Governing Law and Jurisdiction in Reinsurance – Foreign Reinsurer Participation in a London Programme
Gard Marine & Energy v. (1) Lloyd Tunnicliffe; (2) Glacier Re & Anor [2010] Court of Appeal 6 October 2009
The Background
This was a case giving rise to issues of both jurisdiction and governing law under a contract (or contracts) of excess of loss reinsurance issued by the Defendants, to the Claimant ("Gard"), a reinsured domiciled in Bermuda.
The reinsurance was arranged under two separate placements. An order for 7.5% of the whole was placed by way of a London market slip, to which various Lloyd’s syndicates subscribed. A separate slip, for 5% of the whole, was placed with the second Defendant, Glacier Re ("Glacier") a company domiciled in Switzerland.
A dispute emerged under the reinsurance between Gard and certain of the subscribing reinsurers, specifically under the Sum Insured clause and the application of the policy deductible. In March 2007, Gard issued English proceedings against the reinsurers then in dispute, namely three Lloyd’s syndicates and Glacier. Glacier challenged the jurisdiction of the English court, on the grounds that the law governing its participation was Swiss law and that it could be sued only in the courts of Switzerland.
Applicable Law
Dealing with applicable law first, the English court noted that it was obliged to apply the principles of the Rome Convention1. Article 3 of the Convention provides that a contract is to be governed by the law chosen by the parties. Such a choice may be express or it may be "demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case." The 1980 report of Professors Giuliano & Lagarde, a guiding text which accompanies the Convention, offers examples of where this may be so, including where the contract is in a standard form known to be governed by a particular system of law "such as a Lloyd's policy of marine insurance..."
If no choice can be discerned at all, either expressly or by implication as above, then the general presumption is that the contract will be subject to the law of the place of business of the "characteristic" performer of the contract (Art 4(2)), which in the case of reinsurance is taken to be that of the reinsurer2
Lawyers Jonathan Rogers, Anthony Menzies, James Crabtree, Peter Kempe, Dr. Gunbritt Kammerer-Galahn, Franz Janssen, Dr. Astrid Wagner, Wolfgang Schaller, Alain de Foucaud, Christine Flion, Christopher Dixon
1 Recently superseded by the Rome I Regulation, with respect to contracts entered into after 17 December 2009
2 Dornoch v. Mauritius Union Assurance [2006] 1 Lloyd’s IR 786
