Howden North America Inc & Anor v ACE European Group Ltd. & Ors

An English court should not permit service out of the jurisdiction for declaratory relief unless the declarations have real utility. That requirement applies to positive as well as negative declarations.

Utility must be assessed against the circumstances as they exist. An English judgment is not useful merely because it might assist a competent foreign court which is already determining the applicable law and can receive evidence of English law. Nor is it useful, on the facts of the case, to obtain declarations solely as a pre-emptive foundation for resisting enforcement in England of a possible foreign judgment.

Insurers sought permission to serve proceedings on Howden North America Inc outside the jurisdiction. They sought declarations that eight excess-layer liability policies were governed by English law and that, under English law, particular asbestos-related claims did not fall within the policies.

Related coverage proceedings, concerning the same policies or related cover, were already before a federal court in Pennsylvania. That court was to determine the applicable law under Pennsylvania choice-of-law rules. Field J refused to set aside permission for service out, holding that the English declarations would have sufficient utility.

Howden appealed. The sole issue was whether the proposed English proceedings had sufficient utility to justify the exercise of the jurisdiction.

1. Appeal allowed unanimously. The court granted permission to appeal and set aside Field J’s order permitting service of the claim form and particulars of claim out of the jurisdiction in respect of policies 1 to 8.

2. A claimant seeking service out had to establish a jurisdictional gateway, a serious issue to be tried and that England was clearly the appropriate forum. Where declaratory relief was sought, the court also had to scrutinise whether the declarations would be useful. The utility requirement applied equally to the positive declarations sought here: [1998] CLC 1062 and [2012] EWCA Civ 980.

3. The appellate question was whether Field J had reached the wrong conclusion on utility, rather than whether his conclusion should be characterised as an exercise of discretion. Utility had to be assessed on the facts as they stood when the issue came before the Court of Appeal.

4. The proposed English judgment would not usefully assist the Pennsylvania court. That court had already given a reasoned preliminary view that English law was unlikely to apply under its different choice-of-law rules. It was an experienced and competent federal court, could receive and evaluate evidence of English law, and had neither requested nor indicated any need for advice from an English court. The advanced Pennsylvania proceedings would continue regardless of an English judgment.

5. The earlier Faraday litigation did not compel a different conclusion. It involved materially different procedural circumstances, including the timing of the English proceedings and an argument that an English decision would have preclusive effect. The unusual features that supported utility in CGU International Insurance plc v Szabo, [2002] CLC 265, were also absent.

6. Finally, it was not a useful exercise of jurisdiction to obtain English declarations solely to lay a foundation for a future public-policy defence to enforcement of a Pennsylvania judgment. The Pennsylvania court was competent, and its prior jurisdictional challenge had failed.

• Court of Appeal (Civil Division): Permission to appeal granted; Howden’s appeal allowed. Field J’s order permitting service out was set aside.
• High Court, Queen’s Bench Division, Commercial Court: Field J refused to set aside permission to serve the insurers’ declaratory proceedings on Howden outside the jurisdiction, finding sufficient utility in the proposed declarations.