Starlight Shipping Company v Allianz Marine & Aviation Versicherungs AG & Ors

A broadly worded settlement agreement may release claims arising from the handling of an insured loss, including allegations of bad faith, dishonesty and consequential damage, where those matters were known or reasonably capable of being known when the settlement was made. A jurisdiction clause need not use the word exclusive if, read in context, that is its intended effect. A court may enforce a settlement recorded in a Tomlin order without lifting the stay, including by declarations, specific performance, damages and enforcement of an indemnity. Related proceedings may be dealt with in the original action where doing so gives effect to the settlement and does not restrain access to a foreign court.

Starlight’s claims against its marine insurers arose from the loss of the Alexandros T. The insurers alleged unseaworthiness and related misconduct. Starlight in turn alleged that the insurers had obtained false evidence, spread malicious rumours and delayed payment. The parties settled the English proceedings in December 2007. The settlements contained wide releases, indemnities and English-law jurisdiction clauses, and were recorded in Tomlin orders.

In 2011, Starlight, OME and associated parties commenced materially identical proceedings in Greece. The insurers sought summary enforcement of the settlements, declarations and indemnity relief. Starlight and OME sought stays under article 28 of Regulation 44/2001. The central issues were whether the Greek claims fell within the settlements and exclusive jurisdiction clauses, whether the Tomlin orders could be enforced summarily, and whether the intended defendants should be joined.

1. Settlement scope. The Greek claims concerned the loss of the Alexandros T and fell within the settlement releases. They concerned the insurers’ investigations, alleged bad faith, alleged malicious statements and alleged delay in payment. They also fell within the release of claims under the policies. The inclusion of OME and indemnities covering claims by associated parties confirmed the settlements’ wide scope.

2. The settlements were intended to provide a clean break. Claims which had been made, or which were known or reasonably capable of being known, before settlement could not be revived by recasting them under Greek law or by enlarging the alleged consequential losses. The reasoning in Fiona Trust and Holding Corporation v Privalov [2007] EWCA Civ 20 and [2008] 1 Lloyd’s Law Rep 254 supported a liberal construction of the relevant wording. The fraud observations relied upon from Satyam Computer Services Ltd v Upaid Systems Ltd [2008] EWCA Civ 487 concerned unknown fraud claims and did not assist on these facts.

3. Jurisdiction. The jurisdiction clause in the LMI settlement was exclusive although the word “exclusive” was not used. The clause would otherwise be idle, and the policy clauses, the English proceedings and the Tomlin orders confirmed that the parties intended exclusive English jurisdiction. The Greek claims therefore breached the settlement agreements and the relevant jurisdiction clauses.

4. Enforcement of Tomlin orders. The court could enforce the settlement terms without lifting the stays. Enforcement of the indemnities, declarations and specific performance constituted carrying the agreed terms into effect. The court also accepted that damages could be awarded in the same proceedings, whether characterised as damages for breach of contract or as damages under section 50 of the Senior Courts Act 1981. The restrictive approach in Hollingsworth v Humphrey [1987] CAT 1244 did not prevent the relief sought.

5. The English court was first seised in relation to the original action and could grant relief consistently with Regulation 44/2001, provided it did not enjoin the Greek proceedings. Article 28 did not permit a stay of the original action. The stays sought in the later actions also failed because the applications were out of time, the defendants had submitted to the English jurisdiction, and the jurisdiction clauses were exclusive.

6. The court granted summary relief for the insurers, rejected the stay applications and allowed the intended defendants to be joined under CPR Part 19.2(2)(b). The proposed joinder involved issues connected with the original dispute and the settlement agreements, and was desirable so that those issues could be resolved together.