Aspen Underwriting Ltd & Ors v Credit Europe Bank NV

A party establishes a jurisdictional gateway by showing a good arguable case. The court should reach a reliable view on the available material where possible.

An assignee who sues to enforce contractual rights must comply with the contract’s jurisdiction clause. Merely asserting those rights without commencing proceedings does not bind the assignee to that clause.

Whether proceedings are matters relating to insurance depends on their reality and substance. Claims requiring indispensable consideration of liability under a policy may qualify despite an intervening settlement agreement. Protection under the insurance jurisdiction rules depends on membership of a class meriting protection, not an individual assessment of economic strength.

Misrepresentation claims founded independently of contractual breach fall within tort jurisdiction. Restitution for mistake ordinarily does not.

Hull underwriters paid US$22 million following the loss of a vessel. They later alleged that the vessel had been deliberately sunk and sought recovery from its owners and mortgagee bank. The Netherlands-domiciled bank challenged English jurisdiction.

Teare J held that the bank was neither a party to the settlement agreement nor bound by the policy’s English jurisdiction clause. Although the claims were matters relating to insurance, he held that the bank could not invoke the special insurance rules because it was not a weaker party. He accepted jurisdiction over damages for misrepresentation but not restitution for mistake: [2017] EWHC 1904 (Comm); [2017] EWHC 3040 (Comm).

The bank appealed the weaker-party ruling. The underwriters cross-appealed on the evidential standard, the jurisdiction clauses, insurance classification and restitution. The central issue was which elements of the recovery claim could proceed in England under Regulation (EU) 1215/2012.

1. Appeal and cross-appeal dismissed. The judge’s conclusions on all seven jurisdictional issues were upheld. The underwriters’ tort claims could proceed in England, but their restitution claim against the bank could not.

2. The applicable evidential standard was a good arguable case. This required more than a prima facie case but less than proof on the balance of probabilities. Where the material permitted a reliable assessment, the court had to take a view. The judge’s inquiry into which party had the better argument produced no meaningful difference from that approach.

3. The bank was not a party to the settlement agreement. Its terms identified the underwriters, owners and managers as the parties while separately describing the bank as mortgagee and loss payee. The evidence did not establish that the owners possessed and exercised actual authority to contract for the bank. Article 25 therefore conferred no jurisdiction over the bank.

4. An assignee enforcing contractual rights must do so consistently with the assigned contract. The bank had not sued under the policy, however, and a mere assertion of rights would not bind it to the policy’s jurisdiction clause. Its letter of authority did not in any event assert a claim for payment.

5. The claims were matters relating to insurance. Their reality and substance concerned whether the vessel was lost by an insured peril or through the owners’ wilful misconduct. Determination of liability under the policy was indispensable. The intervening settlement agreement did not break that material nexus.

6. The bank nevertheless fell outside the protection of the insurance jurisdiction rules. Courts may not make a case-specific comparison of economic strength. They must instead consider whether the party belongs to a class meriting protection. A ship-finance bank routinely acting as assignee and loss payee in marine-insurance matters was professionally involved in insurance-related claims and was analogous to an insurance professional.

7. The common-law and statutory misrepresentation claims did not depend on breach of contract and therefore related to tort, delict or quasi-delict under Article 7(2). Damage occurred in England when the settlement agreement was concluded there. Payment into the London account provided a further connecting factor. If the claims had instead related to contract, there was at least a good arguable case that London was the place for performance of the obligation not to misrepresent.

8. Restitution based simply on mistake did not fall within Article 7(2). Such a claim ordinarily presupposes neither a harmful event nor a threatened wrong. Binding House of Lords authority required that conclusion despite the resulting division of proceedings between jurisdictions.

1. Court of Appeal (Civil Division): In [2018] EWCA Civ 2590 , the court unanimously dismissed the bank’s appeal and the underwriters’ cross-appeal. It upheld English jurisdiction over the misrepresentation claims but not the restitution claim.

2. High Court, Commercial Court: Teare J determined the principal jurisdiction application in [2017] EWHC 1904 (Comm) . He held that the bank was not bound by either jurisdiction clause, that the claims related to insurance, that the bank could not invoke the insurance rules, and that England had jurisdiction over common-law misrepresentation claims but not restitution.

3. High Court, Commercial Court: In the further decision recorded as [2017] EWHC 3040 (Comm), Teare J held that the claim under section 2(1) of the Misrepresentation Act 1967 also related to tort and could proceed in England.