UK: Choice Of English Law And The Forum Conveniens Test

Last Updated: 30 March 2011
Article by Anthony Menzies

Mujur Bakat BHD v. Uni Asia General Insurance Berhad & Ors [2011]1 Commercial Court, 18 March 2011

In launching proceedings in the English court against a party outside England, it is generally necessary for the Claimant to obtain the permission of the court to serve out of the jurisdiction. That application, by definition, must be brought before the proceedings are served on the Defendant, and hence only the Claimant is represented. However, once served, the Defendant has an opportunity to return to the court and to challenge the order for service out, seeking to have it set aside.

There are a number of alternative grounds upon which the Claimant may base an application for service out of the jurisdiction, and these are enumerated at Practice Direction 6B to Part 6 of the Civil Procedure Rules. Perhaps the most obvious ground is that the parties have expressly conferred jurisdiction upon the English court, by agreement in the policy. An English jurisdiction clause will have this effect. In some cases, however, the policy may fall short of an express choice of jurisdiction. It may, as was true in this case, identify English law as the governing law of the policy but fail to say anything at all about jurisdiction.

While a choice of English law constitutes one of the grounds for service out, the English courts have repeatedly made clear that a contractual choice of English law alone is not the same as a choice of English jurisdiction2. Consequently, an order for service out which is based purely upon a choice of English law is particularly susceptible to challenge by the Defendant. Upon hearing any such challenge, the court will need to consider whether England is clearly the most appropriate forum for the trial of the action, or whether in fact some other forum is more appropriate (the so-called "forum conveniens" test). This determination is a matter of the court's discretion, having considered the issues in the case, the location of the parties and other matters going to the practicality of the litigation, including for example the location of evidence and witnesses.

Where the dispute gives rise to some particularly difficult issues of English law, the court may well conclude that England is the appropriate forum. If it believes that the foreign court will fail to apply English law, or have doubts as to how it is to be interpreted, then it is clearly of benefit that the matter be heard in England. Where, however, the dispute is one about evidence, and that evidence is elsewhere than England, the argument in favour of English forum is much less compelling.

The present case concerned a claim by Malaysian shipowners under a hull and machinery policy issued by Malaysian insurers. The policy was expressed to be subject to the Institute Time Clauses Hulls 01/10/83, which contain a reference to "English law and practice" but which say nothing about jurisdiction. Other than the English choice of law in the Institute Clauses, the contract and dispute had no connection whatsoever with England. The vessel, which was registered in Mongolia, had grounded at Maumere, Indonesia, whilst on en route from East Timor to East Java. The policy was negotiated and signed in Malaysia, and premium designated in Malaysian Ringgits, while the documents and surveyor witnesses were all located in either Malaysia or Singapore.

Initially, it had been suggested that the defendant insurers might assert a right to avoid for misrepresentation, namely that the vessel would be classed under Bureau Veritas within three months, which in fact was not done. The court agreed that this point raised difficult and perhaps "open" questions of English law, which alone would be enough to point to England as the most appropriate forum. However, in the course of the hearing, the Defendants confirmed that the misrepresentation point was abandoned, and they undertook not to pursue it in any foreign proceedings. Absent the misrepresentation issue, what remained were three legally straightforward points, concerning alleged breach of warranty in relation to the registration of the vessel with the Mongolian registry, breach of warranty as to maintenance and management of the vessel 3, and alleged failure to sue and labour.

Since none of these issues involved novel, complex or undecided points of English law, there was no reason to conclude that the Malaysian court would not properly apply English law to the matters in dispute. Consequently, the fact that English law was the governing law of the policy was of little significance 4. Moreover, in so far as the issues in dispute called for evidence, none of that evidence was in England.

Finally, the Claimant also raised a discrete point going to the integrity of Malaysian justice. Although the parties could be confident that the English court would be impartial and free from suspicions of corruption, they argued that the same could not be said of the Malaysian court. These concerns were said to be based upon judicial comments reported in the New Straits Times in November 2008. The court noted, however, that the comments related to two retired judges, were not independently confirmed and, in any event, were counterbalanced by reported measures taken by the Malaysian Chief Justice that had, it was said, "stopped corruption". The court concluded that the article provided no justification to suggest that the parties would not receive a fair trial in Malaysia.

Result: Judgment for the Defendant insurers on forum conveniens.


1 [2011] EWHC 643 (Comm)

2 See Macsteel Commercial Holdings (Pty) Ltd v Thermasteel V (Canada) Inc [1996] CLC 1403 (CA); Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch); Novus Aviation v Onur Air [2009] 1 Lloyd's Rep 576;

3 Specifically, lack of compliance with the SOLAS (Safety of Life at Sea) Regulations and the MARPOL Convention (International Convention for the Prevention of Pollution from Ships).

4 Navigators Insurance Co v. Atlantic Methanol Production Co LLC [2004] Lloyd's Rep IR 418 considered.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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