The Importance Of Aligning Policy Terms Within Insurance Towers

• Published date: 24 June 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Reed Smith (Worldwide)
• Author: Ms Catherine Lewis

Arecent English Court of Appeal decision emphasises the importance of ensuring that what appear to be standard boilerplate provisions within an insurance tower are clear, align between policies, and are not conflicting - particularly in relation to choice of jurisdiction.

In AIG and others v John Wood and others, the Court of Appeal upheld an injunction granted to the Claimants (the Insurers) by the Commercial Court to prevent the Defendants (the Insureds) from pursuing proceedings in the Courts of Alberta, Canada under policies of excess liability insurance. The Insureds appealed.

The main question before the Court of Appeal was one of interpretation: whether the policies provide for the exclusive jurisdiction of the English courts, such that the pursuit of the Canadian proceedings would be a breach of contract by the Insureds.

Applying accepted principles of contractual interpretation, the Court of Appeal upheld the decision of Mr Justice Jacobs holding that: 'The natural commercial purpose of the clause is to stipulate that English law will govern any dispute and that the Commercial Court will be the court having jurisdiction over any dispute' (paragraph [62] of the judgment). The analysis of Lord Justice Males is a helpful reminder that the English courts take a broad, purposive...