|Judgments - Agnew (Suing on his own behalf and in a representative capacity on behalf of all members of Lloyd's Syndicates 672, 79, 1023 and 590) and others v. Länsförsäkringsbolagens A.B.
I turn to Mr. Siberry's submissions. Mr. Siberry's first main submission is that the decision of their Lordships' House in Kleinwort Benson has made it clear that for a claim to fall within Article 5(1) it must be based on a contract, i.e. it must be a claim in respect of a right, and the corresponding obligation arising under a contract: the obligation in question must be a contractual obligation. So far as this submission is concerned apart, possibly, from the inclusion of the word "under" I find it quite acceptable. An obligation which, if it is not fulfilled, provides a right to set aside the contract I would regard as being in ordinary parlance as a contractual obligation of, if not also under, the contract. Otherwise you descend into the unattractive distinctions between obligations which are included in the contract and obligations which arise under the general law. Substitute the words "arising from" for the word "under" and this difficulty is resolved.
As to the authorities, these were examined in detail by their Lordships in Kleinwort Benson. Apart from Lord Mustill who was content to adopt the dissenting opinion of Lord Nicholls, each of their Lordships gave their own opinion. Each opinion examined the relevant Community jurisprudence.
It is Lord Goff of Chieveley who subjects the Community jurisprudence to the closest analysis. However, nowhere does he touch upon a situation where what is at issue is not seeking a remedy in relation to a contract which is void ab initio but seeking one which is only voidable. As he indicates, having ascertained the relevant principles under the Community jurisprudence, the "question is whether the claim of Kleinwort to restitution of the sums paid by it to Glasgow under a contract accepted to be void ab initio falls within Article 5(1)". Having specified that that is the issue he then turns immediately to state his conclusion, again focussing on a void contract, in these terms:
The requirement of Lord Goff is that there should be a contractual obligation. It is a matter of speculation as to whether he would have come to the same conclusion as that to which he came to in the case of a void contract in the different circumstances which exist here. Lord Goff correctly gleaned in particular from the case of Martin Peters (Case 34/82)  E.C.R. 987 (at p. 1002 para. 11) that what is important when deciding whether Article 5(1) applies is a "particularly close connecting factor between a dispute and the court which may be called upon to hear it". The dispute which Lord Goff had in mind was a contractual dispute as to performance. Once it is accepted that a contractual obligation can arise under the general law as well as under the terms of the contract, there is no difficulty in identifying the necessary proximity between the obligation which is relied on here by the claimants and the place of its performance which is within this jurisdiction.
Lord Clyde's approach is also closely tied to the need for there to be a contract. He states :
I would regard this as being one of the "variety of forms" in which an issue as to the performance of a contractual obligation can arise. Lord Clyde's approach does not create any difficulty in regarding the claim here as falling within Article 5(1).
That it would be wrong to regard Lord Clyde's opinion as being inconsistent with the present contentions of the claimants also appears from a passage later in his opinion where he refers to Effer S.p.A. v. Kantner (Case 38/81)  E.C.R. 825. In regard to that case, he states that :
Lord Clyde also refers to the case of Boss Group Ltd. v. Boss France S.A.  1 W.L.R. 351, a case which is similar to this case (declarations were sought denying the existence or the continued existence of the contract in question), without indication of disapproval of it.
Lord Hutton, in his opinion, accepts that the words "may . . . be sued . . . in matters relating to a contract" are wider than the words "may be sued on a contract". (p. 186) The remaining speech is that of Lord Nicholls which is strongly supportive of the claimants' case but as it is a dissenting speech, although I feel it is very persuasive, I place it on one side.
While therefore the comments of their Lordships who constitute the majority in the Kleinwort case deserve careful examination, I do not regard them as inconsistent with what I regard as being the common-sense answer to this case.
The decision of the E.C.J. to which most attention was paid was the decision in the case of Ets. A. de Bloos S.P.R.L.  E.C.R. 1497. Mr. Siberry's reference to an "obligation arising under the contract" came from the judgment in that case. It is a case which is concerned with identifying the place of performance, that is, the second part of Article 5(1). That is clear from the language of the paragraph of the judgment of the court in which the words "under the contract" appear. The court said :
When obligations can arise in the different legal systems of the many Contracting States under the general law which can appropriately be regarded as contractual although they are not mentioned in the contract it would be inappropriate to attach any particular significance to the use of the word "under" by the E.C.J. in these circumstances. I certainly would not be prepared to assume that its use indicated that it was only obligations which arose under the express terms of the contract which the E.C.J. has in mind. Such a legalistic distinction has in my judgment no place in applying a convention which is seeking to lay down rules of jurisdiction of general application among a number of States.
The other case to which it is useful to refer is the case of Effer S.p.A. v. Kantner  E.C.R. 825. The decision provides a degree of support for the claimants' case since the court held :
While it is possible to find other paragraphs in the judgments of the E.C.J. which it can be argued support one side or the other, I do not consider that it is necessary for the purposes of this opinion to refer specifically to any other decisions. In my view there is nothing contained in the other decisions to which we were referred which is inconsistent with the adoption of what I have suggested is the correct approach. The defendant does not suggest otherwise. Apart from the general principles already identified, the arguments of the defendant return to the proposition that pre-contractual obligations are not within Article 5(1), and on this issue there is nothing in the other decisions of the E.C.J. or, for that matter, in the decisions of the other contracting States which are decisive on the subject.
My Lords, I am of the opinion that the authorities enable your Lordships' House to decide this issue in the manner which most satisfactorily promotes what I understand to be the policy of the Lugano Convention and which complies with the ordinary meaning of the language of Article 5(1). It is for this reason that I would reject the arguments of the defendants despite the persuasiveness of Mr. Siberry's argument.
The Tort Issue
It is accepted that if this case falls within Article 5(1) it does not fall within Article 5(3). It is not possible for the same issue to be classified under both heads. Having come to the conclusion that it falls under head 5(1) it does not appear to me desirable to consider subsection (3) further, other than to indicate that if the proceedings fall within Article 5, the obvious candidate is Article 5(1) rather than Article 5(3).
Throughout the hearing of this appeal I have been conscious that the issues before us are ones which it would be preferable for the E.C.J. to decide. It is however not possible to refer issues under the Lugano Convention to that court and while there is a case pending before that court involving the Brussels Convention which raises the insurance issue (Group Josi Reinsurance Company S.A. v. Compagnie d'Assurances Universal General Insurance Company  I.L.Pr. 351), there is no equivalent issue before the European Court as to the contract issue. In these circumstances it seems that their Lordships have no alternative but to determine the present appeal. In giving my opinion as to the proper outcome of the appeal, I am reassured by the fact that the issues with which we are concerned are ones of which the courts in this country have considerable experience because of the size of the reinsurance market in London. When the E.C.J. gives a decision on the same issues under the Brussels Convention then those decisions will take precedence over your Lordships' conclusions. I would hope that when that happens, in coming to their decision the E.C.J. will obtain some assistance from their Lordships' opinions.
My Lords, for the reasons I have attempted to explain I would dismiss this appeal.
LORD COOKE OF THORNDON
I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Woolf, Lord Hope of Craighead and Lord Millett. While respecting the views of the two latter members of your Lordships' House and the lines of reasoning which they employ, I prefer the view of Lord Woolf as being more realistic. Independently I had reached the same conclusion by the end of the arguments of counsel. This view also accords with those of Mance J. at first instance and the Court of Appeal (Evans, Hobhouse and Schiemann L.JJ.), so there is an emphatic overall majority for it. I share with Lord Woolf the hope that this may be of some help to the European Court of Justice when giving a decision on the same issues under the Brussels Convention.
As to Section 3 of the Lugano Convention, the word "insurance" may be used in a general sense covering all aspects of the subject, but just as naturally it may be used in a more limited sense to refer only to direct insurance as distinct from reinsurance. Which sense is appropriate in any given instrument will depend on the context and purpose of the provision in question. The more limited sense is likely to be more appropriate when the rights of policy-holders other than reinsurers in the insurance industry are the focus of attention. In the present case I need not discuss this question at length, as your Lordships' Appellate Committee and the Court of Appeal are unanimous that the more limited meaning is correct; and, while the question was not argued before Mance J., there is an observation in his judgment indicating that he was of the same opinion (see  4 All E.R. at 993C).
The key point is that the wider choice of jurisdictions in which to sue the insurer, given by Article 8 of Section 3, is a form of "consumer" protection; whereas reinsured as a class cannot be supposed to be in need of similar protection and so are outside the evident purview of the Article. And, if Article 8 had been intended to apply to suits against reinsurers, one would expect to find provision for contracting out in Articles 12 and 12A, as there is no obvious reason why a reinsurer should not be entitled to stipulate that he may be sued only in the courts of the State where he is domiciled. Moreover, the provisions of Section 3 are elaborate, yet nowhere in them is there the slightest hint that reinsurance is within their scope. In contrast Article 8.3 expressly brings in co-insurers. Taken as a whole, the language of the Section is strongly suggestive of direct insurance only, and no little effort would be required to fit reinsurance into it (for example, Article 10 as to actions by the injured party directly against the insurer, and Article 11 as to proceedings by the insurer irrespective of whether the defendant is "the policy-holder, the insured or a beneficiary"). For these and for the other reasons given by my Lords, I join in holding that Section 3 must be ruled out.
Turning then to Section 2, Article 5.1: patently an action to avoid a contract is a matter "relating to a contract". All the nine judges who have considered this case in England are of the same mind on this point. One need say nothing more about it.
The issue on which a difference of opinion has arisen in your Lordships' House is whether the words "the place of performance of the obligation in question" are satisfied. This issue has proved to lend itself to extensive discussion. The considerations which seem to me decisive are as follows.
The obligation in question may be variously described as an obligation to make a fair presentation of the risk, an obligation not to misrepresent the risk, or an obligation to disclose facts material to the risk which the reinsured knows or ought to know. However described, it is an obligation falling on the reinsured for breach of which a remedy, namely the setting aside of the contract, is available against the reinsured. Cases where an apparent contract in void ab initio - for such causes as failure to comply with a statutory requirement as to form, lack of contractual power in one party, or uncertainty - are distinguishable.
Whether the concept of contract, for the purposes of Article 5.1, be given an independent (or autonomous) convention interpretation or a common law interpretation, the remedy of repudiating the contract is essentially part of the law of contract. That is so not only because of the subject-matter but also because the remedy is available to the reinsurer in his capacity as one of the parties to the contract of reinsurance. As put in 25 Halsbury's Laws of England, 4th ed. (1994) para. 361, it is "an inherent right derived as a matter of law from the nature of the contract". In English law breach of the obligation in question does not itself give rise to a cause of action in tort or delict; for the latter there must be the added factor of deceit or breach of a duty of care. The obligation is imposed by law and has to be performed in negotiations for a contract (and may extend subsequently), but in a case such as the present it becomes enforceable only if a contract is concluded. It is then a condition precedent to the formation of a fully binding contract or, more shortly, a condition of the contract. Whether it is a term or condition "in" (or "under") the contract is the kind of question which schoolmen might debate, but that is a refinement of linguistics which, in my opinion, should be avoided if possible in interpreting a modern convention intended to provide clear and broad rules as to the jurisdiction of courts. Suffice it that the obligation is so intimately connected with the contract that if falls naturally within Article 5.1.
A powerful factor supporting that conclusion in a case such as the present is the close connection between the dispute and the courts sitting in London. Mance J. said (see  4 All E.R. at 981) -
That same concession was made in the Court of Appeal (see  4 All E.R. at 940E). In the argument before your Lordships' Committee the point ceased to be common ground, but I think that the judge at first instance and the Court of Appeal clearly proceeded on a correct basis. The obligation fell to be discharged where and when each contract was negotiated. The reinsurer was entitled to performance of it there and then, subject to agreement otherwise, waiver or estoppel (as by acceptance of disclosure to an authorised representative elsewhere).
Closely allied with the consideration just mentioned is the fact that, in a case concerned with the negotiation on the London reinsurance market of contracts with Lloyd's underwriters and others, the natural place of trial is London. The situation is analogous to that which arose some years ago when heavy losses by Lloyd's syndicates made resort against overseas Names necessary. Courts in the United States, Canada, Australia and New Zealand regarded London as the natural forum for the determination of resultant disputes: see Society of Lloyd's and Oxford Members' Agency Ltd. v. Hyslop  3 N.Z.L.R. 135, 137-138, 141-142, 154. I think that this factor, although far from conclusive, may be allowed some place in interpreting the Lugano Convention.
As to the general approach to the interpretation of the Lugano Convention, I accept that if there were real ambiguity the provisions of Section 2, being exceptions to the general rule of the defendant's domicile, should be interpreted restrictively. But Section 2 does provide quite an extensive range of exceptions, and I would not regard any grudging attitude to these as appropriate. The question must always be the fair meaning of the exception.
I do not think that any answer to the present issue can be wrung out of the decisions to date of the European Court of Justice, nor out of Kleinwort Benson Ltd. v. Glasgow City Council  1 A.C. 153. The fact is that neither the European court nor the English courts have had to face the present issue squarely before the present case; attempts to predict how a particular court would have decided it must be speculative. I would decide it as already stated. On all matters not expressly covered by what I have said, I would adopt the opinion of Lord Woolf. It will be apparent that I would dismiss this appeal.
LORD HOPE OF CRAIGHEAD
The question in this appeal is whether the English courts have jurisdiction to try a claim by reinsurers in the London market to avoid contracts which they entered into with an insurance company domiciled in Sweden on the ground of the company's alleged breach of the duty to observe utmost good faith that English law imposes in relation to the making of such contracts.
The respondents maintain that the English courts have jurisdiction to try the matter under Article 5 in Title II of the Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1988, as set out in Schedule 3C to the Civil Jurisdiction and Judgments Act 1982 as amended by section 1(3) of and Schedule 1 to the Civil Jurisdiction and Judgments Act 1991. They rely, in the alternative, on two of the special rules of jurisdiction in Article 5. These are the rule which applies in matters relating to a contract in Article 5(1) and the rule which applies in matters relating to tort, delict or quasi-delict in Article 5(3). The Court of Appeal, affirming Mance J., held that the proceedings were within the scope of Article 5(1). The Court of Appeal rejected the appellants' argument that the proceedings fell within Article 11, by which an insurer may bring proceedings in matters relating to insurance only in the courts of the defendant's domicile.
These three issues are now before your Lordships in this appeal. It is common ground that, as they arise under the Lugano Convention and not the Brussels Convention of 1968, they cannot be made the subject of a preliminary reference to the European Court of Justice under Article 234 of the EC Treaty (ex Article 177). As the questions raised, especially in regard to article 5(1), have not been the subject of decision by that Court and are far from easy, this is regrettable. But we have no choice in the matter, so we must do our best to arrive at an interpretation of the relevant Articles of the Lugano Convention which is compatible with that which would be given to the equivalent provisions in the Brussels Convention by the European Court.
In Kleinwort Benson Ltd v. Glasgow City Council  1 A.C. 153 the European Court held (Case C-346/93)  Q.B. 57 that it did not have jurisdiction to make a preliminary ruling on the question referred to it by the Court of Appeal because, although the national law pursuant to sections 16 and 17 of the Civil Jurisdiction and Judgments Act 1982 and Articles 5(1) and 5(3) in Title II of Schedule 4 to that Act was based on the Brussels Convention, the Convention was not directly applicable in that case. Nevertheless, as section 16(3) of the Act of 1982 provides, and as Lord Goff of Chieveley was at pains to stress in Kleinwort Benson at p. 163D-G, it is clear that in considering questions which arise under the national law in Title II of the Schedule the courts of this country must have regard to the principles laid down by the Court of Justice in connection with the Brussels Convention. It follows that full account must be taken of any relevant decisions of the European Court as to the meaning and effect of the corresponding provision in Title II of the Convention, and that the reports mentioned in section 3(3) of the 1982 Act may also be considered and given such weight as is appropriate. The application of these rules ensures that the same approach is taken to the interpretation of the jurisdictional concepts in Title II under the national law as that taken to the like concepts under the Brussels Convention. In my opinion it is highly desirable, in the interests of consistency, that the same concepts in Title II of the Lugano Convention should be interpreted in the same way. Accordingly I would take, as a starting point for an examination of these concepts, the jurisprudence of the European Court and, so far as they may be relevant, the reports mentioned in section 3(3) of the Act of 1982.
In my opinion Title II Section 3 of the Lugano Convention, by which matters relating to insurance are to be determined by special rules, does not apply to matters arising out of contracts of reinsurance. While it is no doubt true that reinsurance is a form of insurance, a clear line can be drawn between the generality of insurance business conducted between insurers and members of the public who wish to obtain insurance cover and the particular form or category of it which is commonly referred to by insurers, textbook writers and judges as reinsurance. The purpose of reinsurance is to lay off or pass on part of the liability of the insurer under an underlying insurance contract to another insurer. The contracting parties are engaged in the same industry. The reinsurer is an insurance company or underwriter who deals not with members of the public but only with other insurance companies or underwriters.
Professor Schlosser, in paragraph 140 of his Report on the 1978 Accession Convention to which the United Kingdom was a party, explains that the policy consideration which lies behind the special rules which derogate from the general rule in Article 2 that jurisdiction is founded upon domicile is that of social protection. It was in the light of this concept that the United Kingdom's request for special rules for the insurance of large risks was examined, in order to see which types of insurance contracts were in general concluded only by policy holders who did not require social protection. One has only to ask the question whether social protection needs to be extended to the insured under a reinsurance contract for it to be plain that the concept of social protection does not apply to this type of contract. An insurer who wishes to obtain reinsurance does not need social protection against the insurance company or underwriter who deals in reinsurance. Professor Schlosser did not give reasons for his brief statement in paragraph 151 that "Reinsurance contracts cannot be equated with insurance contracts". But when that paragraph is read in the context of his Report as a whole it can be seen that the reason is that contracts of that kind do not fall within the policy of social protection which has informed Section 3.