Cross border claims: geographic limitation of cover or restriction of choice of jurisdiction?

A BLM case heard in the High Court last week involves significant questions of jurisdiction under the recast Brussels I Regulation (reg 1215/2012), certain of which had been aired in the recent cases of Lackey* and Cole*, which will be familiar to those involved in cross-border litigation. The novel question in the current case – probably of greatest interest to insurers – was whether a territorial scope clause in the policy between insurer and insured had the practical effect of barring the third party claimant from accessing the favourable jurisdiction options set out in section 3 of the regulation.

The claimant, who is domiciled in England, suffered serious injury while on holiday in Spain (the applicable law was not a live issue as it was common ground that Spanish law applied). He sued the Spanish insurer in England, as ostensibly allowed for in section 3 of the regulation. His case on jurisdiction was that since Spanish law provided the necessary direct right of action against the liability insurer required by section 3 consequently the English court could hear his claim pursuant to section 3 of the regulation (articles 11 and 13 in particular). He also joined the insured, a business registered in Spain and for whom BLM acted, to the English proceedings.

The Spanish insurer challenged English jurisdiction, relying on a clause in the policy limiting the territorial scope of cover provided to the insured only to claims brought in Spain. We and those acting for the insurer argued that there was therefore no indemnity under the policy and thus the claimant could not be said to benefit from a direct right of action in such circumstances. The claimant countered by arguing that the clause was invalid against him under both Spanish and EU law.

The point would turn on whether or not the territorial limits clause, regardless of being it designated as such, actually operated in practice as an exclusive jurisdiction clause that would fall foul of the recast regulation. The claimant argued that if the challenge to English jurisdiction were to succeed on this point, the clause’s true practical effect would be to exclude the special jurisdiction in matters of insurance set out at section 3 (that being the option for the claimant, as the weaker party, to bring his claim against the insurer in the country of his domicile). The claimant cited the Court of Justice of the European Union’s (CJEU) cases Axa Belgium C-112/03 and Assens Havn C-368/16 in support of his contention that this amounted to an invalid exclusive jurisdiction clause.

The insurers and the insured argued that the clause was a not an exclusive jurisdiction clause but merely a risk-limiting clause governing the forum for disputes between insurer and insured, suggesting that that was the correct analysis of the two CJEU cases cited above.

The claimant submitted that what mattered was the effect of the clause rather than its label. He was a third party to the insurance contract and hadn’t been involved in negotiating its terms. It would therefore be unjust to rely on it to exclude his claim against the insurer (and the joinder of the insured) from the special jurisdiction of the court of the country where he was domiciled (i.e. England).

Seen in this light, the case is one in which the regulation’s public policy goal of providing the weaker party in direct claims against insurers with more favourable rules of jurisdiction clashes with the legitimate commercial interest of the insurer in defining contractually the scope of the risks it insures.

Judgment is awaited.

* We noted both these cases in brief towards the end of a blog post from 31 October. The jurisdictional issues in Lackey have since been compromised between the parties.



Written by David Thompson, associate at BLM

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