Aspen Underwriting Ltd and others v Credit Europe Bank NV

An assignee of contractual rights does not become a party to the contract. It must comply with conditions governing an assigned right when it asserts that right through legal proceedings, but merely receiving payment without dispute does not bind it to the contract’s jurisdiction clause.

Claims founded substantially on an insurance policy are matters relating to insurance. A person falling within the express categories protected by section 3 of the Brussels Regulation Recast, including a beneficiary, receives that protection regardless of its relative economic strength. Article 14 therefore requires an insurer to sue such a defendant in the courts of the member state where the defendant is domiciled.

The insurers paid US$22m following the loss of an insured vessel. The respondent bank, a Netherlands-domiciled mortgagee, assignee and loss payee, authorised payment through the owners’ broker and ultimately received most of the proceeds. After another court found that the vessel had been deliberately sunk, the insurers sought rescission, restitution and damages against the owners, managers and bank.

Teare J held in [2017] EWHC 1904 (Comm) and [2017] EWHC 3107 (Comm) that the English court had jurisdiction over specified misrepresentation claims but not the restitution claims. The Court of Appeal affirmed those decisions in [2018] EWCA Civ 2590.

The Supreme Court considered whether the bank was bound by the policy’s English jurisdiction clause, whether the claims were matters relating to insurance, and whether a commercially sophisticated bank could invoke the protection of section 3 of the Brussels Regulation Recast.

1. The insurers’ appeal was dismissed and the bank’s appeal was allowed. Lord Hodge, with whom all six other Justices agreed, declared that the High Court had no jurisdiction over the insurers’ claims against the bank.

2. An assignment transfers contractual rights but does not, without the relevant contracting party’s consent, transfer contractual obligations or make the assignee a party. The conditional-benefit principle prevents an assignee from enforcing an assigned right inconsistently with the contract’s conditions. In the case of an arbitration or jurisdiction clause, that constraint ordinarily operates when the assignee asserts the right through legal proceedings: The Jay Bola [1997] 2 Lloyd’s Rep 279 approved. The bank neither commenced proceedings nor asserted a disputed claim. Its letter merely facilitated an agreed payment and provided discharges. It was therefore not bound by the English jurisdiction clause under article 15 or article 25 of the Brussels Regulation Recast.

3. The insurers’ claims were matters relating to insurance within section 3. That expression is broader than “matters relating to a contract” in article 7(1), and section 3 protects beneficiaries and injured parties who need not be parties to the insurance contract. In substance, the claims depended on whether the vessel was lost by an insured peril or through wilful misconduct. Even if the contractual test discussed in Brogsitter applied, it would be met because the alleged insurance fraud necessarily entailed breach of the insurance contract.

4. Article 14 contains no implied exception for a policyholder, insured or beneficiary that is commercially powerful or experienced. Recital (18) explains the legislative policy but cannot qualify the article’s unqualified language. The protected categories were selected because their members are generally weaker parties. Legal certainty and predictability preclude a case-by-case comparison of economic strength. The weaker-party criterion is relevant when deciding whether protection should be extended by analogy to a person outside the specified categories, not when determining the entitlement of someone expressly included.

5. The bank, as named loss payee, was a beneficiary of the policy. Article 14 consequently required the insurers to sue it in the Netherlands, where it was domiciled. The insurers could not rely on article 7(2), and the separate question whether unjust-enrichment claims fall within that article did not arise.

1. United Kingdom Supreme Court: In [2020] UKSC 11, dismissed the insurers’ appeal, allowed the bank’s appeal and declared that the High Court lacked jurisdiction.
2. Court of Appeal: In [2018] EWCA Civ 2590, reported at [2019] 1 Lloyd’s Rep 221, affirmed Teare J’s jurisdiction decisions.
3. High Court: In [2017] EWHC 1904 (Comm), Teare J accepted jurisdiction over the tortious misrepresentation claims but rejected jurisdiction over the restitution claims and under the jurisdiction clauses. In [2017] EWHC 3107 (Comm), he accepted jurisdiction over the statutory misrepresentation claim.