English High Court Grants Anti-Suit Injunction in Insurance Dispute

In Hiscox Dedicated Corporate Member v Weyerhaeuser Co [2019] EWHC 2671 (Comm), the English High Court considered an excess insurance policy containing an express reference to English jurisdiction or “service of suit” provisions and continued an anti-suit injunction against the defendant on the basis that it was satisfied that the parties had agreed to submit their dispute to London arbitration.

The insurance policy was written on a “follow form” basis and followed the form of the lead underlying policy, which contained the following three endorsements:

  • All disputes arising out of or relating to the Lead Policy to be determined in London under the Arbitration Act 1996 (Endorsement No.7);
  • The construction and interpretation of the Lead Policy was to be governed by the laws of the State of Washington (Endorsement No. 8); and
  • Solely for the purpose of effectuating arbitration, in the event of the failure of the Company to pay any amount claimed to be due hereunder, the Company, at the request of the Insured, will submit to the jurisdiction of any court of competent jurisdiction within the United States (Endorsement 9, the service of suit endorsement).

Weyerhaeuser issued proceedings in the USA seeking a declaration that there was no valid arbitration agreement applicable to coverage disputes between itself and various defendant insurers (including the Insurers) and that the US Court was the appropriate forum for such disputes.  Another insurer participating in the tower obtained an anti-suit injunction against Weyerhaueser from the English Court.  Weyerhaeuser’s claims were eventually dismissed on the basis that they were non-justiciable and the insurers then sought and obtained an interim anti-suit injunction against Weyerhaeuser from the English Court, which the English Court was asked to continue.

The Court framed the relevant question as follows [@40]:

“It is common ground that the central question is one of interpretation: whether, on a true interpretation of the Policy, the Service of Suit clause entitles Weyerhaeuser to pursue its substantive claim against the Insurers in the US District Court or whether Weyerhaeuser is compelled to arbitrate. This requires consideration of whether the arbitration agreement in Endorsement 7 to the Lead Underlying Policy is incorporated into the Policy.”

The Court found that the insurers had not submitted to the jurisdiction of the US Court by their participation in Court proceedings in the USA, and was satisfied to a high degree of probability that the parties had agreed to submit their dispute to London arbitration stating [@59]:

“I am satisfied to a high degree of probability that the parties have agreed to submit their dispute to arbitration. In my judgment an interim anti suit injunction should continue, unless Weyerhaeuser is ready to provide suitable undertakings to this Court to equivalent effect. This holds Weyerhaeuser to its apparent agreement to arbitrate rather than litigate.”

Accordingly, the Court continued the interim anti-suit injunction.

See the note on this case by Herbert Smith Freehills, who conclude:

“What this case also reflects, however, is that where there remains scope, based on the expressly agreed wording in the contract (in this case, the Policy), for dispute as to whether the parties agreed to submit all disputes to arbitration, there is an increased risk of the counter-party commencing foreign court proceedings in breach of the arbitration agreement.”

“Clear drafting is important to minimise the scope for any argument as to whether the parties intended to incorporate an arbitration agreement covering all disputes under their contract. In an insurance context, ensuring consistency of dispute resolution clauses within a coverage tower is also crucial both to minimise the risk of disputes and the potential for inconsistent judgments. It is also critical for a party to act promptly to protect its rights to have any claims against it determined in accordance with the agreed arbitration agreement.”

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 Hong Kong Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

View

Leave a Reply

Your email address will not be published. Required fields are marked *