Stonebridge Underwriting Ltd v Ontario Municipal Insurance Exchange

On an application to set aside service out, the claimant must show a good arguable case, realistic prospects of success and that England is clearly and distinctly the most appropriate forum.

Where a London-market reinsurance contract is likely governed by English law, that factor may carry considerable weight. The English court’s experience in construing such contracts, including claims co-operation clauses and annual aggregate deductibles, may reinforce the conclusion that England is the natural forum. Earlier proceedings abroad do not by themselves justify declining jurisdiction. The court must assess all relevant factors, including the governing law, connections, witnesses, evidence, convenience, costs and the stage of any concurrent proceedings.

Stonebridge Underwriting Limited, acting for Lloyd’s Syndicate 990, sought declarations concerning liability under a London-market excess-of-loss reinsurance contract with Ontario Municipal Insurance Exchange. OMEX had commenced proceedings in Ontario claiming payment under the contract.

OMEX applied to set aside service of the English claim form. The principal issues were whether the reinsurance contract was likely governed by English law and whether England was clearly and distinctly the most appropriate forum, having regard to the Ontario proceedings, the parties’ locations, witnesses, evidence, the contract’s construction and alleged breaches of its claims co-operation clause.

1. Application refused. OMEX failed to show that England was not clearly and distinctly the most appropriate forum. The English proceedings were permitted to continue.
2. For service out, the claimant had to establish a good arguable case that the claim fell within a relevant gateway, realistic prospects of success, and that England was the proper forum. The forum question required identification of the forum in which the dispute could most suitably be tried in the interests of all parties and the ends of justice.
3. The parties had impliedly chosen English law. The contract was a London-market slip, placed through London brokers, subscribed by a London Lloyd’s underwriter, and contained standard London-market clauses. The characteristic performance was also to be provided by an English underwriter.
4. The likely application of English law was of considerable significance. The dispute required construction of excess provisions, annual aggregate deductibles and a claims co-operation clause containing a condition precedent. The English Commercial Court had particular experience in resolving Lloyd’s reinsurance disputes and determining the relevant legal principles, rather than receiving expert evidence about them.
5. The risk that an Ontario court might apply Ontario law, including the relief-from-forfeiture provision in section 129 of the Insurance Act (Ontario) 1990, and thereby deprive the claimant of an English-law defence, was a material factor. It was not conclusive.
6. The earlier commencement of Ontario proceedings did not determine the forum issue. Concurrent proceedings were undesirable, but that was only one factor. The English proceedings were more developed, and the Ontario jurisdiction challenge had not yet been heard.
7. The location of Canadian witnesses, the related claim against JLT Canada and the Ontario subject matter did not outweigh the factors favouring England. Documentary evidence could be used, witnesses could give evidence by video-link, and JLT Canada could potentially be joined in England.
8. The court therefore declined to set aside service of the claim form.