Al Mana Lifestyle Trading LLC & Ors v United Fidelity Insurance Company PSC & Ors

A clause making law and jurisdiction accord with the country of issue, followed by an English jurisdiction provision introduced by otherwise, ordinarily establishes a primary local forum with an English fallback. The fallback applies where the local forum is unavailable, including where it does not or would not accept jurisdiction. It does not give a claimant a free choice merely because England is preferred. The choice of local law and practices strongly supports mandatory local jurisdiction. Commercial convenience, a possible neutral venue and the rarity of the fallback do not justify a different construction. Where the local courts accept jurisdiction, the English court has no jurisdiction under the clause.

The claimants, entities within the Al Mana Group, brought claims for business interruption losses under 17 substantially identical insurance policies issued in the United Arab Emirates, Qatar and Kuwait. They served the claim form out of the jurisdiction, relying on an Applicable Law and Jurisdiction clause.

Mrs Justice Cockerill held that the clause gave a non-exclusive choice between the local courts and England and Wales: [2022] EWHC 2029 (Comm). The defendants appealed. The central issue was whether the local jurisdiction was primary and mandatory, with England available only if the local court was unavailable, or whether the clause conferred a free choice of forum.

By a majority, Males LJ and Nugee LJ allowed the appeal. Andrews LJ dissented. The English court had no jurisdiction to try the claims and service of the claim form was set aside.

1. Construction. The clause had to be read as a whole and from the perspective of a reasonable policyholder, taking account of ordinary meaning, context and commercial common sense. An initial impression could be important, but further analysis remained necessary. The approach was consistent with Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1.
2. Meaning of the first two sentences. The first sentence dealt together with local law, local practices and local jurisdiction. In that context, in accordance with was mandatory. The selection of the local law was a powerful indication that the local courts were intended to have mandatory jurisdiction, since a court is normally the best forum for applying its own law. The reasoning in Hin-Pro International Logistics Ltd v Compania Sud Americana de Vapores [2015] EWCA Civ 401 and AIG Europe SA v John Wood Group Plc [2022] EWCA Civ 781 supported that conclusion.
3. Fallback jurisdiction. In this clause, otherwise introduced a fallback rather than an alternative choice. It meant that England and Wales became available if the local court was unavailable, which in practice meant that it did not or would not accept jurisdiction. It did not mean that a claimant could choose England because it preferred that forum. The possible practical advantages of a single neutral forum could not overcome the wording. Nor did the possibility that the fallback might rarely be needed make it otiose.
4. Application and further points. It was common ground that the UAE, Qatari and Kuwaiti courts would accept jurisdiction. The third sentence was a genuine jurisdiction provision for claims under the liability section, extending the relevant jurisdiction worldwide except for the USA and Canada, but it did not affect the claims in issue. The claimants’ alternative construction, based on whether local jurisdiction was mandatory under local law, had no sufficient textual basis and would create unnecessary disputes. Andrews LJ considered that otherwise conferred a true choice of forum and that commercial common sense supported the High Court’s construction.

• Court of Appeal (Civil Division): [2023] EWCA Civ 61. Appeal allowed by majority; Andrews LJ dissented.
• High Court of Justice, Commercial Court: Mrs Justice Cockerill, [2022] EWHC 2029 (Comm). The clause was construed as conferring a non-exclusive choice between the local courts and England and Wales.