Griffin Underwriting v Varouxakis ("Free Goddess"): Judge holds director of insured out of time to challenge jurisdiction/considers whether insurer's claim can be brought In England
The claimant insured a shipowner under a policy of kidnap and ransom insurance for a 30 day voyage. While carrying a cargo from Egypt to Thailand, the ship was seized by pirates. The claimant insurer paid out under the policy (including ransom payments) and the vessel continued to Oman. The insurer and insured then entered into a settlement agreement, which provided that the insurer was now subrogated to the rights of the insured and that the insured would account to the insurer for any recoveries it made.
When the vessel failed to continue to Thailand to discharge the cargo, the insurer claims that it lost its rights to recover general average, on a subrogated basis, against the cargo interests ("the lost general average claim"). Furthermore, the insurer alleges that amounts which were received by the insured from the vessel's P&I club and cargo interests were not accounted to the insurer ("the accounting claim").
Since the insured appeared to no longer have any assets, the insurer commenced proceedings in England against the sole director of the insured for inducing breaches of the settlement agreement by the insured. The defendant director filed an acknowledgment of service indicating an intention to contest jurisdiction. He had 28 days to then challenge jurisdiction, but one day before the expiry of that deadline, the parties agreed a moratorium, terminable on 48 hours' notice. That moratorium was terminated by the insurer some 6 months later. Males J has now held as follows:
(1) PD58 para 7 requires parties who agree an extension of time in Commercial Court proceedings (even if that extension is for up to 28 days, in accordance with the "buffer rule" of CPR r3.8) to notify the court in writing, giving brief written reasons for the agreed variation. The judge said that "I would hold that the failure to notify the court meant that the moratorium was not effective to extend the time for the defendant to challenge jurisdiction". (The judge appears to have left open the question whether the moratorium was effective to extend time, but only for 28 days – on the facts, the challenge to jurisdiction would still have been out of time). The judge refused to grant relief from sanctions and accordingly, the defendant's challenge to jurisdiction had been brought too late.
(2) Nevertheless, the judge went on to consider the merits of the jurisdictional challenge, had the challenge been brought in time. He concluded as follows:
(a) In relation to the lost general average claim, the damage was suffered by the insurer when its contractual rights (to receive general average contributions from the cargo interests) were lost, and not when there was subsequent non-payment of those contributions. Accordingly, the damage was suffered in Oman, where the voyage was abandoned. Accordingly, damage had not occurred in England.
(b) In relation to the accounting claim, the damage had occurred in England. The settlement agreement had provided that the insured had to account to the insurer by paying recovered monies to the average adjusters. Prior caselaw has demonstrated that for the purpose of a claim under article 7(2) of the recast Brussels Regulation 1215/2012 (which enables a claimant to sue in the courts for the place where it has suffered damage even if the event which gave rise to the damage occurred elsewhere), what matters is where the payment would in fact have been made, rather than whether there was an obligation to make payment in that place. Here, the claim that the defendant had procured the non-payment of money which ought to have been paid to the average adjusters in London meant that the English courts had jurisdiction.
(c) This was not a "matter relating to insurance", such that Article 14 of the recast Regulation would have applied. Not all claims brought by a claimant who happens to be an insurer fall within Article 14. The test is whether "the nature of the claim made by the insurers was so closely connected with the question of liability under the contract of insurance that it could fairly and sensibly be said that the subject matter of the claim related to insurance or, in other words, whether consideration of the insurance contract was indispensable to the determination of the claim". That was not the case here, and a consideration of the insurance policy would not be required to determine the claim.
Finally, since the claim did not fall within Article 14, it was unnecessary for the judge to consider whether the defendant here was a "weaker party". Last week's decision in Aspen Underwriting v Credit Europe Bank had held that the defendant bank could not rely on Article 14 on this basis. In this case, the insurer had raised the argument that the defendant could not rely on Article 14 because he is a member of a class of "substantial shipowners", but the judge did not need to consider that argument.
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