Draft Jurisdiction Clauses With Precision. "Otherwise" You May Not Get What You Want

• Jurisdiction: European Union
• Law Firm: Gatehouse Chambers
• Subject Matter: Corporate/Commercial Law, Insurance, Real Estate and Construction, Contracts and Commercial Law, Insurance Laws and Products, Construction & Planning
• Author: Mr Kort Egan
• Published date: 02 February 2023

The Court of Appeal recently handed down judgment in a case that hinged on the proper construction of an "Applicable Law and Jurisdiction" clause in a series of insurance policies issued by the appellant defendants - Al Mana Lifestyle Trading LLC & Ors v United Fidelity Insurance Company PSC & Ors [2023] EWCA Civ 61.

The relevant clause was relatively concise and much rested on what the word "Otherwise" meant at the beginning of the second sentence. Cockerill J and Andrews LJ adopted one interpretation whereas the majority in the Court of Appeal, Males LJ and Nugee LJ, preferred the alternative construction.

The claimants were 27 entities forming part of the Al Mana Group, carrying on business in the food, beverage and retail sectors, principally in the Middle East and Gulf Region but also with a small part of their operation in Ireland. The group did not carry on business in England or Wales. The defendants were insurance companies operating within Gulf Cooperation Council countries, located in the UAE, Qatar and Kuwait.

The claims were brought by the claimants under a suite of seventeen "Multi-Risks" insurance policies underwritten by the defendants. 15 policies were issued in the UAE, one in Qatar and one in Kuwait. For the purposes of the case all of the policies were on materially identical terms. The claims were all for indemnities for business interruption losses, said by the claimants to arise from the Covid-19 pandemic.

Each policy contained a Schedule that includes, among other things, the "Applicable Law and Jurisdiction" clause.

The clause in question

The relevant clause stated as follows (the numbers were not included in the clause but added by the parties for ease of exposition):

"APPLICABLE LAW AND JURISDICTION

[1] In accordance with the jurisdiction, local laws and practices of the country in which the policy is issued. [2] Otherwise England and Wales UK Jurisdiction shall be applied,

[3] Under liability jurisdiction will be extended to worldwide excluding USA and Canada."

The defendants' case was that, in each policy, the clause provides for the exclusive jurisdiction of the court of the country in which the policy was issued with a fallback for English or Welsh jurisdiction in the event that the local court does not have or would not accept jurisdiction.

The claimants' primary case, accepted by the judge at first instance, was that the clause gave whichever party wished to bring a claim a free choice to bring proceedings either in the local court or in England. Alternatively, if that was wrong, the jurisdiction of the English Court is available so long as the jurisdiction of the local court is not mandatory under the law of that country.

The decision at first instance

The claim form was served on the defendants out of the jurisdiction in reliance on what the claimants contended was the agreement for English jurisdiction contained in the Applicable Law and Jurisdiction clause.

The defendants' challenge to the jurisdiction came before Cockerill J in July 2022. Cockerill J accepted the claimants' primary case that the clause gives whichever party wishes to bring a claim a choice of bringing proceedings either in the local court or in England and Wales. In that sense the jurisdiction was non-exclusive, although exclusive as against the rest of the world.

Cockerill J applied the approach of the Supreme Court in Financial Conduct Authority v Arch Insurance (UK) Ltd...