Court Of Appeal Considers Jurisdiction Of The English Court To Hear Covid-19 BI Claim

• Published date: 09 February 2023
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Real Estate and Construction, Insurance Laws and Products, Trials & Appeals & Compensation, Construction & Planning
• Law Firm: Herbert Smith Freehills
• Author: Mr Greig Anderson and Max Eshraghi

In Al Mana Lifestyle Trading LLC & Ors v United Fidelity Insurance Company PSC & Ors [2023] EWCA Civ 61 the Court of Appeal considered the jurisdiction of the English court to hear claims brought by the Claimant policyholders against their insurers for indemnities for business interruption losses (BI) arising from the Covid-19 pandemic. In doing so, the court had to consider whether a jurisdiction clause that both parties agreed was 'not a model of drafting' was exclusive or not.

The Court of Appeal reversed the first instance decision and found that the English court did not have jurisdiction to hear the claims. In a split decision, the majority of the Court of Appeal found that the clause gave exclusive jurisdiction to the courts in the country in which each policy was issued (in the Middle East). Only if the jurisdiction of the local court was not available would the courts of England and Wales have jurisdiction.

BACKGROUND

The Claimants formed part of the Al Mana Group, an enterprise which includes businesses in the food and beverage and retail sectors operating in the Middle East and Gulf region. There was no business in England or Wales. The Defendant insurance companies operated within Gulf Cooperation Council countries. The First Defendant had its headquarters located in the United Arab Emirates, the Second Defendant was located in Qatar and the Third Defendant in Kuwait.

The Claimants sought an indemnity in the region of US$40m related to alleged BI losses during the Covid-19 pandemic under a suite of seventeen 'Multi-Risks' insurance policies underwritten by the Defendants (the Policies). It was common ground that the Policies were issued respectively in the UAE, Qatar and Kuwait.

The principal issue was whether or not the Policies contained a jurisdiction agreement entitling the Claimants to bring their claims before the English courts. Each of the Policies contained the following Applicable Law and Jurisdiction Clause (the Clause):

'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 USA and Canada.'

The Claimants argued that the Clause permitted proceedings to be brought in either:

• the country where each of the Policies was issued (in this case, the UAE, Qatar or Kuwait); or
• in the courts of England and Wales.

The Defendants' case was that the Clause should be interpreted as an exclusive jurisdiction clause such that disputes must be submitted to the courts of the countries in which the Policies were issued (the UAE, Qatar and Kuwait), with a fallback for...