Dornoch Ltd & Ors v Mauritius Union Assurance Company Ltd & Anor

A jurisdiction or choice-of-law clause is incorporated into a related contract only where the language and contractual context demonstrate that intention. Clear words are required because such clauses are important. The close connection between an insurance policy and a back-to-back reinsurance makes incorporation more likely, but does not determine the question.

Where several putative proper laws are possible, the forum applies its own law when deciding whether a particular jurisdiction term forms part of the contract. On an application for permission to serve out, the claimant need establish only a good arguable case for the jurisdictional proposition on which it relies.

Pre-contract negotiations cannot ordinarily be used to interpret the resulting written contract. Words merely indicating an intention to agree a jurisdiction clause do not create one where the parties left the chosen jurisdiction unresolved.

The respondents reinsured an excess premises and transit policy issued by the first appellant to the second appellant, a Mauritian bank. The slip stated that it followed specified terms and conditions of a primary reinsurance and separately contained the words “Jurisdiction Clause”. It did not identify a jurisdiction.

After the bank reported a long-running fraud, the reinsurers commenced English proceedings seeking declarations concerning avoidance and the scope of cover. They also alleged misrepresentation, deceit and negligent misstatement. Aikens J permitted service in Mauritius and subsequently refused to set that order aside. He held that the insurer had not shown a good arguable case that a Mauritius jurisdiction clause was incorporated, that English law was the putative proper law of the contract and torts, and that England was clearly the appropriate forum: [2005] EWHC 1887 (Comm).

The insurer and bank appealed. The central issue was whether the reinsurance contained a Mauritius jurisdiction clause and, consequently, whether the judge had been entitled to retain the proceedings in England.

1. Appeal dismissed. The reinsurers had a good arguable case that the reinsurance contained no Mauritius jurisdiction clause. The judge was therefore entitled to address the appropriate-forum question and had committed no error warranting appellate intervention.

2. English law governed the preliminary inquiry into whether the disputed term had been incorporated. The cases applying a putative proper law to the existence of an agreement did not govern a dispute about one term where several putative laws were possible. Before choosing the proper law, the court had no alternative but to apply the law of the forum.

3. On an application for permission to serve out, the relevant question was whether the claimant had a good arguable case for the jurisdictional proposition on which it relied. It was therefore enough that the reinsurers had a good arguable case that the contract contained no Mauritius jurisdiction clause. A competing good arguable case for another conclusion would not itself defeat jurisdiction.

4. Incorporation depended upon the parties’ objectively ascertained intention. The words, contractual context and relationship between the contracts were important. Clear words were required to incorporate choice-of-law or jurisdiction provisions. Closely connected, back-to-back insurance contracts may favour incorporation, but the general words here concerned the insured subject matter and risk. The slips also dealt with jurisdiction separately.

5. The evidence about the broker’s and underwriter’s discussions was inadmissible pre-contract negotiation. It disclosed no freestanding oral agreement or agreed meaning. The words “Jurisdiction Clause”, read alone or in context, did not identify Mauritius or England. They indicated an intention to agree a clause, but the parties never completed that agreement.

6. There was a good arguable case under articles 3 and 4 of the Rome Convention that English law governed the reinsurance. If no choice could be demonstrated with reasonable certainty, the characteristic performance was payment by the reinsurers in England.

7. The judge was entitled to find under sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995 that English law governed the alleged torts. Reliance in England was the most significant element. Section 12 could require consideration of wider connecting factors, but added nothing on these facts.

8. The judge could consider the juridical disadvantages of trial in Mauritius, including the absence of relief available under English insurance law, without criticising Mauritian law or suggesting that a fair trial was unavailable. His overall evaluation under the Spiliada principles, including the risk of multiple proceedings, disclosed no appealable error.

1. Court of Appeal (Civil Division): The court unanimously dismissed the appeal and affirmed the refusal to set aside permission for service out: [2006] EWCA Civ 389.
2. Commercial Court: Aikens J held that no good arguable case had been shown for incorporation of a Mauritius jurisdiction clause, treated English law as the putative proper law of the contract and torts, and held England clearly to be the appropriate forum: [2005] EWHC 1887 (Comm).