CRÉDIT LYONNAIS v. NEW HAMPSHIRE INSURANCE CO.

Where no permitted choice of law for an insurance contract is expressed or demonstrated with reasonable certainty, the applicable law is that of the country with which the contract is most closely connected under Insurance Companies Act 1982, Schedule 3A. The rebuttable presumption in favour of the Member State where the risk is situated must be applied; unlike the corresponding provision of the Rome Convention, it cannot simply be disregarded because the circumstances may suggest another connection.

Rebuttal depends upon geographically relevant links with the insured risk, contractual performance and the relevant performing parties. Matters directed only to an inferred choice of legal system, the currency of the policy, foreign-law definitions, or a worldwide programme negotiated abroad do not rebut the presumption.

Crédit Lyonnais, a French bank operating in the United Kingdom through a London branch, claimed under two local policies issued in London by New Hampshire Insurance Company. The policies covered United Kingdom risks, were placed and renewed in London, and contemplated local payment of premiums and claims. They formed the first and second layers of a worldwide insurance programme negotiated in France.

The insurer contended that French law governed the policies and provided time-bar defences. Miss Barbara Dohmann QC, sitting as a Deputy High Court Judge, held on 16 September 1996 that English law applied. The insurer appealed. The central issue was whether the statutory presumption that the contracts were most closely connected with England had been rebutted.

Appeal dismissed. Lord Justice Hobhouse gave the leading judgment, with whom Lord Justice Mummery and Lord Justice Evans agreed. English law governed both policies.

1. Under Insurance Companies Act 1982, Schedule 3A, the parties had made no choice of law expressed or demonstrated with reasonable certainty. The applicable law therefore depended on whether England or France was the country with which the contracts were most closely connected. The statutory presumption favoured England because the relevant establishment of the policyholder, and thus the risk, was situated there.

2. The statutory inquiry was not the common-law inquiry into an inferred intention to contract by reference to a particular legal system. It required geographical connections arising from the subject matter and performance of the contract, and from the locations of the relevant performing parties. The comparison with the Rome Convention on the Law Applicable to Contractual Obligations supported that approach, but the Directive-based scheme was materially stricter: it contained no equivalent to the Convention provision permitting a presumption to be disregarded where the whole circumstances pointed elsewhere.

3. The United Kingdom territoriality clause, the local risks and activities, the contemplated payment of premiums and claims in England, and the parties' establishments in England reinforced the presumption. There was no relevant performance geographically connected with France. French-franc limits, references to French criminal-law concepts, and the French origin of the worldwide programme did not concern contractual performance or the location of relevant performing parties.

4. The judge was right that the presumption had not been rebutted, although aspects of her reasoning gave undue weight to considerations of implied choice. The appeal was dismissed with costs, and leave to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): Dismissed the insurer's appeal and upheld the conclusion that English law governed the policies.
• Queen's Bench Division: Miss Barbara Dohmann QC, sitting as a Deputy High Court Judge, held on 16 September 1996 that English law was applicable.