Amlin Corporate Member Ltd & Ors v Oriental Assurance Corporation

A case-management stay of proceedings properly commenced in England is justified only in rare and compelling circumstances. Reinsurance does not create a general exception to that rule. A follow-settlements clause does not require reinsurers to await the reinsured's settlement or liability where the alleged loss falls outside the reinsurance contract.

An exclusive English jurisdiction clause is a relevant consideration, but does not create separate degrees of rarity or compulsion. The court may weigh the practical risk of inconsistent findings, the likely availability of evidence, and delay in foreign proceedings. An appellate court will not interfere with a discretionary decision reached on the correct principles and within the proper range of judgment.

Following the loss of the Princess of the Stars in a typhoon, cargo claims were brought in the Philippines against the shipowner and its Philippine insurer, Oriental Assurance Corporation. The English reinsurers commenced proceedings for negative declarations that no indemnity was due under the reinsurance, principally because of an alleged breach of the typhoon warranty.

The reinsurance contained a follow-settlements clause and an exclusive English law and jurisdiction clause. Oriental sought a case-management stay pending the Philippine cargo proceedings. Andrew Smith J dismissed that application on 17 February 2012. Oriental appealed, relying on the risk of inconsistent decisions, the back-to-back character of reinsurance, and the unfairness of having to advance a position in England inconsistent with its Philippine defence.

1. Appeal dismissed unanimously. The judge had applied the correct starting point. Proceedings properly brought in England should be stayed only where the circumstances are rare and compelling. Reinsurance is not a general exception to that principle.

2. The power to stay arose under CPR 3.1(2)(f) and section 43(3) of the Senior Courts Act. The exclusive English jurisdiction clause did not require a separate, heightened formulation of the test. It was, however, a material circumstance which the judge was entitled to take into account.

3. The follow-settlements clause did not require the reinsurers to await the outcome of the Philippine claims. Following Insurance Co of Africa v Scor [1985] 1 Lloyd’s Rep 319, such a clause has no application if the loss is outside the reinsurance. The alleged breach of the typhoon warranty raised precisely that issue. General dicta concerning the back-to-back nature of proportional reinsurance did not displace the ordinary rule governing stays.

4. The judge had considered the risk of different evidence and inconsistent decisions. He was entitled to regard that risk as modest because relevant evidence was likely to emerge before the English trial. He was also entitled to treat the potentially very substantial delay in the Philippine proceedings as a consideration against a stay.

5. No error of principle, failure to consider a material matter, or impermissible exercise of discretion was shown. The Court of Appeal therefore declined to interfere with the refusal of a stay.

• Court of Appeal (Civil Division): Oriental’s appeal was dismissed: [2012] EWCA Civ 1341.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Andrew Smith J dismissed Oriental’s application for a case-management stay on 17 February 2012.