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The
provision in a policy that it was subject to English law was (absent
an exclusive, or any, jurisdiction clause) only one factor to be taken
into account in deciding, in respect of proceedings previously commenced
in London and New York, which of them constituted the natural forum
for resolution of disputes under two overlapping insurance policies.
The English court held that the advantages of single case management
in the location of the loss, in the court which insurers had chosen
to pursue claims under under one of the policies, and the commercial
insurance arrangement between insured and insurers collectively, pointed
inexorably to New York.
Royal &
Sun Alliance ("RSA") were business interruption insurers of
Retail Brand (trading as Brooks Brothers), a Delaware Corporation under
a "Master Policy". RSA is an English company, the contract
of insurance was made in England and was expressly subject to English
law. However, it contained no provisions as to jurisdiction and accordingly
there was no contractual agreement as to which country should hear disputes
under it. The Master Policy applied where cover was not provided by
Retail Brand's Local Policy (the "Local Policy"). The Local
Policy covering Brooks Brothers' New York premises was placed with Royal
Indemnity Company ("RIC"), a subsidiary of RSA incorporated
in Delaware.
On 11 September
2001, a Brooks Brothers' store was damaged as a result of the terrorist
attack on the World Trade Center. Retail Brand claimed $13.6m under
the RIC Local Policy. RIC disputed the extent of coverage and Retail
Brand made an alternative claim under its RSA Master Policy for any
amounts not recovered from RIC.
On 26 April
2004, RIC and RSA coordinated simultaneously to issue proceedings in
New York and London respectively. In the New York proceedings, RIC sought
against Retail Brand declarations as to coverage under the Local Policy.
In the London proceedings, RSA sought against Retail Brand declarations
as to coverage under the Master Policy. Retail Brand served a Defence
and Counterclaim against RIC in the New York proceedings. Retail Brand's
position was that the disputes under both policies should be heard in
New York. Accordingly, Retail Brand applied to the New York court to
join RSA into those proceedings and applied to the English court for
a stay of the RSA London proceedings.
RSA opposed
this, contending that London was the natural forum for disputes under
the Master Policy, which covered claims that could arise worldwide and
required to be construed in a consistent manner. Langley J agreed that
the policy required to be construed in a consistent manner, but observed
that RSA had sought to achieve this by an English law clause without
the support of an exclusive, or indeed any form of, English jurisdiction
clause applicable to coverage disputes (there was a provision for arbitration
in Great Britain of any disputes over the amount to be paid when liability
was admitted, but that was not applicable to coverage issues). The Judge
also considered as minimal the relevance of English law to the actual
issues in this particular case.
Langley
J therefore found in favour of Retail Brand's submissions, which were:-
1 That
issues under both policies could be decided in one jurisdiction managed
by one court. This was more efficient and cost-effective than two
jurisdictions.
2 The two policies overlapped.
3 RIC, in concert with RSA, had sought New York jurisdiction on the
basis that New York was the location of the premises and the business
which was the subject of the claims by Retail Brand. The courts in
New York were therefore already seized of the matter at the instance
of insurers.
4 In commercial terms, RSA/RIC provided an insurance package through
the combination of the Local Policy and the Master Policy and "it
should be expected that the insured would be entitled to pursue one
claim, in one jurisdiction, to resolve its insurance claims following
one event".
These
factors, Langley J held, overwhelmingly supported New York as the natural
forum for resolution of disputes under the Master Policy. The English
proceedings were therefore stayed.
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