Dassault Aviation SA v Mitsui Sumitomo Insurance Co Ltd

A non-assignment clause which prohibits assignment or transfer “by any Party” applies to a transfer effected by a contracting party. It does not invalidate a transfer effected by statute by operation of law. The material question is whether the party made the transfer, rather than whether its voluntary commercial acts led to the statutory transfer.

Contractual interpretation is a unitary exercise. However, where the contractual language has one clear objective meaning, there is no competing construction for which wider context or commercial consequences must be used to choose between alternatives.

Dassault agreed to sell aircraft to Mitsui Bussan Aerospace Co Ltd (MBA), which was to resell them to the Japanese Coast Guard. MBA insured its liability for delayed delivery with MSI. Following late delivery, MSI paid the Coast Guard and, under article 25 of the Japanese Insurance Act (Act No. 56 of 2008), MBA’s claim against Dassault transferred to MSI by operation of law.

The majority of an ICC arbitral tribunal held that article 15 of the sale contract, a non-assignment clause, did not require Dassault’s consent to that transfer and that the tribunal had jurisdiction over MSI’s direct claim. Cockerill J allowed Dassault’s jurisdiction appeal under section 67 of the Arbitration Act 1996: [2022] EWHC 3287 (Comm).

MSI appealed on the central issue whether a statutory transfer was a transfer “by any Party” within article 15.

1. Appeal allowed. The court set aside the High Court’s ruling and reinstated the arbitral award. Article 15 did not invalidate the transfer of MBA’s claim to MSI under article 25 of the Japanese Insurance Act (Act No. 56 of 2008).

2. Applying the unitary approach to contractual interpretation stated in Rainy Sky SA v Kookmin Bank, [2011] UKSC 50, and Wood v Capita Insurance Services Limited, [2017] UKSC 24, the objective meaning of article 15 was clear. Its prohibition concerned an assignment or transfer made “by any Party”. It did not extend to every transfer which a party’s voluntary acts might have caused.

3. The arbitrators had unanimously determined, and Dassault did not challenge, that article 25 effected the transfer by operation of law. MBA had chosen to insure and to claim under the insurance policy, but it had not itself made the transfer. A transfer under article 35 of the insurance contract might have raised a different issue, but that was not the transfer found to have occurred.

4. The later words making “any such” assignment or transfer null and void did not enlarge the prohibition. They referred back to transfers made by a party. The old insolvency authorities, including Cohen v Popular Restaurants, [1917] KB 480, did not establish a general voluntary-versus-involuntary rule for commercial non-assignment clauses; they principally turned on the nature of the relevant insolvency.

5. Since article 15 admitted only one relevant meaning, the court did not need to use the detailed iterative comparison of rival constructions. The confidentiality provisions and the commercial context did not justify a different result. The court did not decide any issue concerning English-law subrogation.

• Court of Appeal (Civil Division) Allowed MSI’s appeal and reinstated the arbitral award.
• Commercial Court (KBD) Cockerill J allowed Dassault’s appeal under section 67 of the Arbitration Act 1996, holding that the arbitral tribunal lacked jurisdiction: [2022] EWHC 3287 (Comm).
• ICC arbitration The majority held that MSI’s claim had transferred by operation of Japanese law and that article 15 did not prevent the tribunal from determining MSI’s direct claim against Dassault.