AXA Corporate Solutions Assurance SA v Weir Services Australia Pty Ltd

Factual and Procedural Background

These proceedings concern a coverage dispute under liability insurance policies issued by the claimant insurance company, Company A. The relevant policies include global liability policies issued in England covering companies within Group B, including the Defendant, Company C, and a "broadform" liability policy issued in Australia in favor of Company C and other subsidiaries of Group B in Australia.

Two sets of proceedings have arisen: first, proceedings brought in the English court by Company A against Company C seeking declaratory relief regarding the global policies, filed in August 2015 but served in Australia in March 2016 with permission granted by Judge Knowles. Second, proceedings initiated by Company C against Company A in the Commercial List of the New South Wales court in March 2016, seeking indemnity under the Australian policy or alternatively under the global policies.

Company A applied for an anti-suit injunction to restrain Company C from pursuing its claim under the global policies in Australia, asserting England as the appropriate forum. Company C applied to set aside the order permitting service in Australia, contending that New South Wales is the proper forum. The dispute centers on which court should determine the claims under the global and Australian policies.

Company A is a major insurance company based in France with global operations. Company C is an Australian subsidiary of Group B, an engineering company headquartered in Scotland and listed on the London Stock Exchange.

The global policies, covering the years 2011 to 2014, were arranged in England and form part of a worldwide integrated liability insurance program for Group B. These policies provide cover on a difference in conditions/difference in limits basis, meaning the local policies are primary, with the global policies providing excess or gap cover. The Australian local policy covers public and products liability but excludes professional indemnity and has lower indemnity limits.

The global policies contain a clause indicating they are governed by the laws of England and Wales unless agreed otherwise, which was not the case. The Australian policy is governed by Australian law, likely New South Wales law. Neither policy contains a jurisdiction clause.

The underlying claim arises from a 2007 contract with a company in the Philippines involving refurbishment of a large plant item. Following a failure in 2011, arbitral proceedings were commenced in 2013 in Sydney, resulting in a 2016 award finding no liability. Company C's claim under the policies crystallized as a claim for a minimum payment under a confidential "Cap and Collar Agreement" and its arbitration costs, primarily legal costs exceeding US$5.6 million, which fall within the Australian policy limits.

The coverage dispute involves whether the "Product" covered includes the relevant component, issues of late notification, entitlement to indemnification for the Cap and Collar payment, and recoverability of arbitration defence costs. Differences exist between the global and Australian policies in coverage scope, particularly regarding professional indemnity and defence costs.

Legal Issues Presented

1. Whether England is the appropriate forum for the resolution of the coverage dispute under the global liability policies.
2. Whether to grant Company A’s application for an anti-suit injunction restraining Company C from pursuing claims under the global policies in Australia.
3. Whether to set aside the order permitting service of the English proceedings on Company C in Australia.
4. How the proceedings in England and Australia should be managed and sequenced.

Arguments of the Parties

Company A's Arguments

• The global policies are governed by English law and were arranged and issued in England.
• The principal issues concern the construction and application of the global policies under English law, including key definitions and exceptions.
• Company C’s claim to indemnity for the Cap and Collar payment cannot succeed under English law.
• The global policies are widely used and it is desirable for key provisions to be construed by the English courts.
• The global policies and dispute have the closest connection to England, involving English-based brokers, insurers, and legal representatives.
• Practical considerations such as witness location and evidence do not militate against litigation in England.
• Company A seeks an anti-suit injunction to avoid vexatious parallel proceedings in Australia which would increase costs and risk inconsistent judgments.

Company C's Arguments

• Although service out of jurisdiction was proper, Company A cannot show England is clearly the most appropriate forum.
• The Australian policy must be determined first as Company A’s liability under the global policies is contingent on the Australian policy not responding.
• The Australian court can resolve the entire dispute, including monetary claims under both policies, whereas the English court cannot deal with the Australian policy claims.
• The Australian policy is governed by Australian law and subject to local insurance legislation, which the New South Wales court is best placed to apply.
• Issues arise under both policies involving Australian law and facts, including the arbitration and the Cap and Collar Agreement governed by New South Wales law.
• Key witnesses and evidence are located in Australia, and the arbitration costs were incurred there.
• Company C is an Australian company, and Company A has a registered Australian branch, which was validly served.
• The Australian proceedings were commenced promptly upon learning of the English proceedings.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460	Test for determining the most appropriate forum for trial under CPR r. 6.37(3).	Used to assess whether England is clearly the most appropriate forum for the claim under the global policies.
VTB Capital plc v Nutritek International Corp. [2013] 2 AC 337	Factors relevant to forum conveniens and appropriateness of jurisdiction.	Supported the analysis of relevant factors including governing law and location of parties and witnesses.
Astrazeneca Insurance v XL Insurance [2013] Lloyd's Rep IR 290	Policy interpretation and limits on indemnity claims.	Applied to reject indemnity claims where underlying arbitration claimant’s claims do not meet policy thresholds.
Tiernan v Magen Insurance Co Ltd [2000] I.L.Pr. 517	Usefulness of negative declaratory relief in insurance disputes.	Supported the court’s acceptance that declaratory relief is useful to clarify policy construction issues.
New Hampshire Insurance Co. v Philips Electronics North America [1999] 1 Lloyd's Rep IR 58	Criteria for granting declaratory relief in insurance cases.	Referenced in support of the utility of declaratory relief in the present dispute.
Seismic Shipping v Total E & P [2005] 2 Lloyd's Rep 359 (CA)	Principle that anti-suit injunctions require showing that foreign proceedings are unconscionable, vexatious or oppressive.	Summarized the threshold for granting anti-suit injunctions which was not met here.
Lincoln National Life Insurance Co v Employers Reinsurance Corp [2001] 1 Lloyd's Rep 853	Governing law as a significant factor in forum appropriateness.	Supported the conclusion that English law governing the policies favors English jurisdiction.
CGU International Insurance plc v Szabo [2002] 1 All ER (Comm.) 83	Governing law’s influence on forum choice in insurance disputes.	Reinforced the significance of English law governing the global policies.
Ass. Generali SpA v Ege Sigorta AS [2002] 1 Lloyd's Rep 480	English jurisdiction favored where policies are governed by English law.	Applied to support English jurisdiction over global policies.
Faraday Reinsurance Co Ltd v Howden North America Inc [2012] 1 Lloyd's Rep IR 631	English law as a key factor in determining the natural forum.	Supported the court’s finding that England is the appropriate forum for the global policies.

Court's Reasoning and Analysis

The court first considered the appropriate forum for the claims under the global policies. It acknowledged that Company A bears the onus of proving England is clearly the most appropriate forum. The court accepted that the global policies are governed by English law, were arranged and issued in England, and that the key issues involve construction of English law policies. The integrated nature of the global insurance program and the widespread use of such policies governed by English law supported this conclusion.

Company C’s argument that the Australian court should hear the entire dispute, including the Australian policy claims, was recognized as strong because it would avoid splitting the dispute between jurisdictions. However, the court found that this did not override the principle that claims under English law policies should be decided in England.

The court noted that witness evidence is unlikely to be significant and that the arbitration record provides the factual basis. Although the arbitration and Australian policy issues arise in Australia, this does not affect the forum for the English law claims.

Regarding the anti-suit injunction, the court applied the established principle that such injunctions require the foreign proceedings to be unconscionable, vexatious, or oppressive. While Company C’s Australian proceedings were tactical, they were not illegitimate or unconscionable, and thus no anti-suit injunction was warranted.

Finally, the court addressed case management and sequencing of the proceedings, acknowledging the practical benefits of resolving the Australian policy claims first. It decided to stay the English proceedings pending resolution of the Australian proceedings, allowing the Australian court to address the logically anterior issues. The stay could be lifted if necessary after the Australian court’s decision.

Holding and Implications

The court held that England is clearly the most appropriate forum for the trial of the action concerning the global liability policies. However, it declined to grant an anti-suit injunction restraining the Australian proceedings.

The English proceedings were stayed pending the outcome of the Australian proceedings concerning the Australian policy. This approach allows the Australian court to address the logically prior issues under the Australian policy, with the English court retaining jurisdiction over the global policies if still relevant after the Australian decision.

The direct effect is that the parties will litigate in both jurisdictions with coordinated case management, but no new precedent was established beyond reaffirming established principles on forum conveniens, anti-suit injunctions, and insurance policy governance.