Catlin Syndicate Ltd & Ors v Weyerhaeuser Company

Insurance policy provisions should be construed together so far as the language and commercial context permit. A service-of-suit clause may coexist with an arbitration agreement where the former operates to support enforcement of an arbitral award or another agreed post-contractual court process. The court should avoid attributing commercially impractical fragmentation of dispute resolution to the parties unless the wording requires it. The construction remains one of the policy as a whole and depends on its wording, facts and context. A foreign law principle favouring insureds or expressing hostility to arbitration does not alter the objectively manifested agreement where the policy is not genuinely ambiguous and the proposed alternative construction is commercially incoherent.

The claimants were insurers under an excess insurance policy issued alongside underlying layers of insurance. The policy referred to the lead underlying policy and contained a service-of-suit clause submitting the insurers to United States jurisdiction in specified circumstances. The lead underlying policy contained a London arbitration agreement and a Washington law clause.

The defendant commenced proceedings, or threatened to pursue proceedings, in the District Court in Washington State. The claimants sought a final order restraining those proceedings on the basis that the relevant disputes had been agreed to be resolved by arbitration in London. The court considered the construction of the policy under English law and, alternatively, Washington State law.

1. The claim succeeded. A final order was made restraining Weyerhaeuser from pursuing proceedings before the District Court in the State of Washington. The order was directed to Catlin to enforce its contractual obligation and was not directed to the United States court.
2. The policy had to be read as a whole. The reference in the choice-of-law and jurisdiction clause to the lead underlying policy incorporated the London arbitration agreement. The service-of-suit provisions were capable of operating consistently with that agreement.
3. The service-of-suit provisions required submission to a competent United States court where an amount claimed under the policy had not been paid, but that submission was for the purpose of effectuating arbitration. The provisions also preserved specified United States procedural rights. In context, those rights concerned enforcement of an arbitral award, or a later agreement to dispense with arbitration.
4. The alternative construction would divide disputes between arbitration and litigation, including potentially requiring arbitration for declaratory relief but litigation for indemnity claims. That commercially unattractive result was not required by the language. The different drafting of the underlying policy and the attached service-of-suit clause did not produce a conflict or give the service-of-suit clause primacy.
5. Washington State law led to the same result. The agreed principles required construction from the objectively manifested intention of the parties, with ambiguity resolved in favour of the insured. There was no true ambiguity. Any Washington policy adverse to arbitration did not alter what the parties had agreed, particularly since Weyerhaeuser accepted that some disputes would be arbitrated.

First-instance decision. No prior appellate decision is stated in the judgment.