'Jurisdiction Clause as Attached'- What if it Isn't?

Originallly published in March 2002

The recent decision of Mr Justice David Steel in Brotherton v Colseguros (18th December 2001) in which RPC represented the successful reinsurers, sheds an interesting light on how the English Commercial Court will approach issues of disputed jurisdiction in facultative reinsurance contracts, and provides some pointers for those placing or underwriting such business in the London Market. his

The claimant reinsurers commenced English Commercial Court proceedings for a declaration that they had validly avoided the defendant's reinsurance contract in respect of their original insurance of a Colombian bank.

The reinsurers argued that the presentation and placement of the reinsurance (under a lineslip) had taken place in London. The reinsurance was accordingly governed by English law and, because most of the relevant evidence and witnesses were located in this country, England was the appropriate forum in which the dispute should be determined - and the Commercial Court should therefore accept jurisdiction.

The reinsureds opposed English jurisdiction on the basis that, as they alleged, the reinsurance contract incorporated a clause imposing Colombian law and jurisdiction.

The underwriter at the Lloyd's syndicate which led the lineslip had given his quotation for the risk on a "quotation sheet" prepared by the brokers, which as printed included the words "jurisdiction clause as attached". Those words were deleted by the underwriter in manuscript. Nonetheless the words reappeared in the final version of the slip. No jurisdiction clause was in fact attached either to the quotation sheet or to the final slip.

Notwithstanding the absence of any attachment, the reinsureds argued that a generic jurisdiction clause had already been discussed and agreed between the brokers and lineslip underwriters in terms which provided for local, in this case Colombian, law and jurisdiction to apply. The reference "jurisdiction clause as attached" was therefore sufficient to incorporate the clause.

In his evidence, the leading syndicate's underwriter confirmed that a standard form of jurisdiction clause for us generally with the lineslip had indeed been discussed, and that the brokers had pressed for the same governing law to be applied to the reinsurance as to the underlying cover, ie that of the country in which the original risk and the reinsured were located. The underwriter's philosophy however had remained that, although he...