The High Court has interpreted a jurisdiction clause in an excess liability insurance policy as granting exclusive jurisdiction to the English courts, despite the clause not containing express words to that effect: AIG Europe SA (formerly AIG Europe Ltd) v John Wood Group Plc  EWHC 2567 (Comm).
While normal principles of contractual interpretation will apply, the decision suggests that an English court is likely to find that a jurisdiction clause is exclusive unless it is explicitly stated to be non-exclusive, particularly if there is also a choice of English law. It also follows in the footsteps of a number of earlier decisions which have interpreted jurisdiction clauses as being exclusive, even though the word “exclusive” was not used (see our blog post here and more recently the decision in Axis Corporate Capital UK II Ltd v ABSA Group Limited  EWHC 861 (Comm)).
The decision is a reminder that the absence of the word “exclusive” is not determinative when interpreting a jurisdiction clause and that clear words should be used when drafting a jurisdiction clause (whether the intention is for the clause to be exclusive or non-exclusive) in order to avoid uncertainty and disputes at a later stage.
The claimant insurers had issued a programme of excess liability insurance to the second defendant’s predecessor. The defendants potentially required resort to the insurance cover and so the second defendant commenced proceedings against the insurers in the Canadian courts.
In response, all but one of the insurers applied for anti-suit injunctions from the English High Court on the basis that the relevant policies contained exclusive English jurisdiction clauses (or in one case, an arbitration clause, which is not considered further in this post).
In order to obtain anti-suit injunctions, the insurers had to demonstrate to a “high degree of probability” that the policies contained exclusive English jurisdiction clauses (following the well-established test, which was affirmed by Christopher Clarke LJ in Ecobank v Tanoh  1 WLR 2231 at 2250).
The High Court (Jacobs J) found that two out of the three relevant jurisdiction clauses met the “high degree of probability” test:
- One of the clauses (contained in the first and third excess policies), expressly provided for English law and exclusive English jurisdiction and therefore clearly met the test.
- Another clause (contained in the second excess policy) contained a choice of English law but no jurisdiction provision and did not meet the test.
- The remaining clause (in a Global Umbrella policy), contained a clause which provided for English law and English jurisdiction but did not use the word “exclusive.” The court interpreted this clause as requiring disputes to be resolved by the English court and it therefore met the test.
This post focuses on the court’s consideration of the Global Umbrella policy clause. The relevant clause provided as follows:
“Choice of Law 11. This policy of insurance shall be governed by and construed in accordance with the laws of England and Wales, or Scotland (in respect of any policies issued in Scotland) and except in the case of Scottish policies the Commercial Court of the Queen’s Bench Division High Court of Justice Strand London WC2A 2LL shall have jurisdiction in respect of any dispute under this Policy.”
The clause was contained in the standard terms and conditions section of the policy and there was no dispute that it was a contractual provision. However, it had to be construed in the context of a potentially conflicting clause contained in the earlier “Risk Details” section of the policy. This clause, the “Primary Policy Jurisdiction Clause” or “PPJC” read as follows:
“Any dispute concerning the interpretation of the terms, Conditions, Limitations, Exceptions and/or Exclusions of the policy are understood and agreed by both the Insured and the Insurers to be subject to the same law and the same jurisdiction as the primary policy. Each party agrees to submit to the jurisdiction of any court of competent jurisdiction within said territory and to comply with all requirements necessary to give such court jurisdiction. All matters arising hereunder shall be determined in accordance with the law and practice of such court.”
The primary policy was a reference to a policy known as the “Global CGL”. The Global CGL did not contain any express clause concerning either applicable law or jurisdiction.
Interpretation of clause 11
The defendants argued that clause 11 should be construed as a non-exclusive jurisdiction clause because it gave the parties the option of proceeding in the Commercial Court, but it did not require them to do so.
The court disagreed, finding that the words “shall be governed by and construed in accordance with the laws of England and Wales” meant that English law was mandatory, not optional, and there was no reason to think that a different, optional connotation should be given to the words “the Commercial Court… shall have jurisdiction in respect of any dispute under this Policy”.
The choice of English law in conjunction with the reference to English jurisdiction was also a powerful factor in favour of construing the choice of English jurisdiction as exclusive. Further, if clause 11 was intended to provide for non-exclusive jurisdiction, there would have been no need to include a specific provision in respect of Scottish policies.
The court’s conclusion was also supported by the fact that there would be limited benefit in specifying England as an optional jurisdiction without any obligation on either party to litigate in England.
A further consideration was that clause 11 was considered to be transitive, in other words it required disputes to be submitted to the English courts, rather than intransitive, which would just mean the parties submitted to the English court if proceedings were begun there. Jacobs J noted, however, that some cases have questioned the importance of categorising clauses as transitive or intransitive: see for example BNP Paribas v Anchorage Capital  EWHC 3073 considered here.
Relationship between clause 11 and the PPJC
The defendants also argued that clause 11 should be disregarded because it conflicted with the PPJC and therefore the Global CGL, which did not contain any clause identifying applicable law or jurisdiction. The defendants’ proposed approach was that the court should not assume that the parties were seeking to agree a law and jurisdiction which could be identified with certainty; rather, the parties intended there to be a “permissive” approach to jurisdiction in the Global Umbrella, and contemplated that a variety of courts might have jurisdiction to determine any dispute between them.
The court held that full effect should be given to the clear agreement on law and jurisdiction in clause 11. The jurisdiction and applicable law regime contemplated by the defendants would introduce “very considerable uncertainty” and should be rejected. In particular:
- There was no relevant jurisdiction provision in the Global CGL which could be construed as displacing clause 11.
- The “permissive” approach contended for by the defendants would lead to the conclusion that there was no single applicable law in accordance with which disputes under the Global Umbrella were to be determined. The practical effect would be to render the Global Umbrella subject to a floating proper law, dependent on where the underlying claims were made.
- This was inconsistent with the express terms of the PPJC, the last sentence of which indicated that the parties had in mind a single applicable law to govern disputes under the Global Umbrella. Also, as a matter of English law, a floating proper law is not permissible: see Armar Shipping Co v Caisse Algerienne d’Assurance et de Reassurance  1 WLR 207.