Prifti & Ors v Musini Sociedad Anonima De Seguros Y Reaseguros

A jurisdiction clause in an underlying insurance contract is not incorporated into a reinsurance contract merely because the reinsurance is subject to the insurance’s terms and conditions. Under article 23, consensus on the jurisdiction clause must be clearly and precisely demonstrated. Ancillary jurisdiction provisions require sufficiently specific language; commercial background cannot cure inadequate contractual wording.

For related actions under article 28, the court applies a broad, commonsense test directed to avoiding irreconcilable judgments. The risk must arise from issues genuinely common to the proceedings. A peripheral possibility of factual overlap will not justify a stay or dismissal.

The reinsurers sought declarations that they had validly avoided reinsurance contracts relating to insurance written for Real Sociedad’s football players, or alternatively that they were not liable concerning a player’s alleged disability. Musini applied to set aside the proceedings for want of jurisdiction, relying on a Spanish jurisdiction clause in the underlying insurance contract. Alternatively, Musini sought dismissal or a stay under article 28 of Council Regulation No 44/2001 because Real Sociedad had brought related proceedings against Musini in Spain.

The central issues were whether the reinsurance contracts contained an effective agreement conferring jurisdiction on the Spanish courts and whether the avoidance claim or the alternative pre-existing-condition claim constituted related actions.

1. Jurisdiction agreement. The court accepted that the claim related to a contract under article 5 of the Regulation and that, absent an effective jurisdiction agreement, the English court had jurisdiction over the avoidance claim. The question whether an agreement existed was governed by Community law.
2. Article 23 requires a consensus on jurisdiction to be clearly and precisely demonstrated. Incorporation by reference may be effective, but general words ordinarily incorporate terms germane to the substantive contract and do not necessarily incorporate ancillary jurisdiction provisions. The contractual language must be construed in its commercial context, but commercial background cannot make good deficiencies in the language.
3. The full reinsurance clause did not expressly refer to the jurisdiction clause in the 2000/01 insurance. The express exclusion of limits and rates, and the separate incorporation of certain insurance provisions, did not demonstrate agreement to incorporate the ancillary jurisdiction clause. The differences between the two insurance jurisdiction clauses and the absence of the earlier leading underwriter from the later reinsurance further weakened the inference of incorporation.
4. Applying the flexible good arguable case test, the reinsurers showed that their jurisdiction argument was highly likely to succeed if tried. The court considered Musini’s contrary case barely arguable and would have rejected it on the balance of probabilities.
5. Related actions. The alternative pre-existing-condition claim created a real risk of irreconcilable judgments because the issue whether the disability resulted from a pre-existing condition was also in issue in Spain. The reinsurers therefore undertook to abandon that claim and confine the proceedings to avoidance.
6. The avoidance claim did not create a sufficient article 28 connection. Its focus was whether Musini should have disclosed a medical report, not the player’s actual condition, which was unlikely to require determination and, if relevant, would be peripheral. It was not expedient to hear the avoidance claim with Real Sociedad’s claim in Spain. Musini’s application was dismissed upon the undertaking.