Summary
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.
Factual background
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.
Held
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.
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.
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.
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.
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.
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.
The court’s approach to earlier authorities
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Appeal route
- This judgment [2011] EWHC 3381 (Comm) High Court (Commercial Court)
- Appealed to[2012] EWCA Civ 1714Outcomeappeal allowed (english applications/actions stayed; summary judgments set aside)
- Appealed to[2013] UKSC 70Outcomeappeals allowed in substantial part; cross-appeal dismissed (cjeu reference contingent on insurers maintaining specified declaration claims)
Key cases cited
28 authorities cited.
- Johnson v Gore Wood & Co [2002] 2 AC 1
- Bank of Credit and Commerce International v. Ali and Others [2001] UKHL 8
- Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
- Masri v Consolidated Contractors International Company Sal & Anor [2008] EWCA Civ 625
- Satyam Computer Services Ltd v Upaid Systems Ltd [2008] EWCA Civ 487
- Stuart v Goldberg & Ors [2008] EWCA Civ 2
- Aldi Stores Ltd v WSP Group Plc & Ors [2007] EWCA Civ 1260
- Prescott v Dunwoody Sports Marketing [2007] EWCA Civ 461
- Fiona Trust & Holding Corporation & Ors v Yuri Privalov & Ors [2007] EWCA Civ 20
- DSM Anti-Infectives BV & Anor v Smithkline Beecham Plc & Anor [2004] EWCA Civ 1199
- KNAUF UK G.m.b.H. v. BRITISH GYPSUM LTD. AND ANOTHER [2001] EWCA Civ 1570 [2002] 1 Lloyd's Rep 199
- Union Discount Co Ltd v Zoller (Union Cal Ltd, Part 20 defendant) [2001] EWCA Civ 1755
- Shetty v Al Rushaid Petroleum Investment Co [2011] EWHC 1640
- Dunlop Haywards (DHL) Ltd v Erinaceous Insurance Services Ltd [2008] EWHC 520
- Humber Work Boats Ltd v "Selby Paradigm", Owners of MV & Ors [2004] EWHC 1804 (Admlty)
- The Bargain Pages Ltd. v Midland Independent Newspapers Ltd. [2003] EWHC 1887 (Ch)
- STRIBOG LTD v FKI ENGINEERING LTD AND ANOTHER [2011] 2 Lloyd's Rep 387
- CMA CGM SA v HYUNDAI MIPO DOCKYARD CO LTD [2009] 1 Lloyd's Rep 213
- STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD v SULPICIO LINES INC [2008] 2 Lloyd's Rep 269
- Owners of cargo lately laden on board the ship Tatry v Owners of the ship Maciej Rataj (The Tatry) Case C-406/92
- Continental Bank NA v Aeakos Cia Naviera SA [1994] 1 WLR 588
- Rofa Sport Management A G v DHL International (UK) Ltd [1989] 1 WLR 902
- Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488
- Hollingsworth v Humphrey [1987] CAT 1244
- Cooper v Williams [1963] 2 QB 567
- Ellerman Lines Ltd v Read [1928] 2 KB 144
- Henderson v Henderson (1844) 3 Hare 100
- Rowland v Gulfpac Ltd
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Cases citing this case
1 later case · 1 caution
Most senior citing decisions:
- Hotel Portfolio II UK Limited (in Liquidation) & Anor v Andrew Joseph Ruhan & Anor [2022] EWHC 1695 (Comm) distinguished
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