Shipowners' Mutual Protection And Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat Ve Ticaret AS

A statutory direct-action right against a liability insurer may remain, in substance, contractual where the insurance contract defines the insured perils, monetary limit, period of cover and time bar. Exceptions which protect the victim from particular contractual defences do not necessarily alter that characterisation. A claimant exercising such a right is bound by the arbitration agreement governing the underlying contractual liability, even without privity of contract.

An anti-suit injunction may be granted where foreign proceedings would deprive the insurer of contractual arbitration rights and the benefit of a pay-to-be-paid clause. The proceedings may be vexatious and oppressive notwithstanding that they are authorised by foreign legislation.

The claimant, a P&I Club, sought continuation of an anti-suit injunction restraining Turkish time charterers from pursuing precautionary and intended substantive proceedings in Turkey. The charterers relied on a Turkish statutory right of direct action against the Club in respect of cargo claims arising after the total loss of the vessel Yusuf Cepnioglu.

The Club’s cover provided for London arbitration and contained a pay-to-be-paid clause. The issues were whether the Turkish direct-action right was contractual or independent in substance, whether the court had jurisdiction to permit service out, and whether the Turkish proceedings were vexatious and oppressive.

1. Characterisation. The Turkish direct-action right was in substance a right to enforce the contract between the Club and its member. The relevant indicators were that the insured perils, monetary limit, cover period and contractual time bar governed the claim. Although Turkish Insurance Contract Law of 2012, article 1484, could preserve liability to the victim despite the Club’s discharge towards the insured, that exception did not alter the essential contractual nature of the right.
2. Service out. The court had jurisdiction under CPR 6 PD paragraph 3.1(6)(c). The anti-suit claim was made in respect of a contract because it relied on the London arbitration clause. The required connection existed even though the charterers were not original parties to the Club’s contract. The court also had jurisdiction under CPR 62.5(1)(c), since the charterers were, in a real sense, bound by the arbitration agreement when exercising the statutory right.
3. Arbitration obligation. A person exercising a statutory direct-action right to enforce contractual insurance liability must respect the arbitration clause governing that liability. The person is not an original party to the arbitration agreement, but is bound by it for the relevant purpose.
4. Anti-suit relief. The court followed the approach focusing on the effect of the foreign proceedings on the party seeking relief. The Turkish proceedings would deprive the Club of London arbitration and created a real risk that the pay-to-be-paid clause would be unavailable. Those effects made the proceedings vexatious and oppressive. The charterers’ statutory right and policy considerations concerning victim protection did not outweigh the Club’s contractual rights.
5. The injunction granted by Cooke J was continued.

First-instance decision. The judgment records that Cooke J had granted the anti-suit injunction on 18 July 2014; Teare J continued it.