Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Association Company Ltd

Proceedings whose principal focus or essential subject matter is arbitration fall within the arbitration exception in article 1.2(d) of the EC Judgments Regulation. The court hearing those proceedings may determine the exception even if another member-state court was first seised.

A statutory direct claim against a liability insurer may, under English conflict-of-laws principles, be characterised by its substance as enforcement of the insurance contract. The claimant must then accept the contract’s arbitration requirement, although it does not thereby become a contracting party.

An anti-suit injunction does not follow automatically. Where the statutory claimant made no contractual promise to arbitrate and legitimately invoked the law of another member state, restraint may be neither just nor convenient.

A cargo insurer compensated its insured for goods lost during carriage and sought recovery in Finland from the insolvent carrier’s liability insurer. Section 67 of the Finnish Insurance Contracts Act 1994 permitted a direct claim against an insurer in specified circumstances.

The liability policy was governed by English law and required disputes to be arbitrated in London. Moore-Bick J, in [2003] EWHC 3158 (Comm), held that the direct claimant had to arbitrate. He granted declarations and restrained continuation of the Finnish proceedings.

The appeal concerned the EC Judgments Regulation’s arbitration exception, characterisation of the Finnish statutory claim, service and discretionary stay, the declarations, and the propriety of the anti-suit injunction.

1. Appeal allowed in part. The English proceedings fell within the arbitration exception in article 1.2(d) of the EC Judgments Regulation. Their principal focus and essential subject matter were whether the claim had to be arbitrated and whether related judicial relief should be granted. Articles 27 and 28 therefore did not require the court to decline jurisdiction or grant a stay.

2. A court second seised may decide whether proceedings before it fall within the arbitration exception. Gasser concerned two sets of proceedings admittedly governed by the European jurisdiction regime. It did not require the court first seised to determine whether different proceedings were outside that regime because their subject matter was arbitration.

3. English conflict-of-laws rules required the court to identify the substance of the issue rather than the claim’s formal description. Section 67 of the Finnish Insurance Contracts Act 1994 gave the injured party a direct means of enforcing compensation in accordance with the insurance contract. The claim was therefore one to enforce the insurer’s contractual obligation, governed by English law. The insurer could rely on every relevant contractual term, including the London arbitration clause.

4. The claimant was accordingly bound to pursue the direct claim through London arbitration. Permission for service outside the jurisdiction remained effective, and no discretionary stay was justified. The declaration requiring arbitration was upheld.

5. The statutory claimant had not become a party to the insurance contract or promised to arbitrate. Commencement of the Finnish proceedings was therefore not a breach of contract. The declaration that those proceedings breached the arbitration clause was set aside.

6. An injunction may ordinarily enforce a contracting party’s promise to arbitrate, including where proceedings are brought in another member state. That principle did not apply by parity of reasoning to this non-party statutory claimant. It was legitimately invoking a Finnish statute in Finland, and its proceedings were neither vexatious nor oppressive. Having regard to the mutual-trust reasoning in Turner v Grovit, an injunction was not just and convenient under section 37(1) of the Supreme Court Act 1981. The anti-suit injunction was discharged.

1. Court of Appeal (Civil Division): In [2004] EWCA Civ 1598 , allowed the appeal in part. It upheld the declaration requiring arbitration but set aside the declaration of contractual breach and the anti-suit injunction.
2. High Court, Queen’s Bench Division (Commercial Court): Moore-Bick J, in [2003] EWHC 3158 (Comm) , dismissed the jurisdictional challenge, declared that the claims had to be arbitrated in England and that the Finnish proceedings breached the arbitration agreement, and granted an anti-suit injunction.