Konkola Copper Mines and ALH Limited SA
V Coromin Limited and Others

[2006] EWHC1093 (COMM)
May 2006

A party ought to have appreciated the existence of the risk of inconsistent decisions in different courts when entering into separate exclusive jurisdiction clauses when seeking insurance cover. It should not therefore be open to a party to justify proceedings in England on the basis of potential inconsistency.

Konkola Copper Mines ("KCM"), a mining company in Zambia, claimed against its insurers, Coromin, in respect of a mineshaft collapse, under a policy containing an English jurisdiction and law clause. KCM also asserted that there was dual cover under a policy issued by local Zambian insurers, subject to Zambian law and jurisdiction. However, the Zambian insurers ("the local insurers") argued that they were in fact only on risk as to 10%, the other 90% being with Coromin. There were other disputes between them, with which we are not here concerned.

KCM commenced proceedings in the English court against Coromin and sought to join the local insurers on the basis that they were "necessary and proper parties" to the action (pursuant to CPR6.20 (3)). The local insurers sought to set aside service, relying on the Zambian jurisdiction clause in their policy, but before the issue was heard entered into an agreement with KCM that KCM would bring proceedings in Zambia and the English proceedings would be stayed on condition that the local insurers would accept they were 100% primary insurers of KCM.

In breach of that agreement the local insurers, in the Zambian action, did not accept that they were 100% primary insurers of KCM. The English court, at KCM's instigation, therefore lifted the stay on the ground of the local insurers' breach of the condition. Once the stay had been lifted, the undecided application to set aside the proceedings against the local insurers came to be heard.

The local insurers argued that the words in the cover note "local law and jurisdiction clause" were to be construed as an exclusive jurisdiction clause, with which the Commercial Court agreed. However, it is possible to depart even from an exclusive jurisdiction clause if there are "strong cause or strong reasons". Local insurers argued that none existed - that the parties to the Zambia policy were in Zambia, Zambian law applied, the issues had their "centre of gravity" in Zambia and the witnesses were mostly in Zambia.

Against this KMC pointed out that only if the Zambian insurers were joined to the English action would all of the parties be bound by one decision. If there were separate proceedings in Zambia, there could be inconsistent results - for example as to whether local insurers were 100% primary insurers and how the double insurance provisions should be applied. KMC argued that either way Zambian law issues would have to be decided in the English Coromin action and fact witnesses would have to travel to London, but that it was better they only give evidence at one trial.

The court, however, placed most weight on the fact that the Zambian jurisdiction clause had been freely negotiated, as had the English jurisdiction clause in the Coromin contract. It would have been obvious when entering into these policies that there was a possibility of proceeding against the respective insurers in the separate jurisdictions. Accordingly, it should not be open to a party to justify proceedings in England in the face of a foreign jurisdiction clause, on the grounds of the risk of inconsistent decisions of different courts, when that party ought to have appreciated the existence of that risk when entering into the exclusive jurisdiction clauses in the first place. KMC was not to be permitted to avoid the foreseeable consequences of the contractual structure which it had itself created: