XL Insurance Company SE v AXA Corporate Solutions Assurance

Jurisdiction under Article 7 of Brussels I Recast depends on the true legal basis of the claim. Article 7(1) requires a contractual obligation owed by the defendant to the claimant, which the claimant seeks to enforce or for whose breach compensation is sought. An underlying contract is insufficient.

Article 7(2) requires a real liability connected with a harmful event: an act or omission by the defendant causing damage to the claimant. A co-insurer’s statutory or equitable contribution claim arising from overpayment does not satisfy that requirement merely because the defendant is liable to contribute. The exceptions to the defendant’s domicile jurisdiction must be interpreted restrictively, but no additional forum conveniens requirement applies.

XL and AXA were co-insurers of Connex Railroad LLC and related insureds following a fatal train collision in California. XL paid $65 million into a federal interpleader fund established for the victims and claimed approximately $7.8 million from AXA by way of contribution, alleging double insurance.

AXA was domiciled in France. It challenged the jurisdiction of the English court under Article 4 of Brussels I Recast. XL relied primarily on Article 7(2), alternatively Article 7(1), contending that England was the relevant place of jurisdiction. The central questions were whether the contribution claim was a matter relating to a contract or tort, delict or quasi-delict, and, if so, where the relevant obligation or harmful event was situated.

1. General principles. Article 4 establishes the general rule that a defendant is sued in the courts of its domicile. The derogations in Article 7 must be interpreted restrictively because they depend on a close connecting factor supporting legal certainty and reasonable foreseeability. There is no additional requirement resembling forum conveniens: if an Article 7 exception applies, jurisdiction follows.
2. Article 7(1). The relevant obligation must be a contractual obligation founded on contract and owed by the defendant to the claimant. The claimant must seek performance of that obligation or compensation for its non-performance. A contract in the background, or a contract which is merely a necessary step in establishing liability, is insufficient. XL’s contribution claim arose by operation of law after XL had overpaid the insured’s claims. AXA owed no contractual obligation to contribute to XL. The contractual obligations to indemnify Connex therefore did not bring the claim within Article 7(1).
3. Article 7(2). The phrase matters relating to tort, delict or quasi-delict requires more than the existence of liability or an award of relief. There must be an event caused by an act or omission of the defendant which causes damage to the claimant, resulting in the defendant’s liability in respect of that damage. The fact that AXA was liable to contribute, if its defence failed, did not itself amount to that kind of harmful event. The relevant event was XL’s overpayment, not AXA’s later refusal to contribute. The original torts by Metrolink and Connex were irrelevant because AXA had not committed them.
4. The claim therefore fell within neither Article 7(1) nor Article 7(2). Alternatively, if Article 7(2) applied, the relevant damage would have occurred in California, whether the event was treated as the overpayment into the fund or the underlying collision. Loss reflected in XL’s English bank account was insufficient.
5. AXA’s application succeeded. The court had no jurisdiction and the proceedings were dismissed. Consequential matters were reserved.