HEADLINE SUMMARY

The English Commercial Court has confirmed its jurisdiction to hear claims for COVID-related business interruption ("BI") losses under multi-risk insurance policies issued in the Middle East. In doing so it emphasised the Commercial Court's expertise in relation to dealing with both COVID-related BI losses, and foreign law.

AL MANA LIFESTYLE TRADING LLC & ORS V UNITED FIDELITY INSURANCE COMPANY PSC & ORS. [2022] EWHC 2049 (COMM)

BACKGROUND

The claimants were all part of the Al Mana Group, a group including businesses in the food, beverage and retail sectors operating in the Middle East and Gulf region.

On 21 May 2021, the claimants commenced proceedings in the English courts seeking an indemnity for c. US $40 million in COVID-related BI losses. The claim was made pursuant to a suite of seventeen multi-risk insurance policies (the "Policies") which were underwritten by the defendants (insurance companies with headquarters in the United Arab Emirates, Qatar and Kuwait respectively). Of the Policies, 15 were issued in the UAE, one in Qatar, and one in Kuwait.

The Schedule in each of the Policies contained a jurisdiction clause which read.

"APPLICABLE LAW AND JURISDICTION:

i) In accordance with the jurisdiction, local laws and practises of the country in which the policy is issued.

ii) Otherwise England and Wales UK jurisdiction shall be applied, iii) Under liability jurisdiction will be extended worldwide excluding the USA and Canada." (the "Jurisdiction Clause").

Relying on the jurisdiction clause giving jurisdiction to the courts of England and Wales, the claimants did not seek the court's permission to serve the Claim Form out of this jurisdiction.

The defendants applied to challenge the jurisdiction of the English court and set aside service of the Claim Form, which they contended was wrongly served without permission. Alternatively, they invited the court to decline jurisdiction to hear the claimants' claims.

KEY LEGAL POINTS

The defendants argued that the jurisdiction clause was an exclusive jurisdiction clause, providing that claims should be brought first in the courts of the countries where each of the Policies was issued; the English court would only have jurisdiction if the local court did not, for any reason, accept jurisdiction.

The defendants argued that:

• a) In relation to the first part of the jurisdiction clause, that the natural purpose of the words "in accordance with" is that they are imperative and directory and should be read as equivalent to "subject to";
• b) In relation to the second part of the jurisdiction clause, that "Otherwise" is similar to the words "If not withstanding the foregoing", as previously considered by the Court of Appeal in Hin-Pro (International Logistics v CSAV [2015] 1 CLC 901);
• c) It would not make sense for the "Otherwise" wording in the second part of the clause to supersede the first part of the clause, as doing so would provide for the English courts to have non-exclusive jurisdiction, which is uncommercial.
• d) It makes obvious sense for law and jurisdiction to be a mandatory matching pair.

Alternatively, in the event that the clause was decided to be non-exclusive, the defendants submitted that the courts of England and Wales should decline jurisdiction on the grounds of forum non conveniens. In this regard the defendants submitted that none of the claimants or defendants were located in England, none of the losses were sustained in England, and the Policies were governed by the local laws of the countries they were issued in.

The claimants submitted that the "obvious and natural meaning" of the jurisdiction clause was that parties may bring proceedings in the country where the policies were issued or, "otherwise" (meaning alternatively) in the courts of England and Wales. This approach would, the claimants argued, reflect the London market scheme and "makes good commercial sense against the commercial background in which each of the Policies were issued".

On the issue of forum non conveniens, the claimants submitted that very good reasons are required not to give effect to a non-exclusive jurisdiction agreement. In addition, they argued that England is a convenient neutral forum with expertise to deal with the claims - and that the alternative would be the fragmentation of proceedings across the Middle East.

DECISION

Non- exclusive jurisdiction

Cockerill J found in favour of the claimants: they were entitled to bring their claim in the courts of England and Wales. In particular, it was held that the jurisdiction clause was not exclusive. It allowed the parties to bring proceedings in either the jurisdiction where the policy was issued, or in the courts of England and Wales. Cockerill J found that this struck the right balance of "wording and commercialities of the clause in the context of the wider factual matrix".

Cockerill J disagreed with the defendants' contention that the words "In accordance with" are imperative and directory (although those words might be) and agreed with the claimants that this was an overreach based on "wishful thinking".

She established that the crux of the dispute was the word "Otherwise". Cockerill J noted that its use in conjunction with the word "shall" suggested a mandatory formulation. The defendants claimed that "otherwise" is not synonymous with "Or" or "Alternatively" as the claimants suggested, and instead means "If not withstanding the foregoing"; Cockerill J disagreed, saying that there was "no semantic reason" why this would be the case. Cockerill J reasoned that the clause undoubtedly provides for some form of alternative to the local courts' jurisdiction. Indeed, given that there was little chance of the local courts declining jurisdiction, it was noted that finding otherwise would render the "Otherwise" wording redundant.

On the "commercialities of the clause", the judge saw force in the claimants' point that the policies were issued in conjunction with each other as part of a suite to provide comprehensive coverage for the claimants’ operations in a number of jurisdictions, which was also reinsured in the international market. She also indicated where claims could arise across jurisdictions, it was sensible for there to be an option for disputes to be determined in a single neutral venue. She noted that the English Commercial Court "is particularly well-versed in the issues relating to claims for indemnity for COVID-related business interruption losses. It is also highly experienced in dealing with issues of foreign law, when they arise."

Forum non conveniens

Cockerill J rejected the defendants' arguments that England was not the appropriate forum for the dispute (or forum non conveniens). She reasoned that a non-exclusive jurisdiction agreement creates a strong prima facie case that a chosen forum is a forum conveniens. A party should not argue that a chosen forum is an inconvenient one by reference to matters that were foreseeable at the time of the contract: in this instance therefore, the ordinary “forum non conveniens” factors had no role to play. The defendants therefore had to show "strong reasons" why England is forum non conveniens, and they did not discharge that "heavy burden".

PRACTICAL IMPLICATIONS

The wording of this jurisdiction clause is unusual, and – as noted in the judgment – "not felicitous". However, the discussion regarding the meaning of specific words including "In accordance with" and "otherwise" might have broader applicability.

In addition, the judgment is illuminating as to the approach the English court will take when reviewing a policy wording. Cockerill J suggested that the English courts would take a "user friendly" approach to interpretation of policy wordings (while remaining true to "the tenets and more granular modes of testing established by caselaw"). She indicated that "microscopic analysis" is not useful and that there is "little to be gained" from a focus on the punctuation used in a clause when interpreting its meaning.

Policyholders should pay attention to nuances in drafting when negotiating their policy wordings. In addition, they should pay close attention to any provisions dealing with jurisdiction before commencing proceedings in a particular forum (in particular if limitation is or may be an issue).