| CONFLICT OF LAWS — Contract — Arbitration agreement — Liability insurance contracts in Bermuda form governed by New York law with London arbitration clause — Claims under contract avoided by insurers — Partial arbitration award challenged by defendant on basis of manifest disregard of New York law with threat of suit in US court — Whether proper law of arbitration agreement English or New York law — Whether challenge to award permissible only in English courts — Whether anti-suit injunction to be granted
C v D [2007] EWCA Civ 1282
CA (Sir Anthony Clarke MR, Longmore and Jacob LJJ: 5 December 2007
Parties to a liability insurance contract in the Bermuda form providing for the contract to be governed by New York law but with arbitration in London were to be taken as having agreed, by choosing London as the seat of the arbitration, that proceedings on the arbitration award were only those permitted by English law.
The Court of Appeal so held, dismissing the appeal (save as to costs) of the defendant, D, against the decision of Cooke J on 28 June 2007 [2007] 2 All ER (Comm) 557 to grant to the claimant, C, a final anti-suit injunction to prevent the defendant from challenging the award in the US courts.
LONGMORE LJ said that the appeal was, so far as his Lordship was aware, the first time that the Court of Appeal had considered the Bermuda form which had emerged in the last 15 years or so. Its striking feature was that it required the parties to arbitrate in London but provided for the proper law of the insurance contract to be the internal laws of New York. No doubt that represented a balancing of the conflicting interests of the insured on the one hand and the liability insurers on the other. The defendant insured the claimant for three years. The claimant paid out on claims and made demand for payment which the defendant refused. The claimant initiated arbitration. The defendant raised four defences. The tribunal heard the first three and deferred the fourth. The tribunal issued a partial award, ruling that the claimant succeeded in full on its claim and was entitled to recover. The defendant intimated its intention to apply to a US federal court claiming that the arbitrators had manifestly disregarded New York law. The claimant sought and was granted an anti-suit injunction. The judge held that the choice of England as the seat of the arbitration was determinative in as much as the parties had, by that agreement, expressly (or perhaps impliedly) agreed that any proceedings seeking to attack or set aside the partial award would only be those permitted by English law. That effectively meant that the award could only be attacked by reference to ss 67 and 68 of the Arbitration Act 1996 (lack of jurisdiction and serious irregularity), the right of appeal under s 69 on points of law having been excluded by agreement. It was not therefore permissible for the defendant to bring any proceedings in New York or elsewhere in any respect permitted by the law of that place. His Lordship said that the central point at issue was whether or not, by choosing London as the seat of the arbitration, the parties had to be taken to have agreed that proceedings on the award should be only those permitted by English law. They had to be taken to have so agreed for the reasons given by the judge. The whole purpose of the balance achieved by the Bermuda form (English arbitration but applying New York law to issues arising under the policy) was that judicial remedies in respect of the award should be permitted by English law and only those so permitted. Mr Hirst for D could not say that English judicial remedies under ss 67 and 68 were not permitted; he was reduced to saying that New York judicial remedies were also permitted. That would be a recipe for litigation and confusion which could not have been intended by the parties. It followed that a choice of seat for the arbitration had to be the choice of forum for remedies seeking to attack the award. The judge was right to grant a final injunction.
SIR ANTHONY CLARKE MR and JACOB LJ agreed. |
