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The Claimants were Lloyd's underwriters. The Defendant insured was a
company incorporated in Nebraska in the United States which operated
a feed lot cattle business. A coverage dispute arose between the insurers
and insured. The insurers issued proceedings in the English Courts for
a negative declaration, following which the insured issued proceedings
in Nebraska. Consequently the issue of the appropriate jurisdiction
and law governing the dispute had to be addressed.
The parties'
choice of law and jurisdiction was stated to be "UK law and jurisdiction"
as an express provision in the slip. However, the slip incorporated
Lloyd's Form NMA 2072, in which Clause 10 read as follows:
"It
is agreed that in the event of the failure of the underwriters hereon
to pay any amount claimed to be due hereunder, the underwriters hereon,
at the request of the assured, will submit to the jurisdiction of the
Court of competent jurisdiction within the United States …"
The insurers argued on the basis of the slip that the relevant jurisdiction
was England, whereas the insured argued for the Courts of Nebraska on
the basis of its election under the service of suit clause (Clause 10)
in Form NMA 2072.
The Court
had little difficulty in deciding that the parties had meant to agree
English law and jurisdiction in the slip (as opposed to "UK law
and jurisdiction"). The Judge decided therefore that the contract
was governed by English law on the basis that it was a contract concluded
by Lloyd's brokers with Lloyd's underwriters on a Lloyd's slip and by
reference to a particular Lloyd's form, NMA 2702. The question still
remained however as to which was the dominant or preferred jurisdiction
for hearing the dispute.
Certain
Lloyd's regulations applying to the business concerned required underwriters
to submit to jurisdiction in a Court of competent jurisdiction in the
United States of America to reflect the legal requirements governing
US surplus lines business. The parties had to use a choice of jurisdiction
clause in a form that committed insurers to responding to service of
suit in any competent US Court. Witness evidence put forward by the
insurers themselves recognised that it was a legal requirement that
all surplus lines policies included a US service of suit clause in the
same or similar terms to Clause 10.
The Judge
decided therefore that there was no question of any breach of any exclusive
jurisdiction clause by either party since it was plain that the slip
reflected the parties' agreement to England as the preferred or dominant
jurisdiction, and equally plain that under Clause 10 the insured had
a contractual right, which it had exercised, to elect the jurisdiction
of a Court in Nebraska. Although the clause gave the right to the insured
to require the insurers to submit to the jurisdiction of a Court of
competent jurisdiction within the United States, it did not prevent
the insurers from bringing proceedings elsewhere.
In those
specific circumstances that choice to elect the US jurisdiction took
precedence over the general law and jurisdiction clause in the context
of forum conveniens. Given the specific triggers in the clause underwriters
were obliged to submit to the US jurisdiction notwithstanding the general
agreement to English law and jurisdiction. Ultimately the choice lay
with the insured by the agreement of the parties. This particular factor
of agreement was a highly significant factor in the context of forum
conveniens.
The insurers
had expressed their concern that the Nebraska Court was unlikely to
apply English law to the insurance contract. The Judge pointed out that
the difficulty for the Lloyd's underwriters was that they must be taken
to have known that if they agreed to allow the insured to choose a foreign
Court as one to which the insurers would have to submit, that foreign
Court might have a different view of the relevant principles of private
international law and might not apply English law as an English Court
would do. That was a risk that insurers took.
It was
possible for the Court to exercise jurisdiction concurrently with the
United States Courts, but the Court acknowledged the undesirability
of duplication of proceedings and a race to judgment, which had been
expressed in numerous decisions of higher English Courts as a situation
which should be avoided if at all possible. Therefore it was decided
that when insurers have made an express agreement to accept a foreign
Court's jurisdiction as covering the matters in issue that must take
precedence where an election has been made by the insured to require
underwriters to submit to that jurisdiction. The English proceedings
were to be stayed or dismissed accordingly on the grounds of forum conveniens.
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