UK: (Re)Insurance Weekly Update - 23rd October 2012

Last Updated: 29 October 2012
Article by Nigel Brook

Amlin v Oriental Assurance

Application for a stay of proceedings brought by reinsurers/judge's discretion

In 2008, a passenger cargo vessel capsized off the coast of the Philippines after it sailed into the midst of a typhoon. The cargo owners sued the shipowner and brought a direct claim against the shipowner's Philippine cargo liability insurer too. The insurer had entered into a reinsurance contract with English reinsurers and both policies contained a Typhoon Warranty (which warranted that the vessel would not sail where there had been a typhoon warning in the relevant area). The reinsurance contract was subject to the exclusive jurisdiction of England and Wales (and was governed by English law). The English reinsurers commenced proceedings in England seeking a declaration that they were not liable in view of the Typhoon Warranty in the insurance and reinsurance contracts. The reinsured sought a stay of the English proceedings pending the outcome of the Philippine actions. At first instance, Smith J dismissed that application and the reinsured appealed.

The Court of Appeal has now unanimously dismissed that appeal (although Tomlinson LJ and Rimer LJ did so "with little enthusiasm". That was because they felt the reinsured was being forced to adopt a stance in the English proceedings (ie that there had been no breach of the warranty) when that stance might undermine its credibility in the Philippine proceedings (where they were seeking to argue that there had been a breach of the warranty)).

The Court of Appeal held that the judge had used the correct test when exercising his discretion to dismiss the application for a stay. Reinsurance was no exception to the general rule that a stay should be granted only in "rare and compelling" cases. The follow the settlements clause found in the reinsurance policy here did not negate or relevantly impinge on that general rule.

The presence of an exclusive English jurisdiction clause was just one factor which the judge should bear in mind when exercising his discretion regarding a stay. A long delay in the foreign proceedings (here, it was estimated that it might take up to 10 years to reach judgment in the Philippines) could also be a consideration militating against a stay (especially since the projected trial date in England was June 2013). The judge had also correctly taken into account the risk of inconsistent decisions in the English and the Philippine courts.

Tomlinson LJ also noted that "If this were proportional reinsurance it would not be immediately apparent that reinsurers were following the fortunes of their reinsured. As it is, it is excess of loss reinsurance and perhaps the considerations are different. However that may be, we are not ourselves market professionals, we have no evidence of market practice and we should be very wary of pronouncing on what is and what is not appropriate conduct in the market".

EUI Limited v Bristol Alliance

Whether property insurer could bring subrogated claim against motor insurer under the Road Traffic Act 1988 following deliberate act of driver

The first instance decision in this case was reported in Weekly Update 25/11. A driver deliberately drove his car into a department store (in an apparent suicide bid). The property insurers paid a claim under their policy and then sought to bring a subrogated claim against the driver. However, the driver's policy did not cover damage arising out of his deliberate acts. The property insurers were unable to claim under the scheme set up by the Motor Insurers' Bureau because it does not cover the victims of property damage where such damage is insured by the victim's own insurer who then seeks to bring a subrogated claim.

Section 151 of the Road Traffic Act 1988 imposes on motor insurers a duty to satisfy a judgment against their insured provided that certain pre-conditions are met. These include the following pre-condition: that the liability to which the judgment relates "is covered by the terms of the policy.... to which the certificate relates". The motor insurers sought to argue that this condition was not met because the driver's liability was not covered under their policy. The property insurers sought to rely on the words "to which the certificate relates" i.e. the certificate relates to a policy that is certified as satisfying the requirements of the relevant law applicable in Great Britain and therefore must include a liability to compensate third parties for damage caused by the assured even when engaged in a criminal or deliberate act.

At first instance, Tugendhat J held that, although the insured driver could not take the benefit of the policy where his act was deliberate, an innocent third party (or its insurers bringing a subrogated claim) could. The motor insurers appealed and the Court of Appeal has now unanimously allowed that appeal. Ward LJ, giving the leading judgment, held that the liability had to be covered by the policy and "the certificate of insurance does not trump the terms of the policy". The additional words at the end of the pre-condition did not make any difference - their only purpose is to link delivery of a certificate of insurance (another pre-condition in section 151) to the very policy which covers the insured's liability. Nor did European jurisprudence require a different construction to be given to section 151.

It is worth noting, however, that the property owner could himself have claimed under the MIB scheme - it is only because this was a subrogated claim by his property insurers that a claim could not be made under the scheme.

Patterson v MoD

The meaning of "disease" in CPR r45 - of potential interest to employers' liability insurers

The claimant soldier sustained an injury known as non-freezing cold injury ("NFCI") whilst undertaking a week of cold weather survival training. His claim against the Ministry of Defence was settled but the issue in this case was the recoverability of the claimant's solicitors' success fee. If NFCI was categorised as "bodily injury" a success fee of 25% would be recoverable in this case under Section IV of CPR r45. However, if it was categorised as a "disease", 62.5% would be recoverable instead under Section V of CPR r45 (both sections applying to employers' liability claims). At first instance, it was held that NFCI was not a disease and the claimant appealed.

That appeal has now been dismissed. Males J noted that there is no definition of "disease" in the CPR and held that relatively little assistance could be derived from dictionary definitions or from prior caselaw where the word has been considered in other contexts.

Instead, he held that the word should be given its natural and ordinary meaning. The claimant had conceded that as a matter of ordinary language, NFCI would not be regarded as a disease. In any event, the judge found the defendant's arguments compelling. NFCI is not caused or contributed to by any virus, bacteria, noxious agent or parasite. It would be stretching the meaning of "disease" too far to apply it to conditions resulting from exposure to weather conditions (eg frostbite or sunstroke). The factors pointing to a different conclusion were insufficient to overcome the defendant's arguments. Accordingly the claimant's solicitors were not entitled to a success fee calculated in accordance with Section V.

COMMENT: Note, though, that from 1 April 2013, the recovery of all success fees (as well as ATE premiums) will be abolished, except for mesothelioma claims (pending further review) and in insolvency proceedings. Any success fee will have to be paid by the CFA-funded party.

Parking Eye v Somerfield

Court of Appeal considers illegality defence

The appellant entered into an agreement with the respondent pursuant to which the respondent monitored and controlled the appellant's car parks. It was agreed that the respondent could send out up to four letters demanding a "fine". The first two demand letters which it customarily sent out did not contain any false representations - however, the third letter did. After the appellant terminated the contract early, the respondent claimed a repudiatory breach and sought damages. At first instance, the judge agreed that there had been a repudiatory breach but also found that the respondent had been guilty of the tort of deceit when it sent out the third letter. Nevertheless, he rejected the appellant's illegality defence (ie that the contract should not be enforceable because of the respondent's unlawful performance of it). The Court of Appeal has now unanimously rejected the appeal from that decision.

It was recognised that the illegality defence is "notoriously knotty territory". The Court of Appeal noted that in some circumstances a contract that does not require the commission of any unlawful act, and which was not entered into to facilitate an unlawful purpose, is nevertheless performed in an unlawful way. However, the effect that this unlawful performance has on the parties' contractual rights is unclear. On the facts of this particular case, the contact involved continuous performance and much of that performance would have been lawful, given that most motorists never received the offending third letter. Furthermore, illegal performance was not an object of the contract and it was not necessary to perform the contract unlawfully. It was held that it would be disproportionate and "unduly sanctimonious" to hold that the respondent could not recover damages because of its actions: "the form of the letters was too far removed from the basic operation of the contract to taint the latter".

Toulson LJ added that he thought that the following factors should be taken into account when considering the applicability of an illegality defence: (1) the object and intent of the claimant; (2) the centrality and gravity of the illegality; and (3) the nature of the illegality.

Phaestos & Anor v Ho

Whether court had jurisdiction to order delivery up to preserve evidence

The claimant obtained an order for the imaging of any relevant computer. It subsequently applied for an order for (inter alia) the preservation and delivery up of certain documents. The issue was whether the court could (and should) make such an order.

Although there is no express interim remedy under CPR r25 for the preservation and inspection of evidence (rather than property), the claimant sought to argue that Section 7 of the Civil Procedure Act 1997 allows the court to make an order to preserve evidence. Although that argument was accepted by the judge, he did not believe that the order was necessary or proportionate in the circumstances of this case.

He also accepted the argument that it would be wrong to treat his earlier order as if the images disclosed under that order were disclosable documents under CPR r31 and so it would be wrong the characterise the claimant's application as seeking an inspection of disclosed documents.

OSJC Tnk-BP v Lazurenko

Whether grant of injunction governed by applicable law or law of forum

In this case, the applicable law was Russian law, although the case was being heard in England. One issue which arose was whether an injunction (to restrain disclosure of confidential information) could be granted even though such an injunction would not be available under Russian law. Traditionally, the English courts have regarded the availability of equitable remedies as a matter for the courts hearing a case. However, since the Rome Convention it has been unclear whether the availability of a remedy such as an injunction falls to be determined by the law of the forum or the applicable law. It has been suggested by Chitty that it should be the applicable law and hence if an injunction is not available under Russian law, the English court would have no power to grant one either. Halsbury's has expressed doubt about that conclusion though. The issue was raised in this case, but the Chancellor of the High Court declined to decide it. He instead discharged an injunction against the defendant on another ground (but based on the doubt as to the availability of an injunction).

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Nigel Brook
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.