Gard Marine & Energy Ltd v Lloyd Tunnicliffe & Ors

Jurisdictional provisions which permit a defendant to be sued outside the state of domicile require narrow construction. A claimant seeking jurisdiction under articles 5(1) or 6(1) of the Lugano Convention must establish a good arguable case.

For article 5(1), the place of performance of a contractual payment obligation is determined by the governing law. Market practice that reinsurers usually pay claims through London brokers does not itself establish a contractual obligation to pay the broker in London.

For article 6(1), claims are sufficiently connected where they concern the same legal and factual situation and separate proceedings create a real risk of divergent judgments. The court may consider a contingent claim against a co-defendant where it forms part of the same dispute.

Gard, a Bermudan insurer, sought indemnity under an excess of loss reinsurance slip from Glacier Re, a Swiss reinsurer. The underlying risk concerned property and business interruption losses arising from Hurricane Rita.

Glacier Re challenged the jurisdiction of the English court. Gard relied on article 5(1) of the Lugano Convention, arguing that claims were payable through its London brokers, and on article 6(1), arguing that the claim was closely connected with claims against a London Lloyd’s syndicate and the broker.

The court also considered whether English or Swiss law governed the Glacier Re slip. The central issues were whether there was a good arguable case for jurisdiction under either article 5(1) or article 6(1), and whether the court should decline jurisdiction as a matter of discretion.

1. Applicable law. Gard had established a good arguable case that English law governed the Glacier Re slip. The surrounding circumstances, the London market form, the Lloyd’s wording and the use of recognised London market clauses pointed towards an implied choice of English law.
2. Article 5(1). The obligation in question was Glacier Re’s obligation to pay claims under the reinsurance contract. Under English law, the general place of performance was where the creditor resided, namely Bermuda. Gard had not shown a good arguable case that Glacier Re was contractually bound to pay claims to AHP in London. Evidence of market practice was insufficient to establish such an obligation. The authorities concerning payment through brokers did not establish the necessary contractual term on these facts.
3. Article 6(1). The claims against Glacier Re and Advent concerned precisely the same contractual wording and arose from a common reinsurance programme. They therefore created a real risk of divergent outcomes in the context of the same situation in law and fact. The contingent claim against AHP strengthened the connection because it depended substantially on the construction issue and involved overlapping factual evidence.
4. The fact that AHP was added after the original claim form did not prevent reliance on article 6(1). Under English procedure, the claim against AHP was deemed to have commenced at the date of the original action.
5. It was overwhelmingly just, convenient and expedient for the claims against Advent, Glacier Re and AHP to be determined in one jurisdiction. The jurisdictional challenge was rejected.

This was a first-instance jurisdictional decision in the Commercial Court. No prior appellate decision concerning this action is stated.