malta branch…..all our right, title and interest in and to all insurances effected or to be effected in respect of the Vessel, including the insurances constituted by the policy on which this notice is endorsed, and including all money payable and to become payable thereunder or in connection therewith….”

“Claims payable under this policy in respect of a total or constructive total or an arranged or agreed or compromised total loss or unrepaired damage and all claims which (in the opinion of the Mortgagee) are analogous thereto shall be payable to the Mortgagee up to the Mortgagee’s mortgage interest.”

“ We hereby authorise you to pay to Willis Ltd all claims of whatsoever nature arising from the above mentioned casualty provided that (i) there are no amounts due under the policy and (ii) …[the Bank] is the sole loss payee of the policy.

We agree that settlement of such amounts in account or otherwise with Willis Ltd, shall be your absolute discharge in respect of such amounts paid.

……”

“….by Clyde & Co. LLP as agent only on behalf of ‘the Assureds’ (defined as being the Owners and the Managers) and by Norton Rose Fulbright LLP as agents only on behalf of the Underwriters.”

“ This agreement is made the 6 ^th day of August 2013

BETWEEN

(1)    The UNDERWRITERS more particularly described in schedule 1 hereto (‘Underwriters’) for their respective several proportions;

(2)    KAIROS SHIPPING LIMITED of…..Malta, as owners of the Vessel (as defined below), ZIGANA GEMI ISLEMTMELERI AS of Itri Sokak….of Turkey, as managers of the Vessel and their associated, affiliated and subsidiary companies for their respective rights and interests (hereinafter together the ‘Assureds’).

WHEREAS:

(A) The Assureds purchased hull and machinery insurance from the Underwriters for 12 months at 15 October 2012 in respect of the ‘ATLANTIK CONFIDENCE’ (the ‘Vessel’) in the sum of US$ 22,000,000 on the terms and conditions appearing in policy no. B080193898M12 and the endorsements thereto (the ‘Insurance’).

(B)   The Insurance was placed on behalf of the Assureds by Willis Limited (‘Willis’). ….[The Bank]….was mortgagee of the Vessel and loss payee under the Insurance. The Bank have consented to Underwriters making payment to Willis in accordance with a letter dated 5 April 2013…..

(C)   The Vessel suffered a fire and sank off the coast of Oman in March/April 2013 (the ‘Casualty’). The Assureds advanced claims under the insurance, inter alia, in respect of damage to and/or loss of the Vessel (the ‘Claims’).

(D) The parties hereto wish to resolve all claims of whatsoever nature in relation to the Vessel and the Casualty upon the terms and conditions set out below.

NOW IN CONSIDERATION OF THE MUTUAL OBLIGATIONS AND PROMISES HEREINAFTER CONTAINED, IT IS HEREBY AGREED AS FOLLOWS:

1.       Payment

1.1 Underwriters shall pay to the Assureds their due proportions….of US$22,000,000 (the ‘Settlement Sum’).

1.2 Each Underwriter shall pay its due proportion of the Settlement Sum to Willis on behalf of the Assureds…..Such payment….shall completely discharge and release each such paying Underwriter for its respective proportion of the Settlement Sum…

1.3 The Assureds accept the Settlement Sum in full and final settlement….

2. Release

Upon payment of each Underwriter’s due proportion of the Settlement Sum to Willis, the Assureds completely discharge and release each such Underwriter……

3, Warranties

3.1 The Assureds warrant that, subject to the interests of the Bank:

(a) they are the only parties entitled to the Settlement Sum and that no other party has any legal or equitable interest in any claims of whatsoever nature against Underwriters….

…..

4. Rights of Third Parties

The parties to this Agreement do not intend that any provision of this agreement confers or purports to confer any benefit which may be enforceable by third parties pursuant to the Contracts (Rights of Third Parties) Act 1999, save that Underwriters’ directors, officers, servants, employees, adjusters, agents, contractors, solicitors, counsel and experts shall have the benefit of and may enforce clauses 2 and 3 above.

5. Law and Jurisdiction

5.1 This agreement and any dispute or claim arising out of or in connection with it (including any non-contractual disputes or claims) shall be governed by and construed in accordance with the laws England.

5.2 The parties irrevocably submit to the exclusive jurisdiction of the High Court of Justice in England in respect of any disputes or claims that may arise out of or in connection with this agreement (including any non-contractual disputes or claims).”

“ …that (1) the Vessel was lost by reason of a peril insured against under the Policy; (2) the Vessel’s loss was accidental; (3) the Owners were unable to explain the cause of the loss of the Vessel; (4) the Owners and the Bank were entitled to an indemnity under the Policy in respect of the loss of or damage to the Vessel; (5) the Owners were not guilty of wilful misconduct and did not procure the loss of the Vessel by their own wilful misconduct.”

“ (1) the avoidance and/or rescission of the Settlement Agreement on grounds of misrepresentation and mistake; (2) restitution of the sums paid pursuant to the Settlement Agreement by reason of the avoidance and/or rescission of the Settlement Agreement; (3) damages in deceit, for negligent misrepresentation and/or pursuant to sections 2(1) and/or 2(2) of the Misrepresentation Act 1967; and (4) restitution of the sums paid by mistake….”

“…For what it is worth, I agree (1) that the correct test is ‘a good arguable case’ and glosses should be avoided; I do not read Lord Sumption JSC’s explication in para. 7 as glossing the test….”

ISSUE II: THE SETTLEMENT AGREEMENT

“….though that would be a breach of the mortgage and they would need the Bank to agree that payment by the Hull Underwriters to Willis would be a good discharge of their payment obligations. That agreement was given by the Bank in the letter dated 5 April 2013 and….probably also amounted to consent for the purposes of the mortgage. But it does not follow that the claim must have been made on behalf of the Bank. ”

The Judge accepted that the Loss Payable Clause meant that claims for a total loss were payable to the Bank (provided the amount of the claim was at least equal to Owners’ indebtedness) and that only the Bank could give a good discharge but did not consider that these points materially advanced the debate.  They did not mean, for the reasons already given by the Judge, that Owners could not make a claim on the Policy in their own name.

“The Bank, if it had wished to do so, could have instructed the Owners to make a claim on the Policy on its behalf. It was an equitable assignee of the Policy and loss payee…..”

There was, however, no direct evidence that it had done so. To the contrary, Mr Tayfun’s evidence was that Owners would deal directly with Underwriters on their own behalf.  The Bank’s “only concern” was that the sums received by Owners (from Underwriters) would be used to discharge their debts and those of other group companies.  Subsequently, as already noted, when the Bank asked Owners for information as to the progress of the insurance claim, Owners declined to share all their correspondence, on the basis that it was “private and confidential”.  Understandably, this prompted Teare J’s observation:

“That remark sits unhappily with the suggestion that the Owners were making a claim under the Policy on behalf of the Bank.”

“….by signing the letter dated 5 April 2013 and by providing it to the Owners in circumstances where the Bank was the total loss payee and knew that a claim was to be made on the Policy and in due course settled, to which settlement the Bank consented, it is to be inferred that the Bank authorised the Owners to make and settle the claim on its behalf. But I do not regard that as an inevitable inference and it is contrary to Mr Tayfun’s understanding of the position as expressed in his evidence.”

In the event and applying the good arguable case test, the Judge (at [33]) rejected Underwriters’ arguments on these points, even considered as a whole:

“My conclusion as to the letter dated 5 April 2013 is that the Hull Underwriters do not have the better of the argument on their submission that the Bank, by signing the letter dated 5 April 2013, authorised the Owners to settle the insurance claim on their behalf. On the contrary, on the evidence before the Court, including in particular the evidence of Mr Tayfun, the Bank has the better of the argument that it did not, by its letter dated 5 April 2013, confer authority upon the Owners to settle the claim on its behalf.”

Neither the terms nor the context of the Letter of Authority required the Court to infer nor “compelled the conclusion” (the wording of Underwriters’ counsel) that the Bank must have given Owners authority to settle the claim under the Policy on its behalf.  Instead (at [34]) the terms of the Letter of Authority and its context were consistent with the Bank’s understanding that:

“…Owners would deal with the Hull Underwriters on their own behalf but being concerned to ensure that the sums received by the Owners from the Policy would be used to discharge the Owners’ debts to the Bank.”

“The first question which…arises….is whether the terms of the Agreement unequivocally and exhaustively define the parties to it. I consider that they do, or that the Bank has at any rate the better of the argument that they do. The Agreement purports to define the parties to it, namely the Hull Underwriters and the Owners and Managers. Such clear definition of the parties is a cogent indication that they and no-one else were the parties to the Settlement Agreement. Further, the recitals expressly noted the role of the Bank as mortgagee and loss payee and referred to the Bank as having consented to the Hull Underwriters making payment to Willis by their letter dated 5 April 2013. Had it been intended that the Bank was also party to the Settlement Agreement the parties would surely have made that clear. In those circumstances the natural construction of the terms of the Agreement…..which referred to ‘the Assured’ is that they did not include the Bank.”

“It is a well-established rule of English law that an undisclosed principal can sue and be sued upon a contract, even though his name and even his existence is undisclosed, save in those cases when the terms of contract expressly or impliedly confine it to the parties to it.”

Diplock LJ (as he then was) said this (at p.555):

“….In determining who is entitled to sue or liable to be sued on a contract, a useful starting point, where the contract is in writing, is to look at the contract……

Where an agent has such actual authority and enters into a contract with another party, intending to do so on behalf of his principal, it matters not whether he discloses to the other party the identity of his principal, or even that he is contracting on behalf of a principal at all, if the other party is willing….to treat as a party to the contract anyone on whose behalf the agent may have been authorised to contract...

Whether the agent was actually authorised to enter into a particular contract on behalf of a particular principal depends on what passed between the agent and the principal…. ”

Thus, both the terms of the Settlement Agreement and the need for Underwriters to establish (to the standard of a good arguable case) that Owners had actual authority from the Bank to contract on its behalf, remain to be considered.

i)                    At [32], the Judge helpfully summarised what might be regarded as the “high point” of Underwriters’ case.  He took very much into account the features that the Bank was the mortgagee and loss payee, that it had signed the Letter of Authority and that it (at some point) consented to the settlement.  These were the strongest inferences supporting the Bank conferring authority on Owners to enter into the Settlement Agreement on its behalf.   The Judge’s reference to these features not giving rise to an “inevitable inference” did not import some excessively demanding test; here, the Judge was doing no more than saying that it did not necessarily follow from the features relied on by Underwriters that the Bank had indeed conferred actual authority on Owners to make and settle the claim on its behalf.  That must be right and was no more than an introduction to the next paragraph ([33]), where the Judge applied the “good arguable case” test.

ii)                  Turning to [33], the Judge reached a conclusion that was open to him, taking fully into account the contextual evidential materials and not, in my judgment, giving undue weight to Mr Tayfun’s evidence.  Thus, first, the Judge had well in mind that the Bank was an equitable assignee and, though the loss payee, was not entitled to the entirety of the insurance proceeds. In this regard, the Judge’s analysis that Owners could have settled the claim without the Bank’s consent, albeit conduct which would have been most unattractive and in breach of the mortgage, is difficult to fault.  Secondly, the Judge had already underlined Owners’ unwillingness to share all their correspondence as to the progress of the insurance claim with the Bank; for my part, this factor alone poses the gravest difficulties for Underwriters’ case that Owners entered the Settlement Agreement on behalf of the Bank.  Thirdly and earlier in the judgment, the Judge had correctly posed the question of whether the Bank had in fact authorised Owners to enter the Settlement Agreement on its behalf. The Judge’s conclusion, that there was not a good arguable case that it had done so, was consistent with the terms of the Letter of Authority and the evidence as a whole, namely, that Owners would deal with Underwriters on their own behalf, the Bank’s concern being confined to the use made of the proceeds once received: judgment, at [34].  Fourthly, the Judge’s conclusion is reinforced by Mr Berry’s submission, not contradicted by Underwriters, that the Bank was not aware of the terms of the Settlement Agreement until years later. While not by itself conclusive – the Bank’s concern being the receipt and use of the proceeds by Owners rather than the terms of the Agreement – it does tell against Owners having contracted on the Bank’s behalf. Had that been the case, it might have been expected that, on conclusion of the Settlement Agreement and without more ado, Owners would have sent the Bank a copy or that the Bank might (as a matter of good order) have asked for one.

iii)                Accordingly, in my view, the Judge was entitled to conclude that, in context, the Bank did not confer actual authority on Owners to enter into the Settlement Agreement on its behalf and that, in any event, Owners had not exercised any such authority in entering into that Agreement.

ISSUE III: THE POLICY

“….the Bank is in any event bound by the jurisdiction agreement in the Policy by virtue of its assertion of its right, under the Policy, to payment of the insurance proceeds.  In circumstances where the Bank, as assignee of and loss payee under the Policy, asserted a right to payment under the Policy, manifested by the letter of authority dated 5 ^th April, 2013, it must have done so subject to the jurisdiction agreement in the Policy.”

“…The Bank does not …thereby [i.e., by virtue of the Letter of Authority] assert its right to payment under the Policy in the sense of demanding that the proceeds of the Policy be paid to it or to its order. Rather, the Bank recognises that in certain circumstances (where it is the sole loss payee of the Policy) the Bank is entitled to the proceeds of the Policy and informs the Hull Underwriters that in those circumstances they may pay the proceeds to Willis and that such payment will be regarded as a good discharge of the Hull Underwriters’ obligation to pay the proceeds to the Bank under the loss payable clause. The Bank had the right to assert a claim in the sense of demanding that the proceeds be paid to it or its order but the terms of the letter do not suggest that it did so. In any event, the Bank would only have been bound by the jurisdiction clause in the event that it chose to sue the Hull Underwriters on the Policy and it never did so. In those circumstances the Hull Underwriters do not have the better of the argument that the Bank is bound by the jurisdiction clause in the Policy.”

“…the rights which the insurance company has acquired are rights which are subject to the arbitration clause. The insurance company has the right to refer the claim to arbitration, obtain if it can an award in its favour from the arbitrators, and enforce the obligation of the time charterers to pay that award. Likewise, the insurance company is not entitled to assert its claim inconsistently with the terms of the contract. One of the terms of the contract is that, in the event of a dispute, the claim must be referred to arbitration.  The insurance company is not entitled to enforce its right without also recognising the obligation to arbitrate.”

ISSUE IV: MATTERS RELATING TO INSURANCE

“(15) The rules of jurisdiction should be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile. Jurisdiction should always be available on this ground save in a few well-defined situations in which the subject-matter of the dispute or the autonomy of the parties warrants a different connecting factor. The domicile of a legal person must be defined autonomously…..

(18) In relation to insurance, consumer and employment contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules.

(19) The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, should be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation.”

“1. ….an insurer may bring proceedings only in the courts of the Member State in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary.

2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.”

There was no dispute before us that the Bank was a “beneficiary”, within Art. 14.1, as assignee and loss payee.

“….not merely one where there is a factual connection between the claim and the Policy but is one where the outcome of the claim very much depends upon whether the Hull Underwriters were in fact liable under the Policy.”

The Judge accepted that the Settlement Agreement had been interposed but cautioned against a “strict legal analysis of the position in English law”, giving rise to the risk that the Court would not give effect to the autonomous meaning of the phrase “matters relating to insurance”.

“69. I accept that the mere fact that an insurance policy features in the history or pathology of the claim may not be enough to cause the subject-matter of the dispute to relate to insurance. But in my judgment the Policy on the Vessel is much more than a feature of the history or pathology of the claim brought by Hull Underwriters against the Bank.  The representations which form the basis of the claim expressly concern the question whether the Vessel was lost by reason of a peril insured against under the Policy. The Hull Underwriters expressly allege that the Vessel did not become a total loss by reason of a peril insured against under the Policy. That is the reason why the representations were misrepresentations and why the Hull Underwriters claim to be entitled to avoid or rescind the Settlement Agreement. The Hull Underwriters, when explaining their claim for damages, expressly allege that they are not liable for loss caused by the wilful misconduct of the Owners pursuant to …section 55(2)(a) of the Marine Insurance Act 1906……

70.  It is wise in these matters to stand back from the detail of the claim and its precise legal analysis in terms of English law. In my judgment the nature of the claim made by the Hull Underwriters against the Bank is so closely connected with the question of the Hull Underwriters’ liability to indemnify in respect of the loss of the Vessel pursuant to the Policy that it can fairly and sensibly be said that the subject-matter of the claim relates to insurance and so is governed by Article 14.

71. Indeed, Mr MacDonald Eggers accepted that where consideration of the insurance contract is indispensable to the determination of the claim the matter is one which relates to insurance. Perusal of the Hull Underwriters’ claim shows that consideration of the Hull Underwriters’ liability under the Policy is indispensable to the determination of the claim against the Bank.”

“23. ….the mere fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’….

24. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract.

25. That will a priori be the case where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.

26. It is therefore for the referring court to determine whether the purpose of the claims brought by the applicant in the case in the main proceedings is to seek damages, the legal basis for which can reasonably be regarded as a breach of the rights and obligations set out in the contract which binds the parties in the main proceedings, which would make its taking into account indispensable in deciding the action.

27. If that is the case, those claims concern ‘matters relating to a contract’….Otherwise, they must be considered as falling under ‘matters relating to tort, delict or quasi-delict’…..

…..

29. Therefore, the answer to the question referred is that civil liability claims such as those at issue in the main proceedings, which are made in tort under national law, must none the less be considered as concerning ‘matters relating to a contract’ within the meaning of article 5(1)(a)….where the conduct complained of may be considered a breach of the terms of the contract, which may be established by taking into account the purpose of the contract.”

“….the correct approach as a matter of English law is to consider the question whether the reality and substance of the conduct relates to the individual contract of employment, having regard to the social purpose of Section 5….”

ISSUE V:  ECONOMIC IMBALANCE

“72. …..Another recital to the Regulation, number 18, provides that in relation to insurance the weaker party should be protected by rules of jurisdiction more favourable to his interest than the general rules. In the present case, it is not possible to describe either party to the Policy or the Bank as ‘the weaker party’. That being so the case law of the European Court of Justice appears to establish that the special rules for matters relating to insurance do not apply; see Vorarlberger v WGV-Schwabishe [2010] Lloyd’s Rep IR 77 at paragraphs 40-45.  The ECJ stated at paragraph 41 that the protective role fulfilled by these provisions implies that they should not be extended to persons for whom that protection is not justified. Further, at paragraph 42 it said that no special protection is justified where the parties concerned are professionals in the insurance sector. It followed, on the facts of that case, that a social security institution, acting as assignee of an injured person, could not, when suing an insurer, take the benefit of the special jurisdictional provisions in article 11 (now article 13) of the Brussels Regulation; see paragraph 43.”

“When negotiations for the accession of the United Kingdom commenced, the United Kingdom proposed a major amendment to section 3, so as to exclude large risks altogether from the scope of Articles 7-12.  According to Professor Schlosser, this proposal was regarded as ‘too far reaching in view of the general objectives of the 1968 Convention’.  In paragraph 140 Professor Schlosser says:

‘The United Kingdom’s request for special rules for the insurance of large risks was probably the most difficult problem for the Working Party. The request was based on the realisation that the concept of social protection underlying a restriction on the admissibility of provisions conferring jurisdiction in insurance matters is no longer justified where the policyholders are powerful undertakings.  The problem was one of finding a suitable demarcation line. Discussions on the second Directive on insurance had already revealed the impossibility of taking as criteria abstract, general factors like company capital or turnover. The only solution was to examine which types of insurance contracts were in general concluded only by policyholders who did not require social protection.  On this basis, special treatment could not be conceded to industrial insurance as a whole.’

Thus the solution eventually adopted was to exclude from Articles 7-12 the insurance of ships, aircraft, and goods in transit (other than passengers’ luggage), and liabilities arising out of the use or operation of ships and aircraft: see Article 12A. This came some way towards meeting the needs of the London insurance market; but not the whole way.”

“(5) which relates to a contract of insurance in so far as it covers one or more of the risks set out in Article 16.”

Art. 16 catalogues the risks referred to in Art. 15 (5), including the following:

“(1) any loss of or damage to:

(a) seagoing ships….arising from perils which relate to their use for commercial purposes.

…..

(3)    any financial loss connected with the use or operation of ships…as referred to in point (1)(a), in particular loss of freight or charter-hire;

……

(5)    notwithstanding points (1) to (4), all ‘large risks’ as defined in Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance….”

“…..in affording the insured a wider range of jurisdiction than that available to the insurer and in excluding any possibility of a clause conferring jurisdiction for the benefit of the insurer, they reflect an underlying concern to protect the insured, who in most cases is faced with a predetermined contract the clauses of which are no longer negotiable and is the weaker party economically….”

“ It was therefore decided in the end to insert an article 12a into the Convention, allowing jurisdiction clauses in relation to ‘major risk’ insurance only, that is to say, in insurance policies covering certain kinds of transport (in particular air and sea transport). From that it may be inferred, a contrario , that the size and international stature of the policyholder or insured enterprise do not of themselves have the effect of precluding the operation of the special rules laid down by the Convention in insurance matters, since that effect is confined to the cases specified in article 12a.”

The second, concerns the observation by the Court ([37]) that:

“…it must be borne in mind that the beneficiary, like the policyholder, is protected by the Brussels Convention as the economically weakest party…..”

“ The authors of the Convention took as their premise that the provisions of s.3 of Title II were applicable only to relations characterised by an imbalance between the parties and established for that reason a body of rules on special jurisdiction which favours the party regarded as the party which is economically weaker and less experienced in legal matters. Moreover, Art. 12(5) of the Convention excludes from that protective body of rules insurance contracts in which the insured enjoys considerable economic power.”

“41. The protective role fulfilled by those provisions implies that the application of the rules of special jurisdiction ….should not be extended to persons for whom the protection is not justified.

42. It has not been argued that a social security institution….is an economically weaker party and less experienced legally than a civil liability insurer…. In general, the court has already held that no special protection is justified where the parties concerned are professionals in the insurance sector, none of whom may be presumed to be in a weaker position than the others ( GIE v Zurich… ).”

 Consequently (at [43]), the social security institution could not rely on the Section 3 rules of jurisdiction, against the liability insurer established in another Member State.   The CJEU then added this:

“44.  In contrast, where the statutory assignee of the rights of the directly injured party may himself be considered to be a weaker party, such an assignee should be able to benefit from special rules on the jurisdiction of courts laid down in those provisions. This is particularly the situation….of the heirs of the person injured in an accident.”

This conclusion enjoyed support from the case law concerning consumer contracts (now Section 4). There, it had been held:

“45. ….that where, in the exercise of its professional activity, a statutory assignee of rights brings proceedings in order to pursue the assignor’s claim under a contract concluded by a consumer, it may not enjoy the benefit of the rules of special jurisdiction concerning consumer contracts, since the purpose of those rules is to protect the economically weaker and legally less experienced party….”

“…It includes four categories of persons: the policyholder, the insured, the beneficiary and the injured party.  As a matter of fact, these parties may be economically and legally rather strong entities…. ”

“….the subrogation to the rights of the directly injured party triggers the passing on of the forum actoris to any subrogee, including both physical and legal persons, unless: (i) that subrogee is herself a professional in the insurance sector, to whom the claim passed on the basis of an insurance relationship she formed with the directly injured party (brought about either by operation of the law or on the basis of an insurance contract); or (ii) the subrogee is an entity regularly involved in the commercial or otherwise professional settlement of insurance-related claims who voluntarily assumed the realisation of the claim as party of its commercial or otherwise professional activity. ”

“34. …a case-by-case assessment of the question whether an employer which continues to pay the salary may be regarded as the economically weaker party in order to be covered by the definition of ‘injured party’ within the meaning of art. 11(2) of Regulation 44/2001, would give rise to the risk of legal uncertainty and would be contrary to the objective of that Regulation…according to which the rules of jurisdiction must be highly predictable.

35. Therefore, it must be held that….employers to which the rights of their employees to compensation have passed may, as persons which have suffered damage and whatever their size and legal form, rely on the rules of special jurisdiction laid down in arts 8-10 of that Regulation. ”

“42. …..no special protection is justified where the parties concerned are professionals in the insurance sector, neither of whom may be presumed to be in a weaker position than the other…..

43. Therefore, a person such as Mr Hofsoe, who carries out a professional activity recovering insurance indemnity claims against reinsurance companies, in his capacity as contractual assignee of such claims, should not benefit from the special protection constituted by the forum actoris .

…..

45. …the fact that a professional, such as Mr Hofsoe, carries out his business on a small scale, cannot lead to the conclusion that he is deemed to be a weaker party than the insurer. A case-by-case assessment of the question whether such a professional may be considered as a ‘weaker party’ in order to be covered by the definition of ‘injured party’, within the meaning of Article 13(2)…would give rise to the risk of legal uncertainty and would be contrary to the objective of that regulation….

…..”

  ISSUE VI:  DAMAGES FOR MISREPRESENTATION

“A person domiciled in a Member State may be sued in another Member State:

(1)    (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

…..

(2)    in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.”

“…because either the damage occurred in England (where Norton Rose Fulbright signed the Settlement Agreement and/or where the $22 m. was paid to Willis’ bank account in London) or the event giving rise to the damage occurred  in London (being the place where the misrepresentations were made and/or the place where the Hull Underwriters were induced)…. ”

The Judge recorded that no submissions to the contrary had been made on behalf of the Bank.  He therefore accepted that the harmful event occurred in England and that this Court had jurisdiction over the claim for damages for misrepresentation.

“ Notwithstanding that the success of the claim depends upon proof of a contract between the Underwriters and the Bank the claim remains one which relates to tort…..”

ISSUE VII: RESTITUTION

“ ‘….(b) Does article 5(3) of the Convention confer, in respect of an action based on claims in tort and contract and for unjust enrichment , accessory jurisdiction on account of factual connection even in respect of the claims not based on tort?’ (Emphasis added.)”

Answer 2(b) was as follows:

“…..(b) A court which has jurisdiction under article 5(3) over an action in so far as it is based on tort or delict does not have jurisdiction over that action in so far as it is not so based.”

Lord Hutton regarded this Answer as meaning that a Court which had jurisdiction over an action insofar as it was based on tort or delict did not have jurisdiction over an action insofar as it was not so based but was based on undue enrichment.

OVERALL CONCLUSION

LORD JUSTICE MOYLAN :

LORD JUSTICE COULSON :