Tryg Baltica International (UK) Ltd. v Boston Compania De Seguros SA & Ors

A negative declaration may be granted where it determines a real dispute and has practical utility. The claim must not be premature, hypothetical or an improper form of forum shopping.

On service out of the jurisdiction, the claimant must show a realistic prospect of success and that England is the appropriate forum. Relevant factors include convenience, expense, governing law and the parties’ connections. English courts may be the appropriate forum for disputes concerning English-law reinsurance contracts, even where the underlying risks and insurers are foreign.

Tryg, a London-based reinsurer, sought declarations concerning reinsurance contracts covering risks insured by four Argentine insurers. The declarations concerned Argentine currency measures, notification conditions precedent, follow-the-settlements clauses, and liability for legal costs and expenses.

The defendants applied to set aside permission to serve proceedings outside the jurisdiction or to stay the proceedings. They argued that Tryg lacked a realistic prospect of success, that the declarations lacked practical utility, that Argentina was the appropriate forum, and that Tryg had failed to disclose material matters on the without-notice application.

1. The court applied the CPR Part 24 threshold of a realistic prospect of success. The first declaration, concerning the effect of Argentine currency measures on the reinsurance contracts, raised a real and useful question of construction under English law. It was not premature or hypothetical.
2. The second declaration also raised a serious issue. The evidence disclosed a strong prima facie case of substantial delay in notification under conditions precedent. Further particularisation and disclosure were required, but the court could not conclude that the claims lacked prospects. Issues concerning waiver, estoppel, variation and notification to Argentine adjusters or lawyers remained open.
3. The third declaration was stayed. Once the defendants accepted the effect of English law, there was no continuing need for an abstract declaration concerning the follow-the-settlements clauses. The court did not decide the underlying issue concerning late notification by the original insureds.
4. The fourth declaration raised genuine issues concerning construction, implied terms, waiver, variation and the scope of reinsurance cover for legal costs and expenses. Section 110(a) of the Insurance Law meant that insureds’ legal fees in defending third-party claims fell within the underlying liability cover. That did not resolve the separate questions concerning costs incurred by the reinsureds themselves or costs paid by Tryg.
5. Argentina was an available forum, but England was clearly the more appropriate forum. The reinsurance contracts were made in London and governed by English law. The first and fourth declarations principally involved construction of those contracts. The second involved English contractual communications, documents and notification issues.
6. The material non-disclosure challenge failed. The matters relied on had been disclosed or were immaterial, and disclosure of the available evidence would not have altered the order.
7. Permission to serve out was maintained. The proceedings concerning the third declaration were stayed. Tryg was entitled to a substantial proportion, but not all, of its costs.