Jurisdiction and territorial limits clauses in insurance policies

In a blog last year (here) we commented on the decision in Hutchinson which involved the effect of a territorial limits clause on jurisdiction in a direct action claim against a foreign insurer in the English courts. It transpires that around the time that Andrews J was hearing submissions on this point in that case, the same insurer was running the same argument in a different claim, again involving a tragic accident in a swimming pool in Spain. Although this second case, Alli-Balogun, reached the High Court on a procedural point (set aside of a default judgment) this month, in this blog we address only the issue of jurisdiction.

The latest judgment shows that the insurer maintained the challenge to jurisdiction on the same territorial limits point decided against it in Hutchinson until December 2020, notwithstanding the handing down of the decision in Hutchinson in February. However, in Alli-Balogun, Jacobs J did not find the insurer’s position to be unreasonable, citing the earlier contrary decision in Williams v Mapfre and the possibility of Hutchinson being challenged in the Court of Appeal.

The dispute on jurisdiction in all these cases turned on the interpretation of the recast Brussels I Regulation. The core question was whether or not the territorial limits clause in the insurance policies actually amounted to an exclusive jurisdiction clause enforceable against a third party to the insurance contract. If so, it would oust the claimant’s ‘home’ jurisdiction as provided for in the recast Regulation.

Despite that question having been decided authoritatively in Hutchinson, Jacobs J made the following point about the argument once again being advanced by the insurer (acting in Alli-Balogun as fifth defendant): “The judgment of Andrews J in Hutchinson, rejecting the 5th Defendant’s argument, is powerful and closely reasoned … it is possible that the 5th Defendant took the view that it wished to reargue the issue, and possibly try to take the present case to appeal or seek a reference to the CJEU … Ultimately, the 5th Defendant decided not to pursue its jurisdictional argument.”

The recast Brussels I Regulation ceased to have effect in the UK on 1 January 2021, save for cases issued before that date. Given that the UK has not acceded to the Lugano Convention, which contains very similar rules on jurisdiction and insurance cases, one might think that the decisions above, in Hutchinson and now in Alli-Balgoun, are becoming of historic interest only.

However, under the CPR and common law rules on jurisdiction which replace Brussels I, the ability of an insurer to contest jurisdiction based on a territorial limits clause in its policy may well raise its head again. These post-Brexit rules on jurisdiction are, in effect, the same as those which applied to claims connected to countries outside the EU.

Those rules are being closely scrutinised by the Supreme Court in FS Cairo v Brownlie (which involved an accident in Egypt), the outcome of which will be highly relevant to whether UK-based claimants injured abroad will be able to bring post-Brexit claims in the UK courts against defendants based in the EU27 and beyond. Given that Brownlie was heard back in January it is possible that we may have the judgment before the summer break.

David Thompson, Partner, BLM

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