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The
wording of a reinsurance slip generally incorporating terms and conditions
did not operate to incorporate a Mauritian jurisdiction clause. The
words "jurisdiction clause" on the slip did not designate
which jurisdiction and were meaningless. The English courts would have
jurisdiction if, as was the case, there was a good arguable case that
the reinsurance did not contain a Mauritius jurisdiction clause.
Mauritius Commercial Bank ("MCB") was insured by Mauritius
Union Assurance ("MUA") under three policies, each reinsured
in the London market. Two of these were reinsured by Dornoch, a Lloyd's
Syndicate. At placement the Dornoch underwriter, before giving her quote,
asked the broker about jurisdiction. The broker's recollection was that
he explained the local jurisdiction clause in the underlying policy
would be included, as the reinsurance followed the primary. The underwriter's
recollection differed. She believed the jurisdiction question was left
open, hence her note under conditions, "jurisdiction clause:",
without stating which jurisdiction after the colon. The slip when scratched
stated "jurisdiction clause.", the colon having been replaced
by a full stop.
The slip also contained the words "to follow all terms and conditions
of the primary policy together with riders and amendments thereto covering
the identical subject matter and risk".
MCB suffered losses arising from the fraudulent activity of an employee,
and commenced proceedings in the Mauritian courts against its insurers,
MUA. MUA in turn claimed on its reinsurance. Reinsurers sought to avoid
for non-disclosure/misrepresentation, and commenced proceedings in the
commercial court in London seeking a declaration that there was no cover.
MUA, however, joined reinsurers to the Mauritian action claiming an
indemnity under the same reinsurance, and sought to set aside the English
proceedings on the grounds that the English courts did not have jurisdiction.
The court of appeal, dismissing the appeal, held that the English courts
had jurisdiction. In doing so, the court of appeal found as follows:
1 That where, as here, there was more than one potential system of law
applicable to the reinsurance contract, the court must apply the law
of the forum, English law, in deciding whether a jurisdiction clause
was incorporated.
2 The placement discussions at quotation were inadmissible in evidence.
No actual agreement had been reached at the time of the quote, and even
the broker's evidence went no further than to say what the reinsurance
would contain. Pre-contractual negotiations cannot be used to shed light
on the meaning of the words in the slip.
3 The general words of incorporation in the slip did not operate to
incorporate the Mauritian jurisdiction clause from the primary insurance.
They relate to the subject matter and the risk. Clear words of incorporation
of choice of law and jurisdiction clauses could be required.
4 The test to apply was that if there was a good arguable case that
the reinsurance was not subject to a Mauritian jurisdiction clause,
that the English courts would have jurisdiction. The words "jurisdiction
clause" indicated only that the parties intended to agree a jurisdiction
clause, but in the event they never did so. An English jurisdiction
clause was as much a candidate as a Mauritian clause. The words "jurisdiction
clause" were accordingly meaningless.
5 As to the proper law of the reinsurance contract itself, there were
arguments for both Mauritian and English law. MUA and MCB relied on
the presumption that contracts which follow one another are subject
to the same law. Reinsurers relied on the facts that the reinsurance
was broked on the basis of a Lloyd's proposal form by English brokers
and written on a Lloyd's slip in the London market on London market
terms. The test set out in the Rome Convention, Article 3(1), to decide
proper law is that the choice should be express or demonstrated with
reasonable certainty by the terms of the contract or in the circumstances
of the case. On the present facts, it was not.
6 Under the Rome Convention, Article 4(1), if the law applicable to
the contract cannot be decided under Article 3(1), the contract is governed
by the law of the country with which it is most closely connected. There
was a good arguable case that the proper law of the reinsurance contract
was English as the characteristic performance of a reinsurance contract
was payment and that would be performed in England. However, there was
no need finally to decide the issue at this hearing.
7 There were also certain claims made in tort, as to which the court
of appeal upheld the commercial court in its decision that the most
significant elements of the torts occurred in England.
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