Limit (No. 3) Ltd. & Ors v Pdv Insurance Company Ltd.

Permission to serve proceedings out of the jurisdiction should be set aside where the claimant cannot show that England is clearly the appropriate forum. An English-law or jurisdiction clause is a powerful factor, but its scope depends on construction of the contract as a whole and its commercial background. Where the dispute is centred on foreign events, evidence, parties and governing law, those factors may outweigh the English-law element. The court should also consider whether related disputes ought to be determined together. General allegations about the quality or impartiality of a foreign justice system require candid presentation and cogent evidence.

The claimants sought declarations that they were not liable under two English-law reinsurance contracts relating to pollution losses in Venezuela. PDV Insurance Company Ltd, incorporated in Bermuda and carrying on business in Venezuela, applied to set aside orders permitting service of the proceedings out of the jurisdiction.

The contracts had been placed in the London market. The court considered whether their dispute clauses submitted disputes generally to the English courts, and, if not, whether England was nevertheless clearly the appropriate forum. The issues included Venezuelan limitation law, notification, causation, landowners’ rights, currency conversion, and the location of evidence and related parties.

1. Dispute clauses. The 1997 slip’s attached dispute clause was incorporated only as part of the provisions concerning claims arising in the United States and Canada. Construed against the commercial background, it did not submit disputes under the reinsurance contract generally to the English courts. The 1999 clause incorporating expiring endorsements and addenda did not incorporate a general jurisdiction clause.
2. Forum conveniens. Applying Spiliada Maritime Corp v Cansulex Ltd [1987] A.C. 460, the claimants had to show that England was clearly the appropriate forum. The relevant losses occurred in Venezuela, almost all witnesses and documents were there, and important issues were governed by Venezuelan law. The English-law construction issues did not require the particular expertise of the English courts and could satisfactorily be determined in Venezuela.
3. The possibility that related claims would arise between PDVSA, Mercantil and PDVIC was a powerful factor favouring determination of the disputes in one set of proceedings in Venezuela, where the centre of gravity of the wider litigation lay.
4. Allegations that Venezuelan proceedings might be politically influenced or unfair were not supported by sufficiently candid and cogent evidence. The approach in The Abidin Daver [1984] A.C. 398 applied.
5. The orders permitting service out, the service of the claim forms and all subsequent proceedings were set aside in both actions.

Not stated in the judgment.