Agnew v Länsförsäkringsbolagens AB

The special jurisdiction governing matters relating to insurance under the Lugano Convention does not extend to reinsurance. A claim to avoid a reinsurance contract for material misrepresentation or non-disclosure is a matter relating to a contract under article 5(1).

The obligation to make a fair presentation of the risk may qualify as the relevant obligation although it arises by operation of law during negotiations. It is intimately connected with the resulting contract and becomes enforceable upon its conclusion. Jurisdiction lies where that obligation should have been performed. A claim of this character does not also fall within the mutually exclusive jurisdiction for tort, delict or quasi-delict under article 5(3).

Representative Lloyd's underwriters and United Kingdom insurers entered into facultative reinsurance contracts with a Swedish insurer. The contracts were placed through brokers in London. The reinsurers sought declarations that they could avoid the contracts because the risk had allegedly been materially misrepresented and material information had not been disclosed.

Mance J held that the English courts had jurisdiction under article 5(1) of the Lugano Convention: [1996] 4 All ER 978. The Court of Appeal dismissed the insurer's appeal: [1997] 4 All ER 937.

The House considered whether the Convention's special insurance regime included reinsurance, whether the avoidance claims came within article 5(1), and, alternatively, whether they came within article 5(3).

1. Appeal dismissed by a majority of three to two. Lord Woolf M.R. delivered the principal majority reasoning. Lord Cooke of Thorndon adopted his opinion, and Lord Nicholls of Birkenhead preferred the reasoning of Lord Woolf and Lord Cooke. Lord Hope of Craighead and Lord Millett dissented on article 5(1).
2. Reinsurance. All five members held that Section 3 of the Lugano Convention did not apply to reinsurance. Per Lord Woolf, the special regime was intended primarily to protect the weaker party. A reinsured carrying on insurance business could not conventionally be regarded as weaker than the reinsurer. The Convention's policy and structure therefore required “insurance” to mean direct insurance in this context. Lord Cooke, Lord Hope and Lord Millett reached the same conclusion by reference to the regime's protective or social purpose.
3. Article 5(1). Per Lord Woolf and Lord Cooke, a claim to avoid a concluded contract plainly concerned a matter relating to a contract. The relevant obligation was the reinsured's obligation to make a fair presentation of the risk, avoid material misrepresentation and disclose material facts. It was immaterial that the obligation arose under the general law rather than an express contractual term. It was sufficiently contractual because its breach entitled the reinsurer, in its capacity as contracting party, to avoid the contract.
4. The disclosure obligation had an identifiable place of performance. It fell to be performed in London when the brokers presented the risk and negotiated each contract. Article 5(1) should receive an autonomous, practical interpretation. Although it creates an exception to jurisdiction based on domicile, strict construction does not justify giving its language an artificial or unnatural meaning.
5. Article 5(3). The House unanimously rejected jurisdiction in tort, delict or quasi-delict. The contractual and delictual heads were mutually exclusive in this context. The alleged breach of the duty of fair presentation did not itself create liability in damages under English law.
6. Dissent. Lord Hope and Lord Millett considered that article 5(1) referred only to an obligation created by, or arising under, the contract. In their view, fair presentation was a pre-contractual condition of obtaining a fully binding contract, not a contractual obligation whose non-performance generated contractual liability. They would have allowed the appeal and required proceedings in Sweden under article 2.

1. House of Lords: By a majority of three to two, dismissed the appeal and upheld English jurisdiction: [2001] 1 AC 223.
2. Court of Appeal: Evans L.J., with Hobhouse and Schiemann L.JJ., dismissed the insurer's appeal from Mance J: [1997] 4 All ER 937.
3. High Court: Mance J rejected the challenge to jurisdiction and held that article 5(1) applied: [1996] 4 All ER 978.