Weekly Update - A Summary Of Recent Developments In Insurance, Reinsurance And Litigation Law - 25/11

Contents

NML Capital v Argentina

A Supreme Court ruling on sovereign immunity and service out of the jurisdiction.

Maritsave Ltd v National Farmers Union Mutual Society Ltd

A Clyde & Co case on breach of warranty and an insured's claim for damages for breach of the policy.

Bristol Alliance v Williams & Anor

A case on whether motor insurers were obliged by English/EU law to satisfy a judgment against a non-negligent insured.

Howell & Ors v Lees-Millais & Ors

A Court of Appeal decision on whether an offer was a Part 36 offer.

Thompson & Anor v Bruce

A decision regarding a Part 36 offer which was both made and accepted before proceedings were commenced.

Owners of Samco Europe v Owners of MSC Prestige

A case on the effect of a withdrawal of a Part 36 offer.

Sovarex v Alvarez

A decision on the enforcement of an arbitration award under section 66 of the Arbitration Act 1996.

Fenice Investments v Erram Falkus

A case on challenging the reasonableness of an arbitrator's fees.

Relational LLC v Hodges

Court considers the effect of a set-off argument on an application for security for costs.

Shah & Anor v HSBC Private Bank

A case on reporting money laundering suspicions and public interest immunity, plus the court's approach to redactions.

Love v Fawcett & Anor

Arguments concerning legal advice privilege and waiver.

Garnat Trading & Anor v Baominh Insurance

Court of Appeal considers issues of seaworthiness.

Cook v Cook & Anor

A case on postponing the quantification of long term loss.

Russian Commercial Bank v Khoroshilov

A case on non-disclosure when applying for an injunction and an application to extend time to challenge an arbitration award.

Other News

FSA publishes modification for (co-insurer) employers' liability insurers. Government explains its view on the ECJ ruling on the use of gender by insurers.

This Week's Caselaw

NML Capital v Argentina

Supreme Court ruling on sovereign immunity/service out of the jurisdiction

http://www.bailii.org/uk/cases/UKSC/2011/31.html

The Court of Appeal decision in this case was reported in Weekly Update 05/10. NML seeks to enforce a judgment obtained from a New York court against the Republic of Argentina in England. At first instance, Blair J allowed NML to bring a common law action on the judgment in England but the Court of Appeal reversed that decision. The Supreme Court has now allowed the appeal from the Court of Appeal's judgment and held as follows:

(1) Section 3 of the State Immunity Act 1978 provides that: "A State is not immune as respects proceedings relating to a commercial transaction entered into by the State" (emphasis added). There is prior caselaw to support the argument that NML was seeking to bring a proceeding "relating to" the New York judgment and not the underlying commercial transaction to which that judgment related (and hence section 3 did not apply). By a majority of 3:2, the Supreme Court has held that that prior caselaw is correct.

(2) However, the Supreme Court found that Argentina did not have immunity on other grounds. Section 31 of the Civil Jurisdiction and Judgments Act 1982 provides that a foreign judgment against a state shall only be recognised and enforced in England if it would have been recognised/enforced if it had not been given against a state and the foreign court would have had jurisdiction applying sections 2-11 of the 1978 Act. The Court of Appeal had held that this section does not create a further exception to the general immunity rule set out in the 1978 Act. The Supreme Court has unanimously held that that decision was wrong. In the words of Lord Philips, "section 31 both reflects and, in part, replaces the exemptions from immunity contained in the 1978 Act".

(3) Section 2 of the 1978 Act provides that "a State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom". In this case, the Supreme Court found that Argentina had submitted to the jurisdiction of the English court because of certain wording in bonds issued by it (namely, that a judgment relating to the bonds would be conclusive and binding on Argentina and may be enforced "in any other courts to the jurisdiction of which [Argentina] is or may be subject").

(4) NML could obtain permission to serve out of the jurisdiction by relying on two grounds which were not advanced at the time of the original application for permission to serve out. However, the reasoning for this conclusion differed slightly. Lord Philips said that the rule in Parker v Schuller [1901] (ie that new grounds for permission to serve out of the jurisdiction could not be raised before the judge) should no longer be applied: "procedural rules should be the servant not the master of the rule of law". However, Lord Collins (with whom Lord Walker agreed) held that the rule in Parker v Schuller did not arise in this case at all because this was a state immunity case (although, if the rule did arise, he agreed with Lord Philips).

Maritsave Ltd v National Farmers Union Mutual Society Ltd

Breach of warranty and claim for damages

http://www.bailii.org/ew/cases/EWHC/QB/2011/1660.html

Clyde & Co (Toby Rogers and Ben Hung) for defendant,

Following a fire at the insured's property, the claimant claimed under its property insurance policy. The insurers alleged the breach of a warranty (which provided that a breach "which contributes to damage" may result in a claim not being paid). On the facts, Supperstone J held that there had been no breach by the insured and hence it was entitled to payment. Of general interest, though, is the fact that the judge agreed that the insured was entitled to damages for breach of the policy. The current rule under English law is that laid down in Sprung v Royal Insurance [1999] i.e. that damages cannot be awarded for a delay or failure in payment of insurance monies (instead, the insured is entitled to interest). This is because English law regards payments under an insurance policy as damages for breach of contract (because an insured loss gives rise to a notional breach of contract) and damages cannot be awarded for a failure to pay damages. The rule in Sprung has attracted criticism and the Law Commission called for its reform in Issues Paper 6 (Damages for Late Payment) in March 2010. Supperstone J does not, however, discuss these issues in the judgment and it is therefore unclear on what basis his decision was reached.

Bristol Alliance v Williams & Anor

Whether motor insurers obliged by English/EU law to satisfy judgment against non-negligent insured

http://www.bailii.org/ew/cases/EWHC/QB/2011/1657.html

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 brought a subrogated claim against the driver. The driver's insurers applied to be joined to the action because the property insurers had announced their intention of enforcing any judgment...