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New
India insured a cargo of garments that was lost in overland transit,
having been shipped between Finland and Russia. New India settled the
claim and sought to exercise subrogated rights against the carrier,
Borneo Maritime Oi. As Borneo Maritime was insolvent, New India brought
proceedings in Finland against its liability insurers, TTMIA, under
the Finnish Insurance Contracts Act, which bestows upon a claimant similar
rights against the insurers of an insolvent Defendant as does the Third
Party (Rights against Insurers) Act 1930 in England.
TTMIA applied to the English Court for an anti-suit injunction restraining
the Finnish proceedings on the basis that the insurance contract between
TTMIA and Borneo Maritime contained a London arbitration clause and
was subject to English law. As New India was claiming through Borneo
Maritime, TTMIA asserted that it had to proceed in arbitration in London,
not in the Finnish Courts.
However, the Finnish Court was the court first seized of the dispute,
and under EU law (Council Regulation 44/2001 Art 27) it would normally
be the Finnish Court which should decide whether it had jurisdiction.
There is, however, an exception to this rule in the case of arbitration,contained
in Article 1.2(d) of the same EU Regulation. The Court of Appeal in
London upheld Justice Moore Bick's Commercial Court decision that the
English Court had jurisdiction to decide whether the exemption applied,
so that it was for the English Court had to consider whether the matter
should proceed by way of arbitration.
The Court therefore proceeded to consider the merits of TTMIA's claim
for an anti-suit injunction. It found that the claim by New India v
TTMIA under the Finnish Insurance Contracts Acts was in effect an attempt
to enforce the terms of the contract of insurance between Borneo Maritime
and TTMIA, its insurer. Although the Finnish Insurance Contracts Act
gave New India an independent statutory right of action directly against
Borneo Maritime's insurers, the principal right which New India had
was to enforce the terms of the insurance contract, which included the
arbitration clause. TTMIA was therefore entitled to rely on the arbitration
clause.
The Court of Appeal also found that it had jurisdiction under Section
18 of the English Arbitration Act 1996 to appoint an arbitrator in default
of New India doing so. However, despite this, the Court of Appeal set
aside the anti-suit injunction that Justice Moore Bick had granted at
first instance. In this respect, the Court found that New India was
not itself a party to the contract of insurance and so could not be
found itself to be in breach of that contract for commencing proceedings
against TTMIA in Finland. The effect of this was to leave New India
free to pursue its parallel claim against TTMIA in the Finnish Courts,
which under Finnish law it was entitled to do.
Interestingly, the outcomes of the Finnish proceedings and London arbitration
could be different. The TTMIA Rules contain a "pay to be paid"
clause in a form common to P&I clubs and expressly subject to English
law. Following the "Fanti" and the "Pardre Island"
cases, a claim under English law under the Third Party (Rights Against
Insurers) Act 1930 would fail on the basis that the insured, Borneo
Maritime, had not in fact paid the claims in question. It is, however,
undecided whether the "pay to be paid" clause would operate
in the same way to defeat the claim brought in Finland directly against
the insurers of an insolvent company under the Finnish Insurance Contracts
Act.
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