Insurance And Reinsurance 22 May 2012

Welcome to the seventeenth edition of Clyde & Co's (Re)insurance and litigation caselaw weekly updates for 2012.

These updates are aimed at keeping you up to speed and informed of the latest developments in caselaw relevant to your practice.

Contents

Sulamerica CIA v Enesa The Court of Appeal considers the governing law and scope of an arbitration agreement and whether there was a binding obligation to mediate first. European Group & Ors v Chartis A case on two possible causes of loss and inherent vice. Yeates v Aviva Insurance The Court of Appeal deals with an application for extension of time to appeal and considers insurers' argument that a claim was fraudulent. Western Bulk v Carbofer Maritime A case involving a worldwide freezing order where a party was not subject to English law or jurisdiction. JSC BTA v Ablyazov Whether solicitors had to disclose their client's contact details and privilege issues. JSC BTA v Ablyazov The Court of Appeal considers whether a defendant should surrender to custody as a pre-condition to having his appeal heard. Sulamerica CIA v Enesa

Governing law and scope of arbitration agreement/whether a binding obligation to mediate first

http://www.bailii.org/ew/cases/EWCA/Civ/2012/638.html

Clyde & Co (Peter Hirst and Richard Butt) for respondents

The first instance decision in this case was reported in Weekly Update 03/12. Cooke J granted the continuation of an anti-suit injunction restraining the insured from pursuing proceedings in Brazil (in which it sought a declaration that it was not bound to arbitrate the dispute in London). The insured appealed and the Court of Appeal has now held as follows:

(1) The governing law of the arbitration agreement. The policy contained an express choice of Brazilian law as the law governing the policy and an exclusive jurisdiction clause in favour of the courts of Brazil. Moore-Bick LJ (having reviewed prior caselaw) agreed that, in the absence of any indication to the contrary, an express choice of law governing the substantive contract is a "strong indication" of the parties' intention in relation to the arbitration agreement (which is separable from the rest of the contract). However, in this case, two important factors pointed the other way:

(a) the parties had expressly chosen England as the seat of the arbitration. That choice "invariably imports" an acceptance that English law and the Arbitration Act 1996 will apply to any arbitration commenced under the policy: "This tends to suggest that the parties intended English law to govern all aspects of the arbitration agreement, including matters touching on the formal validity of the agreement and the jurisdiction of the arbitrators"; and

(b) if Brazilian law were to govern the arbitration agreement, it would arguably be enforceable only with the consent of the insured. That was a "powerful" factor since there was nothing to indicate that the parties had intended to enter into a one-sided agreement of that kind. Accordingly, the choice of Brazilian law would significantly undermine the arbitration agreement. The Court of Appeal concluded that the system of law with which the arbitration agreement had the closest and most real connection was English law.

(2) Whether there was a binding obligation to mediate before arbitrating. The policy contained a mediation clause by which the parties had agreed to "seek to have the dispute resolved amicably by mediation", failing which the dispute could then be referred to arbitration. The insured argued that this was an enforceable obligation and that compliance with its terms was an essential pre-condition to arbitration. The Court of Appeal accepted that the parties intended the mediation clause to be enforceable and the court should be slow to hold that they had...

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