Court of Appeal upholds anti-suit injunction
John Wood Group Plc v Chubb EU & Ors  EWCA Civ 781
In a judgment handed down on 10 June 2022 the Court of Appeal (Lord Justice Males, Lord Justice Phillips and Lord Justice Stuart-Smith LJ) dismissed an appeal by Wood Group that challenged the grant of an interim anti-suit injunction (“ASI”) against it in favour of the Respondent (“Chubb”).
Background to the grant of the ASI
Chubb provided a policy of “umbrella” insurance to Wood Group for the years 2015/2016 (“the policy”). In February 2021 Wood Group commenced declaratory proceedings in Alberta, Canada, in relation to its entitlement to an indemnity under the policy for defence costs relating to a claim issued against it relating to a pipeline rupture. Chubb’s position was that those proceedings breached an exclusive jurisdiction clause (“clause 11”) in the policy in favour of the English commercial court. It therefore sought and obtained an interim ex parte ASI against Wood Group in relation to the Canadian coverage proceedings at a hearing in front of Cockerill J on 16 August 2021. Various other excess layer insurers had previously obtained urgent ASIs against Wood Group on 2 August 2021.
In front of Mr Justice Jacobs at the return date hearing Wood Group objected to the continuation of the injunction on the basis that clause 11 was inconsistent with a prevailing clause in the policy (described as the primary policy jurisdiction clause; “PPJC”). The PPJC provided that the choice of law and jurisdiction would be the same as the “primary policy”; identified as a global commercial general insurance policy issued by ACE INA Insurance. The primary policy did not itself include a choice of jurisdiction clause. Wood Group thus argued that the PPJC provided a “permissive” approach to jurisdiction, such that there were many domestic courts that might be able to accept jurisdiction. However, such acceptance would only be valid according to the PPJC if proceedings had also been issued in that court under the primary policy in light of the parties’ principal aim of achieving jurisdictional consistency across the primary policy and the excess layers.
In the alternative Wood Group argued that clause 11, properly construed, provided for the non-exclusive jurisdiction of the English court. There was accordingly no conflict between clause 11 and the PPJC and Wood Group had acted lawfully in issuing proceedings in Canada.
At first instance Mr Justice Jacobs rejected both arguments holding inter alia that there was a high degree of probability that the policy contained an exclusive jurisdiction clause in favour of the Commercial Court in London and that, insofar as clause 11 and the PPJC conflicted, the former prevailed.
Arguments on appeal
Wood Group was granted permission to appeal by Males LJ on the grounds that Jacobs J erred in:
- Preferring clause 11 to the PPJC by starting with a presumption in favour of clause 11, and favoured the “certainty” provided by clause 11 over the permissive approach to jurisdiction provided by the PPJC.
- Construing clause 11 as an exclusive, as opposed to non-exclusive, jurisdiction clause.
- Holding that clause 11 applied to the policy since the carve out for policies issued in Scotland applied.
In relation to ground 1 Wood argued that, if clause 11 provided for exclusive jurisdiction, there was undoubtedly a conflict between that provision and the PPJC. That conflict should be resolved in favour of the PPJC because the PPJC appeared in the mandatory Risk Details at the front of the policy as opposed to the standard terms at the back of the document, and constituted a specifically negotiated term. Further, the absence of an express choice of law and jurisdiction in the primary policy was no reason to favour clause 11 over the PPJC, since what mattered to the parties was jurisdictional consistency across the insurance tower.
In respect of ground 2, Wood argued that the phrase “Commercial Court of the Queen’s Bench Division High Court of Justice Strand London WC2A 2LL shall have jurisdiction in respect of any dispute under this Policy” conferred non-exclusive jurisdiction on the Commercial Court since those words are not an imperative to the parties to submit, rather an imperative to the Commercial Court to accept jurisdiction.
Finally, in respect of ground 3, Wood argued that the carve out in clause 11 for policies “issued in Scotland” applied to the policy on the basis that the named insured was registered in Aberdeen.
In a judgment delivered by Males LJ (with whom Phillips LJ and Stuart-Smith LJ agreed) the Court of Appeal rejected all of Wood’s arguments for the following reasons:
- Applying principles of construction set out most recently in Wood v Capita Insurance Services Ltd  UKSC 24, it was clear from the language and context of the PPJC that it only applied where the relevant primary policy contained a choice of jurisdiction clause.
- Wood raised a number of arguments to oppose this position. First, the PPJC was upfront in the Risk Details (or main terms) section of the policies rather than being contained in the printed standard terms towards the back of a policy which extended to 30 pages (cf. Lord Hoffmann’s approach to a bill of lading contract in The Starsin  UKHL 12,  1 AC 715 at , observing that in some cases the reasonable reader who has found the information he is looking for on the front of the document does not trouble with what is said on the back). Second, the PPJC was a specifically negotiated term of the agreement (because the parties had to decide what to say under that mandatory heading) as distinct from the standard terms and conditions, and should therefore prevail (Generali Italia SpA v Pelagic Fisheries Corpn  EWHC 1228 (Comm),  1 WLR 4211 at ). Third, it served the useful commercial purpose of ensuring that, even though the applicable law and jurisdiction might not be determined at the outset, the same law and jurisdiction would apply to disputes throughout the insurance tower. This was in accordance with the policy of one-stop adjudication and was a valid and sensible choice for the parties to make (e.g. Fiona Trust; Deutsche Bank AG v Sebastian Holdings Inc (No 2)  EWCA Civ 998,  2 All ER (Comm) 245). However, the Court rejected each of these points.
- As the primary policy contained no jurisdiction clause, the Court decided that PPJC has nothing to bite on and so did not conflict with the choice of jurisdiction in clause 11. Wood’s permissive approach to jurisdiction caused the application of the PPJC to become “hopelessly uncertain” since there were numerous potential disputes under the policy which had nothing to do with the primary policy (e.g. concerning the payment of the premium). As no claim would crystalise under the primary policy in respect of those disputes the parties to the policy would have no way of determining the appropriate jurisdiction in which to bring proceedings. That was, in the Court of Appeal’s view, “thoroughly uncommercial”.
- Following the reasoning of Lord Justice Christopher Clarke in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd, it was evident that clause 11 conferred exclusive jurisdiction on the Commercial Court. The imperative “shall have jurisdiction” was directed at the parties rather than the Commercial Court as it is not the function of a jurisdiction clause to give instructions to a court.
- The policy was issued in London, and there was no reason to construe clause 11 as if it referred to a policy issued to a (principal) policyholder with an address in Scotland. Accordingly clause 11 applied to the policy.
A further point of note in Males LJ’s judgment is that Wood had argued that Comity was an issue on the application of the interpretation of the policies and the exercise of discretion. This was not raised at first instance and in any case Males LJ stated that the principle did not assist Wood Group on appeal. In circumstances where parties to a contract have agreed an exclusive jurisdiction clause the court held that comity was best served by giving effect to their agreement (applying OT Africa Line Ltd v Magic Sportswear Corporation  EWCA Civ 710).
The approved judgment can be found here