Agnew and Others v. Länsförsäkringsbolagens A.B.

The House of Lords considered the application of the Lugano Convention (in terms identical to the Brussels Convention) to actions by reinsurers in the London market seeking declarations that reinsurance contracts were avoidable for material misrepresentation or non‑disclosure. The majority held that Title II Section 3 (the special rules "in matters relating to insurance", including Articles 7 and 11) does not extend to reinsurance, and that Article 5(1) (jurisdiction "in matters relating to a contract" — in the courts for the place of performance of the obligation in question) can apply to claims to avoid a contract for non‑disclosure and misrepresentation where the obligation to disclose is sufficiently to be regarded as the obligation in question and its place of performance can be identified (here, London). The Lords also held that Article 5(3) (tort) was not the appropriate head once Article 5(1) applied. The appeal was dismissed on that basis.

The respondents were representative Lloyd's underwriters and United Kingdom reinsurers who had underwritten facultative reinsurance placed in London for a Swedish insurer (the appellant). They sought declarations that the reinsurance contracts could be avoided for material misrepresentation and non‑disclosure in the London negotiations. The appellant insurer argued (i) that the special insurance rules of Section 3 of the Lugano Convention applied to reinsurance so that Article 11 confined jurisdiction to the courts of the insurer's domicile (Sweden), and (ii) alternatively that Article 5(1) did not apply to pre‑contractual duties such as the duty of disclosure and good faith.

The procedural path was: first instance (Mance J. — respondents successful), Court of Appeal (Evans L.J. et al. — respondents successful) and then the House of Lords. The House identified three issues: (1) whether "insurance" in Section 3 includes reinsurance (the "Insurance Issue"); (2) whether Article 5(1) applies to claims to avoid contract for non‑disclosure/misrepresentation (the "Contract Issue"); and (3) if Article 5(1) does not apply, whether Article 5(3) (tort) applies (the "Tort Issue").

On the Insurance Issue the majority concluded Section 3 was intended to protect the weaker party (policy‑holders) and, for reasons of policy, structure and preparatory reports, reinsurance was not within Section 3. On the Contract Issue the majority held that Article 5(1) should be given its ordinary and convention‑wide meaning: a claim to avoid a contract for material misrepresentation or non‑disclosure may be "in matters relating to a contract" and the relevant obligation (the disclosure obligation) can, in appropriate cases, be regarded as the obligation in question and have an identifiable place of performance (here, London), so Article 5(1) applied. The Tort Issue need not prevail once Article 5(1) applied; in any event the claim was contractual in nature rather than a tort claim in damages. Two members of the Appellate Committee took a different view on the Contract Issue and would have allowed the appeal, holding the pre‑contractual disclosure duty was not the contractual obligation contemplated by Article 5(1) and that Article 5(3) did not apply.

The majority therefore dismissed the appeal and left intact the courts' jurisdiction in England to try the respondents' claims.

Appeal dismissed. The majority held that (i) Section 3 (the special insurance rules, Articles 7–12A) of the Lugano Convention does not extend to reinsurance, and (ii) Article 5(1) (matters relating to a contract — courts for the place of performance of the obligation in question) can cover a claim to avoid a contract for material misrepresentation or non‑disclosure when the relevant disclosure obligation is properly characterised as the 'obligation in question' and its place of performance identified (here London). Accordingly the English courts had jurisdiction. The minority disagreed on the second point and would have confined Article 5(1) to obligations arising under the contract itself, not pre‑contractual duties of disclosure.

First instance: Mance J. (High Court) [1996] 4 All E.R. 978 — claimants successful. Court of Appeal: Evans L.J., Hobhouse and Schiemann L.JJ. [1997] 4 All E.R. 937 — appeal dismissed (claimants' position upheld). Appeal to House of Lords: [2000] UKHL 7 — appeal dismissed by majority.