Mora Shipping Inc v AXA Corporate Solutions Assurance S.A. & Ors

For jurisdiction based on the place of performance of a contractual obligation, the claimant must establish where the contract required that obligation to be performed. A guarantee providing for payment to one of two named payees does not, without express words, confer on the creditor or adjuster a right to elect the payee or place of payment. Unqualified alternative payment terms may therefore fail to establish a single place of performance. Commercial practice and contextual evidence cannot rewrite clear contractual language. Where an obligation may be performed in more than one jurisdiction, no single jurisdiction is established on that basis.

The claimant, a Liberian company and demise charterer of the vessel Vitoria, sued insurers domiciled in France, Belgium, the Netherlands and Switzerland under an Average Guarantee. The guarantee required payment of general average contributions to the shipowners or to the average adjusters.

The insurers applied to set aside service and challenge the jurisdiction of the Commercial Court. The agreed issue was whether the guarantee required payment within England for the purposes of Article 5.1(a) of Council Regulation 44/2001 and Article 5.1 of the Lugano Convention.

1. Application granted. The claimant failed to establish that the Commercial Court had jurisdiction. The issue and service of the Claim Form were therefore liable to be set aside, subject to ancillary matters.
2. Jurisdiction under Article 5.1(a) of Council Regulation 44/2001 and Article 5.1 of the Lugano Convention depended on the place where the contractual payment obligation was to be performed. The parties accepted that English law governed the construction of the Average Guarantee.
3. The guarantee obliged each insurer to pay a single general average contribution to the shipowners or to the average adjusters. Those words were unqualified. They did not give the creditor parties or the adjusters a right to elect the payee or to fix the place of performance by a later direction. The suggested construction would create commercially improbable uncertainty and was inconsistent with the express wording.
4. The usual practice of average adjusters collecting and distributing funds did not establish a binding market custom and did not assist construction. An adjustment was not conclusive or binding as to the legal liability for general average. The obligation remained to pay what was legally due to one of the named payees.
5. If it had been necessary to consider a right of election, the judge stated that, absent contrary express words, it would in principle belong to the party whose obligation was under consideration, here the insurers. This was subsidiary reasoning. The request to remit funds to a London account would have been effective only if the guarantee otherwise gave the adjusters power to elect the place of payment.
6. The claimant’s construction would make jurisdiction depend on an uncertain later election. The commercially appropriate means of selecting jurisdiction was an express jurisdiction clause. The ordinary domicile rule remained applicable.