ACE Insurance SA-NV v Zurich Insurance Company & Anor

The Brussels–Lugano jurisdiction regime does not prevent an English court from staying proceedings on forum non conveniens grounds where the competing forum is in a non-contracting state. This remains so where the defendant is domiciled in another contracting state.

A non-exclusive service of suit clause permits either party to commence proceedings elsewhere. Once the promised United States jurisdiction is invoked, however, the party which agreed to submit must show good reason or special cause for litigating instead in England. Ordinary considerations of convenience will not readily displace that agreement.

A reinsurer sought a declaration in England that it was not liable under a reinsurance contract. The Swiss reinsured and its New York successor later claimed an indemnity in Texas and applied to stay the English proceedings on forum non conveniens grounds.

Longmore J stayed the proceedings and set aside permission to serve the successor outside the jurisdiction: [2000] 2 Lloyd's Rep 423. The reinsurer appealed. The principal questions were whether the Lugano Convention permitted a stay in favour of a non-contracting state and whether Texas was the appropriate forum, particularly given the reinsurance contract's service of suit clause.

1. Appeal dismissed unanimously. Lord Justice Rix delivered the judgment, with which Lord Justice Kennedy and Jacob J agreed. The action against the first defendant was stayed, and service of the amended claim form on the second defendant was set aside.
2. The Court was bound by In re Harrods (Buenos Aires) Ltd [1992] Ch 72 and Eli Lilly and Company v Novo Nordisk A/S [2000] 1 L Pr 73. Those authorities established that the Brussels–Lugano regime did not exclude a forum non conveniens stay where the alternative forum was in a non-contracting state. Eli Lilly also established that this remained so where the defendant was domiciled in a contracting state other than the United Kingdom.
3. Neither authority was decided per incuriam. An argument that an earlier court misunderstood the Convention or misread another decision amounted to an allegation of legal error. It did not establish the rare condition of a decision given in ignorance of relevant legislation or binding authority.
4. Longmore J had been entitled to give no significant weight to English law as the proper law of the reinsurance. Questions under the underlying insurance and the disputed transfer required consideration of Texan or New York law. The reasoning in Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852 confirmed that an English-law reinsurance intended to provide back-to-back indemnity might require incorporated wording to bear the meaning it had under the law governing the underlying policy.
5. The service of suit clause was non-exclusive. Either party could sue wherever it was otherwise entitled to do so. Once the reinsured commenced competent United States proceedings and invoked the clause, however, the reinsurer's promise to submit effectively reversed the burden of persuasion. It had to demonstrate good reason or special cause for avoiding the agreed forum. No unforeseen circumstance, matter of justice or other special cause had been shown. Ordinary questions concerning governing law, witnesses, cost and delay did not justify departure from the bargain.
6. The first defendant had not waived reliance on the clause by accepting English jurisdiction subject to its stay application. Any challenge to the competence of the Texas court was for that court. A material delay in invoking a service of suit clause might weaken a later stay application, but no sufficient feature of that kind arose here.

1. Court of Appeal (Civil Division): The appeal was dismissed. The action against the first defendant was stayed, and service of the amended claim form on the second defendant was set aside: [2001] EWCA Civ 173.
2. Commercial Court: Longmore J granted a forum non conveniens stay in favour of Texas and set aside permission to serve the second defendant outside the jurisdiction: [2000] 2 Lloyd's Rep 423.