Anti-Suit Injunction Where Insurance Policy Contains Arbitration Clause

In AIG Insurance Hong Kong Ltd v Lynn McCullough and William McCullough [2019] HKCFI 1649, the Hong Kong High Court held that a party was not entitled to pursue a claim on rights arising out of an insurance policy without also being bound by the dispute resolution provisions in the policy, and further, that an anti-suit injunction would ordinarily be granted to restrain a claimant from pursuing proceedings in a non-contractual forum, whether the claimant is a party to the policy or not, unless there were strong reasons to the contrary. The Court followed the principle applied in Qingdao Huiquan Shipping Company v Shanghai Dong He Xin Industry Group Co Ltd [2018] EWHC 3009 (Comm), stating [73-74]:

“In my opinion, and in agreement with AIG, the relevant issue for the purposes of the anti-suit relief, and the issue that has to be classified for the purpose of the applicable test, is the coverage issue. Such issue is clearly contractual, since it determines the liability of the insurer to the insured under the terms of the policy. I disagree with the submission on behalf of the McCulloughs that the coverage issue does not inform the court as to the characterisation of the claim.”

“It further follows that so far as they relate to determination of the coverage issue — the necessary pre-condition for bringing the claim — the Miami proceedings are in substance proceedings to enforce the obligation created by the contract of insurance. The claim may be framed in tort, but the issue is a contractual one. It is of particular relevance in this regard that on 17 May 2019, the McCulloughs took out a motion to lift the stay and for leave to file a Fourth Amended Complaint seeking a declaration regarding the extent to which there is coverage for the McCulloughs’ established damages. This leaves no room for doubt. As noted above, a party “… is not entitled to found a claim on rights arising out of a contract without also being bound by the forum provisions of that contract” (Qingdao Huiquan Shipping Company, ibid).”

See the review of the case by Herbert Smith Freehills.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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