Recent case is a further restatement construction of insurance policies is to be derived from the Supreme Court decision in the FCA test case.
The importance and influence of the English courts on international insurance business interruption claims was heavily emphasised by a recent case in the Commercial Court.
Moreover, the judgment in Al Mana Lifestyle Trading LLC and others v United Fidelity Insurance Company PSC and others (2022) by Justice Cockerill on July 29 illustrated why the English courts were the right venue to hear cross-border insurance disputes.
The substantive dispute concerned claims that were brought by the claimant Al Mana group of companies (and brought on a group basis for indemnities). The estimated combined value of those claims was $40m.
The claimants, the Al Mana Group, owned food and beverage businesses in the retail sectors operating in the Middle East and Gulf region. They claimed Covid-19 business interruption losses of up to $40m under a suite of different insurance policies underwritten by the defendant insurers who operated in the Gulf. The relevant polices were issued in either the United Arab Emirates, Qatar or Kuwait. The Al Mana businesses did not operate in the UK.
Al Mana commenced proceedings in 2021 on the basis the English courts had jurisdiction because the parties had contractually agreed to jurisdiction here. The defendants challenged this and also claimed the English courts should decline jurisdiction because they were not the most convenient forum to hear the parties’ dispute.
The principal issue was the construction of the following jurisdiction clause, found in each of the relevant policies: “Applicable law and jurisdiction: in accordance with the jurisdiction, local laws and practices of the country in which the policy is issued. Otherwise England and Wales UK jurisdiction shall be applied, Under liability jurisdiction will be extended to worldwide excluding US and Canada.”
First, the judge confirmed the construction principles enunciated by the Supreme Court in the recent Financial Conduct Authority (FCA) test case were the starting point for construing insurance policies before the English courts.
This was subject also to having regard to the subsequent comments on those construction principles by the former Supreme Court judge, Lord Mance, in the China Taipeng arbitration award, in an award that disposed of certain Covid-19 business interruption coverage issues, and which had been made publicly available.
Those principles confirmed and effectively emphasised the need for any contractual construction of an insurance policy to remain “user friendly” while otherwise following the construction tests and considerations set out in the wider case law.
Applying those principles to the clause in issue, the judge said little regard should be had to the punctuation used; punctuation was not a strong suit of the drafter and it was not clear what punctuation was intended to be used.
Conversely, she saw force in the point the policies were all issued to provide a comprehensive coverage for Al Mana’s business operations in a number of different
jurisdictions, and there was commercial sense for any multi-jurisdictional disputes to be determined in one neutral venue, the English courts.
She therefore agreed with Al Mana’s construction submission that the relevant clause permitted the parties to bring contested proceedings either in the country where each respective policy was issued, or together before the England courts: this was a a non-exclusive English court jurisdiction clause.
The judge was in no doubt the English court was also the most convenient forum to heard the parties’ dispute. In the modern world, the fact witnesses and documents might be located abroad was not as important a factor to give weight to. The legal resources available in England for dealing with overseas document and evidence management was in the judge’s view “excellent”.
The English court had the experience to handle all the respective policy claims, so they could be heard together before the court.
Furthermore, the court was particularly well versed in dealing with insurance coverage disputes for Covid related business interruption losses in particular, as well as being highly experienced generally in dealing with cross-border claims and any issues of foreign law.
The alternative to having claims heard before the English courts was for the parties to have a number of separate proceedings throughout the Gulf in relation to essentially the same dispute. English jurisdiction was therefore confirmed.
This case is a further restatement that the starting point now for construction of insurance policies is to be derived from the recent Supreme Court decision in the FCA test case.
It also provides a clear statement and reminder to the international marketplace that the English Courts – specifically the Commercial Court for these purposes – are skilled, neutral and remain open for business (in a post-Brexit world, of course) to resolve significant market disputes, if legally able to do so through the commercial choice of the parties.
For more information, please contact Stephen Netherway.