A recent decision sheds light on the court's approach to an application for an anti-suit injunction where there is a dispute of fact that affects the question of whether there is an exclusive English jurisdiction clause (or relevant arbitration clause, where the injunction is sought in support of arbitration). In particular, the decision suggests that if it is not clear, on the evidence, which of two competing clauses governs the contract, the court may decide to give case management instructions to allow the issue to be determined and continue the interim anti-suit injunction only up until that point:
The court in this case had to decide whether the claimant insurer had established a "high probability" that the reinsurance contract was governed by an exclusive English jurisdiction clause in the slip policy, rather than a
The decision is also of interest for the court's rejection of the defendant's suggestion that the threshold of "high probability" is higher than the balance of probabilities test. The court did not accept, in particular, that it could only continue the injunction if satisfied there was no real prospect that the competing clause (the
Background
The claimant is the captive insurer of
Following a fire at
Two documents were signed by the defendant in respect of each policy comprising the Reinsurance:
-
A Slip Policy or MRC (Market Reform Contract) signed on
"This Reinsurance shall be governed by and construed according to the Laws of
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A Facultative Certificate signed on
On
The defendant then withdrew its
Decision
Where a party seeks an anti-suit injunction on the basis that the dispute is subject to an exclusive English jurisdiction clause (or an arbitration clause), it is well-established that the claimant must establish to a "high degree of probability" that the relevant clause exists and covers the dispute in question. The court will then ordinarily exercise its discretion to restrain proceedings brought in breach of the clause unless the defendant can show strong reasons to refuse relief.
No such "strong grounds" were alleged in this case. The key question was whether the Reinsurance was subject to the exclusive English jurisdiction clause contained in the Slip Policies / MRCs or to the
The parties' submissions
The judge noted that there was a substantial dispute between the parties as to
Consistent with its position as to market practice, the defendant argued that the Facultative Certificates in this case superseded the Slip Policies / MRCs, so that the
In contrast, the claimant argued that the Reinsurance was complete when the Slip Policies / MRCs were signed, and so the parties were bound by the choice of English law and jurisdiction. The subsequent issue of the Facultative Certificates was simply an administrative act, and was not intended to change the fundamental terms of the parties' bargain. That was reinforced by the Hierarchy Clause which, on its ordinary and natural meaning, meant the Slip Policies / MRCs would prevail.
Following the hearing in the present case, the Commercial Court gave judgment in another case on very similar facts save for the absence of an equivalent to the Hierarchy Clause (TICL v Partner Re [2023] EWHC 3243). In that case, the court held that the Facultative Certificate superseded the Slip Policy / MRC, and therefore granted a stay of the proceedings in favour of
The court's approach
The judge noted that the parties agreed the test for an anti-suit injunction was whether there was a high probability that there was a binding jurisdiction clause, and that this meant something more than a good arguable case. However, beyond that, there was little guidance as to what the phrase meant and how it should be applied in a case such as the present where there were competing jurisdiction and arbitration clauses. The judge rejected the defendant's suggestion, for which it had cited no authority, that the test required more than establishing the existence of the exclusive English jurisdiction clause on the balance of probabilities, and that the court would have to be satisfied that there was no real prospect that the competing clause (the
The judge referred to
The judge in the present case concluded that he should take a similar approach. He would first consider whether, on the current evidence, it was clear which of the two competing clauses governed the dispute. If so then (by analogy with the law on summary judgment) the court should grasp the nettle and decide the point. However, if the answer was not clear, and especially if further evidence might be relevant, he should give case management directions to allow him to determine the point.
Application to the facts
Leaving aside the evidence of market practice, and simply viewing the documentation, the judge took the view that the Slip Policies / MRCs were binding contracts when issued, and that the effect of the Hierarchy Clause in the Facultative Certificates was to give priority to the jurisdiction provisions of the earlier agreements over the arbitration provisions of the later agreements.
However, he could not dismiss market practice as irrelevant: if there were market practices which were sufficiently well known to both parties, that could affect the construction of the Reinsurance. The judge could not place any weight on the evidence of market practice in this case since he was faced with diametrically opposed opinions from the parties' experts and, in the absence of cross-examination, he could not decide who was right.
In the circumstances, the judge held that he should continue the anti-suit injunction until the defendant's challenge to the English court's jurisdiction had been determined. That would enable evidence of market practice to be put forward and properly tested.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Exchange House
EC2A 2HS
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