Starlight Shipping Company v Allianz Marine & Aviation Versicherungs AG & Ors

Factual and Procedural Background

This opinion concerns the continuation of an appeal from a summary judgment granted by Burton J in favour of Company A Market Insurers ("CMI") and Company B Market Insurers ("LMI") against the shipowners and associated companies (collectively "the owners"). The insurers sought declarations, damages, and indemnities related to the owners' proceedings in a foreign jurisdiction ("the foreign proceedings") which pursued damages despite prior settlements under relevant insurance policies concluded in late 2007 and early 2008. The owners' application to stay the English proceedings was initially refused but subsequently granted on appeal under Article 27 of Council Regulation 44/2001 (EC), though this stay was later lifted by the Supreme Court. The court is now tasked with deciding the remainder of the owners' appeal.

The settlement agreements involved defined "the Assured" as the managers, owners, and associated companies of the vessel in question. The CMI settlement agreement provided for payment of a specified sum in full and final settlement of claims under the insurance policy relating to the vessel's loss, including indemnities against claims by associated entities and mortgagees, subject to English law and exclusive jurisdiction of the High Court in London. The LMI settlement agreement contained similar provisions with slightly different terms and payment amounts.

The owners elected not to appear at the present hearing but relied on previous submissions and correspondence, while CMI, LMI, and certain defendants ("the HD defendants") appeared and made oral submissions.

Legal Issues Presented

1. Whether the claims in the foreign proceedings fall within the settlement and indemnity provisions of the Settlement Agreements;
2. Whether the claims in the foreign proceedings fall within the exclusive jurisdiction clauses of the CMI and LMI Settlement Agreements;
3. Whether the claims in the foreign proceedings fall within the exclusive jurisdiction clauses in the original insurance policies;
4. Whether the claims for damages for breach of the settlement and jurisdiction provisions infringe European Union law;
5. Whether the claims for associated declarations infringe European Union law;
6. Whether the insurers are entitled to summary judgment for damages for breach of the jurisdiction provisions;
7. Whether the indemnity provisions apply given the nature and stage of the foreign proceedings.

Arguments of the Parties

Owners' Arguments

• The owners contended that the principle from the House of Lords decision in Fiona Trust v Privalov should not universally apply to settlement agreements, distinguishing it by reference to a Court of Appeal decision involving expert determination clauses.
• The owners argued that claims for damages interfere with the foreign court's jurisdiction, relying on precedent concerning anti-suit injunctions.
• A new argument was raised that the insurers could not claim indemnity due to their own wrongdoing, although this was considered too late for appeal.

Insurers' Arguments (CMI and LMI)

• The insurers submitted that the foreign claims fall within both the settlement and indemnity provisions of the Settlement Agreements due to their relation to the loss of the vessel.
• They argued that the exclusive jurisdiction clauses in both the Settlement Agreements and the original insurance policies cover the foreign claims, which should have been brought in England.
• The insurers maintained that claims for damages and declarations do not infringe EU law as no anti-suit injunction is sought and the foreign court's jurisdiction is not interfered with.
• They asserted entitlement to summary judgment for damages due to breach of jurisdiction provisions, relying on established case law.
• The insurers contended that indemnity provisions apply and that they should be compensated for expenses incurred due to proceedings wrongly brought in the foreign jurisdiction.

HD Defendants' Arguments

• The HD defendants did not present any distinct points differing from the insurers' submissions but were permitted to address the court as necessary.

Table of Precedents Cited

Court's Reasoning and Analysis

The court reasoned that the foreign claims clearly fall within the settlement and indemnity provisions of the Settlement Agreements because they relate to the loss of the vessel, and the parties intended these provisions to cover all such claims to avoid further litigation. The court applied the Fiona Trust principle, emphasizing a commercial and purposive construction of settlement and jurisdiction clauses, rejecting the owners' argument distinguishing Fiona Trust.

Regarding jurisdiction, the court held that the claims fall within the exclusive jurisdiction clauses of both the Settlement Agreements and the original insurance policies, meaning the claims should have been brought in England. The court noted that even tortious claims fall within these jurisdiction clauses due to the parties' agreement.

The court rejected the owners' contention that claims for damages and declarations infringe EU law, clarifying that no anti-suit injunction was sought and that the foreign court retains jurisdiction to consider the claims and decide on recognition of any English judgments. The court found no interference with the foreign court's jurisdiction and no basis for a reference to the Court of Justice of the European Union.

The court affirmed that summary judgment for damages for breach of jurisdiction provisions was appropriate, noting that the breach lies in bringing the claims in the foreign jurisdiction regardless of their merits. The indemnity provisions were held to apply at this stage, as the insurers have incurred ongoing expenses due to the foreign proceedings. The court dismissed the owners' late argument that the insurers could not claim indemnity due to their own wrongdoing, finding no such wrongdoing under English law.

The court also considered the position of the HD defendants, finding no distinct issues affecting them and allowing them to make any relevant submissions without prejudice to the owners.

Holding and Implications

The court UPHELD the orders made by Burton J, dismissing the remainder of the owners' appeal.

The direct effect of this decision is that the claims brought in the foreign jurisdiction are held to be in breach of the settlement and jurisdiction provisions, entitling the insurers to damages and indemnity for expenses incurred. The foreign claims are subject to the exclusive jurisdiction of the English courts. The decision does not set new precedent beyond affirming established principles regarding settlement agreements, jurisdiction clauses, and EU law considerations in this context.