DASSAULT AVIATION SA v MITSUI SUMITOMO INSURANCE CO LTD

A general prohibition on assignment or transfer is not subject to a broad rule excluding every transfer occurring by operation of law. The critical distinction is between transfers genuinely outside the transferring party’s control and transfers resulting from voluntary or consented acts. The contractual wording, commercial purpose, factual matrix and commercial common sense must be considered together. Broad wording covering assignment or transfer to any third party, for any reason, may extend to an insurer’s statutory transfer of rights where the insured could have avoided that transfer by choosing not to insure, selecting different governing law, excluding statutory subrogation, or declining to claim. Insurance context alone does not justify implying an exception or overriding clear contractual language.

Dassault applied under section 67 of the Arbitration Act 1996 to set aside or vary a majority partial award on jurisdiction. The arbitral tribunal had held that it had jurisdiction over Mitsui Sumitomo Insurance’s claim against Dassault.

The underlying sale contract was governed by English law and contained a broad prohibition on assignment or transfer without consent. After MBA obtained insurance governed by Japanese law and received payment for losses arising from late delivery, Japanese statutory provisions transferred the relevant rights to MSI. The central issue was whether that transfer was caught by the contractual prohibition, so that MSI could not enforce the arbitration agreement.

1. The application succeeded. The tribunal lacked substantive jurisdiction over the dispute between Dassault and MSI, subject potentially to consequential orders. The partial award was to be varied accordingly.
2. The authorities did not establish a general rule that transfers described as occurring by operation of law fall outside anti-assignment clauses. They arose mainly in particular bankruptcy, liquidation and lease contexts. Their consistent feature was the distinction between voluntary transfers and transfers genuinely made without the transferring party’s consent or control.
3. The appropriate inquiry is whether the transfer was truly outside the voluntary control of the transferring party. Voluntariness is not confined to immediate free action. A transfer may be caught where it results from acts which the party chose to undertake and could have avoided. Any relevant taint of voluntariness may suffice, subject to the wording and context of the particular clause.
4. Article 15 was deliberately broad. It prohibited assignment or transfer, in whole or in part, to any third party, for any reason whatsoever, rendered such a transaction void, and contained only limited express exceptions. The reference to a transfer “by” a party required meaningful party involvement, but did not confine the clause to the immediate legal mechanism of transfer.
5. MBA could have avoided the transfer by declining insurance, choosing a different governing law, excluding the operation of Article 25 of the Japanese Insurance Law, or declining to claim under the policy. The statutory transfer was therefore voluntary in the relevant sense and fell within Article 15.
6. The commercial context did not justify an insurance exception. Subrogation under English law was a relevant factual-matrix consideration, but it did not determine the construction of the clause and did not establish that all insurer claims must be permitted. Any broader exception would depend on public policy and would contradict the agreed wording.

The judgment concerned a section 67 challenge to a partial arbitral award dated 29 March 2022. The tribunal had, by majority, dismissed Dassault’s jurisdictional objection. The High Court allowed the challenge and held that the tribunal had no jurisdiction over the referred dispute, save potentially as regards consequential orders.