Korea National Insurance Corp v Allianz Global Corporate & Specialty AG

Representative proceedings are available where the claimant and represented parties have the same interest. A judgment binds those represented even though they were not individually served. On an application for summary judgment, the court assesses objectively whether a pleaded settlement or contractual variation has a realistic prospect of success. The parties’ subjective belief is irrelevant. For a substantial commercial agreement, the absence of any written record and contemporary correspondence inconsistent with agreement may make the defence untenable. A party seeking to rely on an alternative legal characterisation must plead it where that characterisation affects the issues, including governing law, jurisdiction and the consequences of the alleged agreement.

The claimant sought to enforce in England a judgment of the Pyongyang court requiring reinsurers to pay sums arising from the crash of an Air Koryo helicopter. The defendant advanced, among other matters, challenges to the use of representative proceedings, alleged fraud in obtaining the Pyongyang judgment, and the contention that the parties had settled the claim or varied the reinsurance contract by agreeing to payment in North Korean won.

The claimant applied under Civil Procedure Rules 1998 Part 24 for summary judgment on the representative-proceedings issue and the settlement-related defences. The court considered whether those defences had a realistic prospect of success and whether the proposed alternative variation case should be pleaded.

1. Representative proceedings. The claimant was entitled to bring representative proceedings under Civil Procedure Rules 1998 rule 19.6 because the named defendant had the same interest as the reinsurers it represented. Under rule 19.6(9), the represented persons were treated as parties and would be bound by the judgment although they need not be served. The defendant’s challenge to the North Korean representative proceedings also failed. Article 28 of the North Korean Civil Proceedings Act, read with the expert evidence and the Pyongyang court’s own judgment, provided sufficient support for the procedure. The relevant defence was struck out.
2. Alleged settlement. The pleaded conditional settlement had no realistic prospect of success. Whether a concluded contract was formed was an objective question. The size of the claim, the importance of the currency clause, the parties’ mutual suspicions, the absence of a written record, and the casual nature of the alleged exchanges all told strongly against a binding agreement. The subsequent correspondence repeatedly treated liability and settlement as unresolved and was irreconcilable with a settlement having been concluded. The reinsurers’ efforts to obtain North Korean won were neutral and did not establish agreement. The settlement defence was struck out.
3. Proposed variation. The alternative case that the parties had varied the reinsurance contract also had no realistic prospect of success. It required separate pleading because the legal characterisation affected the proper law, jurisdiction and the consequences of the alleged agreement. The evidence indicated that any variation was required to be in writing under North Korean law. There was no contemporary record, no clear replacement for the euro-denominated limits, and no adequate basis for alleging that the jurisdiction clause had ended. Leave to amend was refused.

First-instance decision. No prior appellate decision is stated in the judgment.