Posts Tagged Supreme Court
Aspen Underwriting: The Supreme Court overrules on the issue of economically weaker parties in the insurance section.
I wrote earlier on the judgments at the High Court and the Court of Appeal in Aspen Underwriting v Kairos Shipping. The Supreme Court held yesterday and largely upheld the lower courts’ decisions, except for the issue of whether an economically equal party may nevertheless enjoy the benefit of the insurance section of Brussels Ia.
Reference is best made to my earlier posting for full assessment of the facts. The Supreme Court considered four issues.
Issue 1: Does the High Court have jurisdiction pursuant to the exclusive English jurisdiction clause contained in the Policy? This was mostly a factual assessment (is there a clear demonstration of consent to choice of court) which Lord Hodge for the SC held Teare J and the Court of Appeal both had absolutely right. Lord Hodge refers in support to a wealth of CJEU and English (as well as Singapore) courts on assignment and contractual rights v contractual obligations.
Issues 2 and 3: Are the Insurers’ claims against the Bank matters ‘relating to insurance’ (issue 2) within section 3 of the Regulation and if so, is the Bank entitled to rely on that section (issue 3)?
On issue 2, Teare J and the Court of Appeal had held that the Insurers’ claim against the Bank was so closely connected with the question of the Insurers’ liability to indemnify for the loss of the Vessel under the Policy that the subject matter of the claim can fairly be said to relate to insurance.
On this issue the insurers had appealed for they argued that a claim can be regarded as a matter relating to insurance only if the subject matter of the claim is, at least in substance, a breach of an obligation contained in, and required to be performed by, an insurance contract. They referred in particular to Brogsitter and also to Granarolo and Bosworth.
Lord Hodge disagreed with claimant, upholding Teare J and the CA: the need for restrictive interpretation is mentioned (at 38) and at 35 it transpires that of particular relevance in his analysis, is the very wording of the title of the insurance section: unlike all other special jurisdictional rules of interest, it does not include ‘contracts’. Further (at 36),
‘the scheme of section 3 is concerned with the rights not only of parties to an insurance contract, who are the insurer and the policyholder, but also beneficiaries of insurance and, in the context of liability insurance, the injured party, who will generally not be parties to the insurance contract.’
At 40 he holds that in any event the Brogsitter test is met:
‘The Insurers’ claim is that there has been an insurance fraud by the Owners and the Managers for which the Bank is vicariously liable. Such a fraud would inevitably entail a breach of the insurance contract as the obligation of utmost good faith applies not only in the making of the contract but in the course of its performance.’
However (issue 3) both Teare J and the CA eventually held that the insurance title failed to provide the bank with protection for they argued (as I noted with reference in particular to CJEU Voralsberger) that protection was available only to the weaker party in circumstances of economic imbalance between the claimant insurer and the defendant.
Here the SC disagrees and overrules. Lord Hodge’s reasons are mentioned at 43 ff, and I will not repeat them fully here. They include his view on which he is entirely right and as I have pointed out repeatedly, that recitals may be explanatory but only the rules in the Regulation have legal effect). Bobek AG’s Opinion in C-340/16 Kabeg features with force. Hofsoe is distinguished for, at 56,
‘In none of these cases where the CJEU has relied on the “weaker party” criterion to rule on applications to extend the scope of the section 3 protections beyond those parties who were clearly the policyholder, the insured, the beneficiary or the injured party, did the court call into question the entitlement of those expressly-named persons to that protection by reason of their economic power.’
That assessment is not entirely consistent for as Lord Hodge himself notes, and the CJEU acknowledges, in KABEG, Vorarlberger, Group Josi and GIE the jurisdiction of the forum actoris had been extended under articles 11(1)(b) and 13(2) to include the heirs of an injured party and also the employer who continues to pay the salary of the injured party while he was on sick leave.
All in all, it agree following Lord Hodge’s convincing review of the cases, that it is acte clair that a person which is correctly categorised as a policyholder, insured or beneficiary is entitled to the protection of section 3 of the Regulation, whatever its economic power relative to the insurer. (Even if particularly following Hofsoe the application of the section as a whole might need a more structured revisit by the CJEU). In the case at hand the Bank is the named loss payee under the Policy and therefore the “beneficiary” of that Policy (at 60).
In conclusion: Under A14 BIa the Bank must be sued in The Netherlands.
Finally, whether claims in unjust enrichment fall within article 7(2) (answered by Teare J in the negative) ‘does not arise’ (at 60). I am not entirely sure what this means: was it no longer challenged or was Teare J’s analysis on this straightforward? A different reply than that of Teare J would have required overruling Kleinwort Benson Ltd v. Glasgow City Council (No. 2)  1 AC 153 (HL), that a claim in unjust enrichment for mistake was neither a matter ‘relating to contract’ nor a matter ‘relating to tort’ for the purposes of EU private international law – an issue I discussed in my earlier posting in particular in its relationship with Rome I and II. With the SC’s refusal to entertain it, that authority therefore stands.
One does wish that the CJEU at some point have an opportunity further to clarify the insurance section and will do so in a holistic manner. The SC judgment here is one big step in the good direction.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206, Heading 220.127.116.11.
Thank you Pailler Ludovic for signalling the French Supreme Court’s judgment in 18-24.261 A and X v et al B and Y et al. The Court annulled the Court of Appeal’s (Versailles) decision which had accepted for recognition and enforcement a Cameroonian judgment in a Cameroonian-French adoption case.
Legal basis for the refusal is Article 34 of the relevant 1974 FR- Cam Treaty. Specically, the classic ordre public international hurdle to recognition and enforcement: ‘Elle ne contient rien de contraire à l’ordre public de l’Etat où elle est invoquée ou aux principes de droit public applicables dans cet Etat.’
The Supreme Court held that absence of Agrément does not infringe French ordre public international (Agrément is required by French adoption law and needs to be sought by the prospective adoptant). Yet fraus (fraude à la loi) might and needs to be properly examined, which the Court of Appeal had failed to do. Suggestion is made in the case that the adoption was engineered with the sole purpose of facilitating the French rights of residence of the adopting father’s partner, who is the mother of the children.
The case emphasises the relevance of fraus omnia corrumpit. Whether of course fraus will be proven in the new proceedings before the Paris Court of Appeal remains to be seen.
French Supreme Court on cover by Lugano of legal fees in criminal proceedings – and the proper limits of the ordre public test.
The criminal courts at Geneva have condemned claimant, domiciled at France, to pay a criminal fine of 3,600.00 Swiss Francs, a well as 36,000.00 Swiss Francs towards defendant’s legal fees. The latter were incurred given that defendant in current legal proceedings had entered a civil claim in the Swiss criminal proceedings: a claim which the Geneva judge ordered to be settled through the Swiss courts in civil cases.
Upon fighting the request for exequatur, claimant first of all argues that the French courts’ acceptance of exequatur via the Lugano Convention is outside the scope of that Convention. The matter, he argues, is not civil or commercial seeing as the civil claim was not even entertained.
This of course brings one to the discussion on the scope of application of Lugano (and Brussels Ia) and the perennial difficulty of focusing on nature of the claim v nature of the underlying facts and exercised powers. Now, for civil claims brought before criminal courts there is not so much doubt per se, seeing inter alia that Article 7(3) Brussels Ia (Article 5(4) Lugano 2007) has a specific head of jurisdiction for such civil claims. Claimant’s point of argument here evidently is that this should not cover this particular claim seeing as the legal representation at issue turned out to be without purpose. Not being privy to the discussions that took place at the Geneva court, I evidently do not know the extent of discussion having taken place there (there is no trace of it in the Supreme Court judgment) however one assumes that the Geneva proceedings in theory could have dealt with the civil side of the litigation yet for a factual or legal reason eventually did not. Over and above the intensity of discussions being difficult to employ as a decisive criterion, one can also appreciate the difficulty in separating the civil from the criminal side of the argument made by defendant’s lawyers.
Of perhaps more general interest is the Supreme Court’s rebuke of the lower courts’ treatment of ordre public. Exequatur was granted because, the lower courts had held, the judge in the substantial proceedings has the sovereign right to establish costs under the relevant national procedure. This, it was suggested by these lower courts, shields it from ordre public scrutiny – a clear misunderstanding of the ordre public test. Part of the ordre public considerations had also been that the relative slide in the strength of the Swiss Franc v the Euro, and the generally higher costs of living in Switzerland, put the cost award in perspective. Moreover the judges found that there was insufficient information on the length of the proceedings in Switserland, and the complexity of the arguments. That, however, is exactly the kind of data which the judge in an exequatur assessment ough to gauge.
(Handbook of) European Private International Law, 2n ed. 2016, Chapter 2, Heading 18.104.22.168.
WTO examiners: at ease! Canadian Supreme Court holds in R. v. Comeau (New Brunswick restrictions on alcohol trade).
Fellow faculty about to examine students on the Law of the World Trade Organisation, have their exam sorted (especially if it is an oral exam). In 2018 SCC 15 R v Comeau the Canadian Supreme Court held last week. At issue is New Brunswick’s restrictive regime on the import and sale of alcoholic beverages. Greg Tereposky and Daniel Hohnstein have background to the case.
Despite the Province’s regime having clear trade impact, the SC held that it was not illegal under Canada’s internal free trade rules – with occasional reference to GATT and WTO. For comparative and exam purposes, the interesting angle is clear: has the Supreme Court adopted the kind of aims and effects test which the WTO is no fan of?
Copy of the judgment. 15 mins prep. And Bob’s your (oral exam) uncle.
(Handbook of) The law of the World Trade Organisation, forthcoming at OUP with Demeester, Coppens, Wouters and Van Calster.