Munchener Ruckversicherungs Gesellschaft (t/a Munich Reinsurance Company) v Commonwealth Insurance Company

On an application to set aside permission to serve proceedings out of the jurisdiction, the claimant must show that England is clearly and distinctly the more appropriate forum. The court assesses the dispute as a whole, giving substantial weight to the place and governing law of the principal contract where the issues chiefly concern its construction. A contingent claim against an intermediary in another jurisdiction should not ordinarily determine the forum for the principal contractual dispute. Potential duplication or inconsistent judgments may be managed procedurally. Contractual wording identifying a country for service is construed in its commercial and documentary context, including an apparent mismatch between a country name and a clause number.

Munich Re, an English-based retrocessionaire, sought declarations concerning its liability to Commonwealth, a Canadian reinsurer, and recovery of a payment made under protest. Moore-Bick J had granted permission to serve the claim form in Canada. Commonwealth applied to set aside that order and relied on related proceedings commenced in the federal court in California against Munich Re and THB, its producing broker.

The dispute concerned the construction of a London-market retrocession contract, the effect of the underlying insurance arrangements, and whether the contract contained an arbitration agreement or a follow-the-settlements obligation. The central issue was whether England or California was the more appropriate forum for determining the dispute between Munich Re and Commonwealth.

1. Application dismissed. Munich Re had discharged the burden of showing that England was the more conveniently and appropriately placed forum.
2. For permission to serve out, the relevant requirements were that there was a good arguable case within CPR 6.20, a serious issue to be tried, and that England was clearly and distinctly the most appropriate forum. The first two requirements were accepted on the application. The decisive question was the third.
3. The centre of gravity of the dispute lay in the construction of the retrocession contract, having regard to the master policy and the relevant faxes. The retrocession had been made in London through London brokers, on a recognised London-market form, and was governed by English law. The fact that Illinois law might be relevant to the master policy did not materially favour California. Both courts were capable of dealing with that issue, and the principal questions were matters of English contractual law.
4. The evidence indicated that the basic facts were largely undisputed and that little oral evidence would be required. The allegations made in the Californian proceedings against Munich Re, including allegations concerning an implied term and the effect of a without-prejudice payment, were also matters best determined by the English court.
5. The contingent claim against THB did not outweigh the factors favouring England. The principal dispute between Commonwealth and Munich Re was distinct from any later dispute between Commonwealth and its broker. Procedural mechanisms could ensure that THB was bound by the English court’s judgment or could allow the broker dispute to be determined later. The contingent dispute should not be allowed to determine the forum for the principal dispute.
6. Insurance Corporation of Ireland v Strombus [1985] 2 Lloyd's Law Reports 138 was distinguishable because that case involved insurers, reinsurers and brokers up and down the contractual chain, whereas THB was not directly involved in the placing between Commonwealth and Munich Re.
7. The contractual documents showed that the service of suit provision was for Canada. The reference to the Canadian clause number was an obvious carry-over after the country had been changed from the USA to Canada. The Canadian wording provided for service, whereas the USA wording amounted to a submission to the jurisdiction of courts in the United States. The surrounding commercial context also favoured Canada.

Moore-Bick J granted permission to serve the claim form out of the jurisdiction. The present application to set aside that order was dismissed by the High Court (Commercial Court).