UK & Europe
On 13 April 2021, the Commercial Court handed down judgment in Axis Corporate Capital UK II Ltd & Ors v ABSA Group Ltd & Ors  EWHC 861 (Comm), partially continuing an anti-suit injunction applied for by Claimant Reinsurers (Reinsurers) against Defendants’ claims in South Africa, in respect of possible claims under primary, three layers of excess and aggregate retention reinsurance contracts. This will be of interest to those who deal with policies structured over various layers of insurance and reinsurance, in particular where those layers may not contain identical jurisdiction clauses.
The first three Defendants were insured by their captive (the fourth Defendant), which had arranged the reinsurances. In November 2020, the Defendants brought proceedings against the Reinsurers in South Africa. The following month Reinsurers commenced proceedings against the Reinsureds in England, contending that the South African proceedings were brought in breach of agreement that the courts of England and Wales have exclusive jurisdiction.
On 2 February 2021 the English court granted Reinsurers an interim anti-suit injunction restraining the Defendants from pursuing proceedings in South Africa.
Judgment on the jurisdiction clauses
Following a full hearing on the jurisdiction dispute, the English court continued the anti-suit injunction in respect of claims under the excess reinsurance policies (which represent the majority of the claims) but not for claims under the primary reinsurance policy (the Defendants had conceded that the aggregation retention policy gave the courts of England and Wales exclusive jurisdiction).
Whilst the primary layer and excess layers had similar jurisdiction clauses, they contained a critical difference:
Having considered the construction of the jurisdiction clauses, the Judge went on to consider the injunctive relief requested.
The Reinsurers invited the court to continue the anti-suit injunction for the primary layer on the basis that the South African proceedings were vexatious, oppressive or unconscionable. The Judge declined to do so as he did not consider that the required “high hurdle” had been met. The Judge considered the leading case on anti-suit injunctions in the absence of an exclusive jurisdiction clause – Deutsche Bank AG v Highland Crusader  EWCA Civ 725 and concluded that he was not persuaded that England was clearly the more appropriate forum.
As for the excess layers, the proceedings had been brought in South Africa, in breach of an exclusive jurisdiction clause. Here the Judge considered the principles set out in Catlin Syndicate v Amec Foster Wheeler  EWHC 2530 (Comm) in relation to an anti-suit injunction based on a jurisdiction clause. His view was that, if there had been no proceedings in South Africa in relation to the primary layer policy, then there would clearly be no reason to refuse to restrain the proceedings regarding the excess layers. He concluded that while having parallel proceedings on different layers of the same reinsurance programme in two jurisdictions was not ideal, it was what the parties had agreed and it was not enough reason to refuse to restrain the excess layer proceedings. The Judge held that the Defendants were not able to show the necessary “strong reasons” for him not to enforce the parties’ agreement and therefore granted the injunctive relief sought.
This case illustrates the problems that can arise when primary and excess contracts have inconsistent dispute resolution provisions, and do not spell out whether a nominated venue has exclusive jurisdiction. Consistent and clear drafting through the layers can avoid the inconvenience and expense of “disputes about disputes”, duplicated proceedings and the risk of inconsistent outcomes.