Howden North America Inc & Anor v ACE European Group Ltd. & Ors

There is before the court an adjourned application for permission to appeal and, if permission is granted, an appeal from the order of Field J dated 17 September 2012. The case concerns eight insurance policies, which the appellant (“HNA”), says cover it against liability for asbestos claims made against HNA, which is an American subsidiary in the Howden Group of Companies. The immediate issue is whether Field J was correct to refuse to set aside his own order permitting service of proceedings out of the jurisdiction on HNA. Similar issues in relation to related insurance cover of HNA have already been litigated up to this court. (Footnote: ¹) I will refer to that as “the Faraday litigation”. It is common ground, however, that we are not formally bound to follow the result of this court in that case.

The legal background to the present litigation and other, more extensive litigation between HNA and its liability insurers in Pennsylvania, is that there are two fundamental differences between the law of a number of states in the USA, including Pennsylvania, and that of England as to what triggers liability under policies like those in issue. First, under the law in Pennsylvania, exposure to a hazardous condition can trigger liability under the liability policy, but this is not so under English law. (Footnote: ²) Secondly, under English law, but not under that of Pennsylvania, the relevant trigger of liability must occur in the policy period as defined in the policy “period clause”. (Footnote: ³) That is not so under Pennsylvania law. Accordingly, from the point of view of an insurer under a liability policy which otherwise might cover liability of the insured for asbestos claims, it would be advantageous if the applicable law of the policy is English law. But from the point of view of the insured, it is advantageous if the applicable law is Pennsylvanian law, because the breadth of cover granted will be greater.

The Howden Group is concerned with engineering and it has a number of subsidiaries around the world. HNA is a North American licensee of the Howden Group. It supplies fans, rotary heat exchangers, compressors and gas cleaning equipment to utility and industrial markets in Canada, USA and Mexico. Third parties have brought asbestos-related personal injury claims against HNA in the USA, alleging that HNA is liable for bodily injury, sickness and disease caused by their exposure to asbestos products which were manufactured or distributed by HNA or its predecessors, for whom it is said that HNA is liable.

HNA has been a party to the insurance programmes of the groups to which it has belonged at various times. As usual, the insurance programmes were organised in various layers of cover and were renewed annually. The policies cover the years 1961-1986, when HNA was a subsidiary of Ampco-Pittsburgh Corporation, and 1995-2002, when HNA was a subsidiary in the Howden Group. There are two relevant sections to the policy coverage. Under section 1 the insurers are liable to indemnify HNA for any sums which it may become legally liable to pay claims made against it for damages, costs and expenses in respect or in consequence of personal injury and/or damage to material property only insofar as this happened (or occurred) during (and not before or after) the relevant policy period. Under section 2 the insurers are liable to indemnify HNA in respect of legal liability arising out of the matters set out in that section but only insofar as claims were made against HNA during the relevant policy period or claims have subsequently been made against HNA which arise out any circumstances which could reasonable have been expected to give rise to a claim under section 2 of the policy and of which a nominated person in HNA was aware during the relevant policy period.

In 2003 HNA brought claims against its primary layer insurers, alleging that it was entitled to recover under the policies in respect of asbestos related claims against HNA. Those claims were settled in 2005. HNA had long anticipated that its liability for the asbestos related claims brought against it could exhaust lower levels of its insurance cover and might (or would) lead to claims on the policies which are the subject of this appeal. HNA therefore sought to notify claims to insurers on the excess layers of the insurance programme and for various years, to which it was a party, in respect of asbestos-related claims brought by third parties. These notifications have given rise to two further sets of proceedings in Pennsylvania, which I will describe below.

The present English proceedings were brought by insurers of HNA under eight policies of liability insurance. The claim form was issued on 21 September 2011. The policies all concern “excess layers” of cover for policy periods between 1995 and 1999. Brief details of the policies are given in a schedule to this judgment (“the Schedule”). I will call the individual insurer respondents respectively “Ace”, “Gerling” “New Hampshire”, “Portman”, “QBE” and “Swiss Re”. Collectively I will refer to them as “the Insurers”. (Footnote: ⁴)

The relief sought by the Insurers in these proceedings is unusual. It is not for the usual declarations of non-liability, nor is it for an injunction to restrain proceedings in Pennsylvania. The relief is, broadly, for declarations that (i) the policies are governed by English law; (ii) on a proper construction of the policies (under English law), the insurers are not liable under Section 1 of the policy for asbestos-related claims where the third-party claimant had not suffered actionable personal injury within the policy period; (iii) on a proper construction of the policies (under English law), the Insurers are not liable under Section 2 in relation to asbestos-related bodily injury claims arising out of faulty defective or inadequate materials etc not made by a third party against an insured during the policy period or where a claim arising out of faulty materials was not made or notified within the policy period; and (iv) the Insurers will not be liable where the quantum of the claim or claims in question arising out of one event or attributable to one single cause had not reached the attachment point for the policy.

It will be immediately obvious that the second, third and fourth declarations sought are thus intended to reflect the English law position on liability in respect of an asbestos related claim under the present types of policy. The declarations sought do not go into the details of individual cases and it is accepted that they raise no complex legal issues so far as English law is concerned. The issues can properly be said to concern principles of “hornbook” insurance law.

In the two pending proceedings in the US District Court for the Western District of Pennsylvania HNA is the plaintiff and the Insurers are the defendants. One action was begun in 2009 against New Hampshire and Gerling and other excess insurers. I will call it “the 2009 proceedings”. So far as the present appeal is concerned, the 2009 proceedings relate to policies number (1) to (6) of the Schedule. None of these policies have a proper law or jurisdiction provision. The 2009 proceedings have been settled against other excess insurers but they continue against New Hampshire and Gerling and have been assigned to US Federal Judge Conti, who was also the judge in the 2003 proceedings.

By the time of the hearing before Field J, the 2009 proceedings had reached a fairly advanced stage. Field J said: “…fact discovery is complete, expert reports have been served and the expert phase of the litigation is about to be completed by taking depositions”. (Footnote: ⁵) Most importantly, (as I will explain in more detail below), Judge Conti had rejected an application by the Insurers to stay or dismiss the 2009 proceedings on grounds of forum non conveniens. She handed down her judgment on 21 June 2012, although she had dismissed the motions on 16 November 2011. Things have moved on since the hearing before Field J. We were shown a Case Management Order made by Judge Conti on 7 November 2012. This set out a procedural timetable that would lead to a hearing to determine the applicable law of the policies. It is anticipated that the hearing on this issue will take place in March 2013 and there would be judgment some time thereafter.

The other set of Pennsylvania proceedings was begun by Ampco-Pittsburgh Corporation in February 2011. I will call these “the 2011 proceedings”. These proceedings were against various of Ampco-Pittsburgh’s insurers upon policies dating from 1981-1984. Originally these proceedings did not involve any of the Insurers. But they did include HNA as a defendant. In July 2011, that is just two months before the Insurers begun the present action in England, HNA joined all the Insurers into the 2011 proceedings. HNA made claims under policies (7) and (8) in the Schedule. These policies also do not have any proper law or jurisdiction provisions. The 2011 proceedings have again been assigned to Judge Conti. They are much less advanced than the 2009 proceedings, but they have been subject to the same argument and judgment as the 2009 proceedings on the issue of forum non conveniens, to which I must now refer.

On 21 September 2011 (ie. the same day as the Insurers started the present English proceedings) Gerling and New Hampshire filed motions to dismiss the two Pennsylvania proceedings against them (viz. the 2009 and 2011 proceedings) on grounds of forum non conveniens. Judge Conti heard the argument on the motions on 16 November 2011 and then she announced her decision, which was that the motions would be rejected and dismissed. She gave brief reasons orally on 16 November 2011, but gave more elaborate reasons in a judgment handed down on 21 June 2012. In her written judgment, Judge Conti observed that the underlying policies did not have any express choice of law clause so that the court would have to determine which law applied to the policies and, to do so, it would have to use the choice of law rules of Pennsylvania as the forum state.

Those principles were summarised in the judgment of Field J (Footnote: ⁶) as follows:

“Under those rules, where there was a true conflict between the competing governing laws – here Pennsylvania and England – the court had to determine which jurisdiction had the most significant relationship to the dispute and the relevant factors to be analyses were those identified in §§6 and 188 of the Restatement (Second) of Conflict of Laws (1971). Under §6 the factors include (a) the needs of the interstate and international systems; (b) the relevant policies of the forum; (c) the relevant policies of the interested states and the relative interests of those states in the determination of the particular issue; (d) the protection of justified expectations; (e) the basis policies underlying the particular field of law; (f) certainty and predictability and uniformity of result; and (g) ease in the determination and application of the law to be applied. Under §188(2), in the absence of an effective choice of law, the contacts to be taken into account in applying the principles of §6 to determine the law applicable to an issue include: (a) the place of contracting; (b) the place of negotiation; (c) the place of performance; (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of the business of the parties. And these contracts are to be evaluated according to the relative importance with respect to the particular issue”.

Judge Conti considered the relevant factors and concluded that it was not entirely clear whether the law of Pennsylvania or some other state of the USA would be the governing law. Her judgment continued: (Footnote: ⁷)

“It does not appear, however, that English law would apply. It should be noted that the court’s analysis pertaining to the applicable law is at this stage a preliminary assessment because the parties did not fully brief the matter. … It is sufficient for purposes of these motions to conclude that it is unlikely English law will apply and this court must respectfully disagree with the High Court’s determination that English law would apply. In any event it appears that, as between Pennsylvania and England, Pennsylvania has a more significant relationship to the disputes than England and a greater governmental interest in seeing its laws enforced.”

Judge Conti also concluded that even if English law applied, the court could be “informed” as to the applicable law. To this end, she had already admitted a witness statement of Mr Jason David Bright on the English conflict of laws principles and which concluded that, on those principles, the policies were governed by English law.

One of the excess layer policies for the period July 1998 to May 1999 in respect of the liability of “Howden Group Ltd and/or subsidiary companies” for asbestos claims was written by General Star International Indemnity Ltd (“GSIIL”). I will refer to this policy as the “1998 policy”. With effect from 30 November 2010 all policies written by GSIIL were transferred to Faraday Reinsurance co Ltd (“Faraday”) pursuant to section 111(1) of the Financial Services and Markets Act 2000. On 23 August 2010, Charterbrook Associates LLC gave notice of occurrences which it said might entitle HNA to claim under two policies and one of these was later confirmed as being the 1998 policy. This is policy No 7 in the Schedule, to which Swiss Re, Gerling and New Hampshire are party.

On 6 December 2010 Faraday issued proceedings in the Commercial Court against HNA and Howden Buffalo Inc (HNA’s previous corporate name), seeking the same type of declarations as the Insurers claim in the present proceedings. David Steel J granted permission, ex parte, to serve the proceedings out of the jurisdiction and they were served on HNA on 1 June 2012. HNA applied to set aside that permission. On 1 November 2011 Beatson J dismissed the application. (Footnote: ⁸) He concluded that: (1) Faraday had “much the better of the argument” that the policy was governed by English law; (2) it followed that it was appropriate for an English court to determine the applicable law and the questions as to what constituted “injury” under English law and also the question of whether there had been a “single occurrence”; therefore (3) England was the appropriate forum. Beatson J also held that the proceedings in respect of policy No 7 in the Schedule had sufficient “utility” to be allowed to proceed because the answers given by the English court could assist Judge Conti.

On 20 July 2012 the Court of Appeal dismissed an appeal by HNA. (Footnote: ⁹) The single issue on appeal was whether the Faraday proceedings in the English courts would have “utility”. Longmore LJ gave the sole reasoned judgment of the court. (Footnote: ¹⁰) He concluded that Beatson J was aware of the need for Faraday (as claimant) to establish that there was utility in the English proceedings and he had held that there was. Longmore LJ held that there was no error in the judge’s approach or the result.

In the meantime, in Pennsylvania, HNA applied on 14 June 2011 to join Faraday and other insurers who had subscribed to the 1998 second excess policy to its counterclaim in the 2011 proceedings. Judge Conti granted HNA’s ex parte application on 11 July 2011. An attempt by Faraday to challenge this joinder was rejected by Judge Conti on 16 November 2011, with her written reasons being given on 21 June 2012. It is important to note that the English Faraday proceedings predated Faraday being joined in the 2011 Pennsylvania proceedings by some 8 months and predated Faraday’s unsuccessful challenge to that joinder by 11 months.

There was no dispute about the law on the three elements that a claimant, seeking permission to serve proceedings out of the jurisdiction, has to establish. On the first, ie. whether the claim pleaded came within one of the “jurisdictional gateways” set out in CPR Part 6.36 and paragraph 3.1(6) of Practice Direction 6B, it was accepted by Mr Richard Jacobs QC, counsel for HNA, that the Insurers have a “good arguable case” that the claims in respect of the policies identified in the Schedule (none of which have an express English law or jurisdiction clause) fall within two of the “jurisdictional gateways” set out in CPR Part 6.36 and paragraph 3.1(6) of Practice Direction 6B. This is because there is evidence that those policies were presented to and subscribed by the Insurers (or their predecessors in title) in the London Market through London brokers. Therefore there is a good arguable case that the contracts were made within the jurisdiction (paragraph 3.1(6)(a) of PD6B) or made by or through an agent trading or residing in the jurisdiction (paragraph 3.1(6)(b) of PD6B). Field J also considered that, applying English conflict of laws rules, there was “plainly” a good arguable case that the contracts are governed by English law, and so the case fell within the jurisdictional gateway of paragraph 3.1(6)(c) of PD6B. (Footnote: ¹¹) That conclusion was not challenged before us.

As to the second requirement, it was not disputed that there is a serious issue to be tried on the “merits” of the claims. The dispute before the judge centred on the third overall requirement, viz. whether, in all the circumstances, England is clearly the more appropriate forum in which the disputes raised in the present proceedings may be tried in the interests of the parties and for the ends of justice. (Footnote: ¹²) It was also common ground that in a case where a claimant seeks declaratory relief only, then the court has to apply careful scrutiny to the claim and ask whether the grant of such a declaration would be useful. This requirement has been developed in cases in which so-called “negative declarations” have been sought (usually declarations of “non-liability”), whereas it is accepted that in this case “positive declarations” of a certain kind are claimed. But there was no dispute that the same principles applied.

In New Hampshire Insurance Co v Phillips Electronics North America Corp (Footnote: ¹³) the Court of Appeal approved the judgment of Rix J in that case where he had summarised the relevant principles concerning “utility” in the following terms: (Footnote: ¹⁴)

“1.

There is power to grant a negative declaration in an appropriate case, the fundamental test being whether it would be useful.

2.

However, careful scrutiny will be exercised not only to test the utility, or on the other hand the futility, of seeking to determine the claim by means of a negative declaration in England, but also to ensure that inappropriate forum shopping is not allowed, let alone encouraged.

3.

A negative declaration will not be appropriate where it is premature or hypothetical, viz. where no claim has been made or threatened against the plaintiff.

4.

The existence of imminent or a fortiori current foreign proceedings is always a highly relevant consideration, not only for the purpose of testing the utility of the English claim, but also so as to having in mind the need to avoid the twin dangers of forum shopping and of the vices of concurrent proceedings.”

In the New Hampshire case Phillips LJ also emphasised (Footnote: ¹⁵) that where permission to serve proceedings out of the jurisdiction was sought when a negative declaration is claimed, then the court “will have to consider both the question of whether there is justification for that relief and the separate question of whether England is the appropriate forum in which to seek it”. Phillips LJ went on to say:

“|The two questions will, however, cover common ground where the possibility exists that the [claimant] in the English proceedings will be sued by the defendant in an alternative jurisdiction. It is in that situation that the court must be particularly careful to ensure that the negative declaration is sought for a valid and valuable purpose and not an illegitimate attempt to pre-empt the jurisdiction in which the dispute between the parties is to be resolved”.

It was accepted by Mr John Lockey QC, counsel for the Insurers, that this principle applied in the present case, even though the claim was for “positive” rather than “negative” declarations. In my view he was right to do so. The requirement that there must be “utility” in the proposed claim for declaratory relief was adopted by this court in the Faraday case. (Footnote: ¹⁶) As the same type of declaratory relief is claimed in the present proceedings, it seems to me we must apply the same principle in this case on appeal.

Field J held that there was sufficient utility in respect of the declarations sought on policies (1) to (8) in the Schedule for the English court to exercise its jurisdiction over those claims. He accepted that Judge Conti had stated in an interlocutory hearing that it was “unlikely” that English law would apply to the claims before her. However, in the view of Field J there remained a “real prospect that English law will be held to be the governing law, in which event it is reasonable to assume that the Pennsylvania Court at the very least would find the judgment to be of considerable assistance”. (Footnote: ¹⁷) The judge noted that, in his opinion, the provisions of §188(2) of the Restatement (Second) of Conflict of Laws (1971) seemed to bear “an obvious resemblance to the factors an English Court would consider”. (Footnote: ¹⁸)

Field J also accepted the submission that the declarations sought would, if made, “be useful in resisting enforcement [in England] of a judgment that ignores the express or implied choice of law of the parties”. The judge recognised that New Hampshire, Gerling, ACE and Swiss Re are all foreign corporations, but he said that all the Insurers “are London Market insurers who have a legitimate expectation that the parties to the policies would be bound by their express or implied agreement that the polices were governed by English law”. (Footnote: ¹⁹)

Apart from the issue of “utility”, Field J accepted the argument of the Insurers that England was clearly the appropriate forum. He gave three reasons. First, because, as a general principle, “ a court applies its own law more reliably than does a foreign court” and that pointed strongly in favour of England as the appropriate forum. Secondly, the trial of the claim would be short, probably only 2 to 3 days and would require very limited factual evidence. Therefore there was a very good prospect of judgment being given before a dispositive judgment would be given in the Pennsylvania Coverage Actions, which was not expected before Spring 2013. Thirdly, the Faraday trial for declarations would be continuing in this jurisdiction. (Footnote: ²⁰)

The sole issue on this appeal concerns the judge’s conclusion on “utility”. Mr Richard Jacobs QC for HNA submitted that the judge erred in principle in concluding that there was any “utility” in the present proceedings on both of the grounds stated by the judge. In relation to the first ground, viz. that a judgment of the English court on the questions of the applicable law and the construction of Sections 1 and 2 of the policy terms on the basis that English law was applicable would be “of considerable assistance” to Judge Conti, Mr Jacobs submitted that the judge made an unreasoned and unreasonable conclusion. First, the Pennsylvania proceedings would carry on whatever happened in the English proceedings, so that the latter could not short-circuit the former. Secondly, there was little prospect of Judge Conti concluding that English law was the applicable law of the policies, using Pennsylvania conflicts of law rules. If English law did not apply, then the exercise of the English court would be pointless. Thirdly, even if Judge Conti did conclude (contrary to her preliminary view expressed in her written judgment of 21 June 2012) that, using Pennsylvania conflict of laws rules, English law applied, Judge Conti was perfectly capable of being instructed on the basic applicable principles of the construction of the policies according to English law; she did not need to be told what it was by the English court in what would be, effectively, an “advisory” judgment. Mr Jacobs showed us a transcript of the forum non conveniens hearing on 16 November 2011 in which Ms Sally Clements, counsel for the Insurers other than New Hampshire, denied that the Insurers wanted to go to the English court to get “more favourable treatment” and she said it was the Insurers’ position that “English law can be applied in this court”. (Footnote: ²¹)

As for the second ground of “utility”, Mr Jacobs accepted that, in certain circumstances, if recognition and enforcement of a foreign judgment is sought in the English courts and that judgment was obtained in clear disregard for a pre-existing decision of a competent English court on the same issue between the same parties, then that could provide a defence to an action to recognise or enforce the foreign judgment at common law, on grounds of public policy. (Footnote: ²²) However, Mr Jacobs submitted that this rule could not justify the instigation of “pre-emptive” proceedings in the English courts by artificially invoking the English jurisdiction so as to lay the grounds for such a defence, particularly when the issue of the applicable law was, legitimately, being considered by the court in the foreign jurisdiction.

Mr John Lockey QC, for the Insurers, submitted, first, that the judge was entitled to conclude that there was utility in the present proceedings and that his conclusion could not be regarded as unreasonable or wrong in law. Therefore there was no basis on which this court could interfere with his decision. Secondly, Mr Lockey emphasised the fact that Judge Conti had not ruled out the possibility that the applicable law of the policies (using Pennsylvania conflict of laws rules) could be English law and had admitted the report of Mr Bright. The issue of applicable law would only be decided after the oral hearing in March 2013. Thirdly, even if the chance of English law being held to be the applicable law was slim, there would be utility in Judge Conti having the English court’s decision on the issues raised in the present proceedings both as regards the applicable law and also the circumstances in which, according to English law, liability under Sections 1 and 2 of the policy terms would be established. Fourthly, this exercise by the English court would not be contrary to comity. The decision would not bind the Pennsylvanian court and it would have to make its own mind up on the issues. Fifthly, if the English proceedings resulted in declarations as sought, that would bind the parties. This was a legitimate course to take and it was legitimate to guard against the possibility of an attempt at enforcement in England based on what, to an English court, would be the wrong applicable law (if held to be that of a US state) and so wrong legal principles.

In the Faraday case in the Court of Appeal, Sir Stephen Sedley said that “…the judge’s task was to arrive at a reasoned judgment as to whether the [English] proceedings had some utility….The appellants’ submission that [the judge] had come to the wrong conclusion was an appellate argument appropriate to challenging a judgment”. (Footnote: ²³) Ward LJ agreed with this analysis. Longmore LJ was alone in characterising the judge’s judgment on the issue of “utility” as the exercise of discretion. (Footnote: ²⁴) I respectfully agree with the view of Sir Stephen Sedley and Ward LJ. Therefore the question we have to ask on this appeal is whether the judge had come to the wrong conclusion on the question of the utility of these proceedings in the light of all the facts.

The situation that faces this court is different from that facing the court on appeal in the Faraday litigation. First, in that case the Insurers had started the Commercial Court proceedings before they became parties to the 2011 proceedings some 8 months later. Here, an action on policies (1) to (6) had been proceeding since 2009 as against Gerling and New Hampshire and then, in June 2011, HNA joined all the Insurers in relation to policies (7) and (8) in the Schedule. The present action was started some two months later. Secondly, whereas in the Faraday case, the Insurers argued that a decision of the English court would have “preclusive effect” in the Pennsylvania proceedings, (Footnote: ²⁵) that argument is not advanced in the present case. It is simply argued that the present proceedings would complement and assist the Pennsylvania judge.

Thirdly, Beatson J’s decision in the Faraday case (handed down on 1 November 2011) was taken before Judge Conti gave her written judgment (21 June 2012) on the application of the Insurers to dismiss both the 2009 and 2011 actions on forum non conveniens grounds. Although the Court of Appeal received copies of Judge Conti’s decision and had written submissions on it before handing down their judgments, their approach was to consider whether Beatson J’s decision was correct on the evidence and the case advanced before him, as is clear from the way Longmore LJ approached the issues at [33] and [34] of his judgment. The judgment of this court did not consider in any detail the written judgment of Judge Conti on the application of the Insurers to stay the two sets of Pennsylvania proceedings on the grounds of forum non conveniens, although Longmore LJ did refer to Judge Conti’s “preliminary assessment” that it was unlikely that English law would be held to govern the policy in issue. (Footnote: ²⁶) Fourthly, the Pennsylvania proceedings have now moved on again. Judge Conti has set a tight timetable for the resolution of the applicable law issue by Spring 2013. Lastly, Faraday is an English company, albeit a subsidiary of a US conglomerate. The most significant of the Insurers in the present proceedings, New Hampshire, is based in the USA and all the Insurers do significant business there.

In these circumstances, it seems to me that we are not bound to approach the issue of “utility” in the same way as this court in Faraday, because the question of “utility” can only be judged against all the facts as they now appear. So the question remains: did Field J reach the correct conclusion on this point?

In my view, with great respect to Field J, he did not. On the principal ground, which was that the English court’s judgment on applicable law and principles of liability would be, “at the very least.. of considerable assistance” there are several reasons why I think that the judge erred. In the first place, in my view the judge did not give sufficient importance to the analysis of Judge Conti on the applicable law point in her judgment of 21 June 2012. I appreciate that this was not a concluded view, but Judge Conti considered the issues over six pages of her judgment. Her view at that stage was that “…It does not appear, however, that English law would apply” and that “…it is unlikely that English law will apply and this court must respectfully disagree with the High Court’s determination that English law would apply”. This is not a propitious start for the judgment of the High Court being “useful” in the Pennsylvania proceedings, particularly when it is borne in mind that the Pennsylvania conflict of laws rules are different from those of England. There may be a superficial resemblance between the factors set out in §188(2) of the Restatement (Second) of Conflict of Laws (1971) and the applicable English rules, (Footnote: ²⁷) but the §188(2) factors have to be related back to the principles set out in §6 of the Restatement, which enumerates factors that are not found in English conflicts rules.

Secondly, the judge does not appear to have given any attention to the finding of Judge Conti that even if she were to find that English law did apply, “…movants failed to prove that their counsel are unable to inform the court about the applicable foreign law under Rule 44.1 of the federal Rules of Civil Procedure or that a federal district court would not be able to determine that law”. As I read that statement, it is to the effect that the court will be able to receive, understand and evaluate such evidence of foreign law that the parties may wish to put before the court. Judge Conti has already given leave to file Mr Bright’s report on English law concerning conflict of laws and English law principles. It is evident that Judge Conti had no difficulty in appreciating the differences between the substantive law of England and Pennsylvania on the liability of insurers in respect of asbestos claims. (Footnote: ²⁸)

Thirdly and most importantly, Judge Conti is an experienced and well respected Federal Judge sitting in the Federal Court in Pennsylvania. She has expressed no request or need to be instructed by the English court on what is, in its view and according to the applicable English conflict of laws rules, the applicable law of the policies. Nor is there any suggestion by Judge Conti that she would welcome being told of the English court’s view on the elementary principles of English insurance law on the “coverage issues” that would be raised in the proposed English proceedings. There is no other evidence that Judge Conti wishes to be assisted by the English court’s views. Furthermore, it is clear from the transcript of the hearing before Judge Conti on 16 November 2011 that counsel for the Insurers disavowed the idea that the Insurers were starting proceedings in the English court to obtain “more favourable treatment” there and counsel specifically accepted that English law could be applied in the Pennsylvania court. In these circumstances, for my part, I would regard the idea that the English court should give its unsolicited judgment as “advice” to a Federal Judge in the US District Court for the Western District of Pennsylvania on elementary principles of English law, in the expectation or even hope that such a judgment would be “at the very least…of considerable assistance” (Footnote: ²⁹) as both presumptuous and condescending. To use the phrase of Leggatt LJ in Barclays Bank Ltd v Homan, (Footnote: ³⁰) it smacks of “unacceptable hubris”.

In this respect, the position in the present case is different from that in the Szabo case. (Footnote: ³¹) As Toulson J said in his judgment, the facts of that case were “unusual”. (Footnote: ³²) It concerned a claim under a liability policy which arose out of a motor accident in Ohio, USA in which Miss Szabo was injured. Proceedings were started in Ohio and, almost immediately after, proceedings were started in England. Toulson J noted that there was no “practical distinction” between the test in Ohio for determining the applicable law of a contract and those which would apply in England, in circumstances where there was no express choice of law by the parties. (Footnote: ³³) The proceedings in the English court sought declarations that the applicable law of the policy was English law and that, in accordance with English law, the insurer, CGU, had no liability under it to the claimants. When Toulson J came to consider the issue of whether the English proceedings would be useful, he decided that they would because of two particular factors. First, that there was a strong case that the policy was governed by English law and, most importantly, that the conflict of laws rules of Ohio and England “appear to be the same in both jurisdictions”. (Footnote: ³⁴) That is not so in this case. Moreover, Toulson J emphasised that he did not wish to give the appearance of seeking to influence the Ohio court and the English court must give “great respect” to the views of the Ohio court on how the litigation should proceed. (Footnote: ³⁵) In my judgment, the decision in the Szabo case gives no support to Mr Lockey’s arguments on utility in the present case.

As for the judge’s second basis for “utility”, I regard this also as being ill-founded. The Insurer’s challenge to the jurisdiction of the Pennsylvania court has failed. It is a court of competent jurisdiction. The Pennsylvania court will apply its conflict of laws rules to the issue of the applicable law. If it concludes that Pennsylvania law or the law of some other state of the USA is applicable to the policies, it will apply that law. Its judgment on the merits will therefore be a judgment of a court of competent jurisdiction applying its own laws to the merits. If there is otherwise no proper “utility” in bringing the English proceedings, the sole aim of instituting English proceedings in the context of possible enforcement in England (even assuming that is a realistic likelihood given the business that the Insurers have in the USA) will be to make a pre-emptive strike in England in an attempt to undermine the legitimacy of any Pennsylvania judgment against the Insurers in accordance with Pennsylvania law. There may be circumstances in which that is a proper exercise, but in my judgment Mr Lockey has given no reason why it is legitimate in this case. I would therefore hold that to mount a kind of “pre-emptive strike” to obtain an English court’s judgment on certain, limited, declarations for no other reason than to lay the ground for a defence to enforcement of a foreign judgment on the ground that it is contrary to pre-existing English judgment is, at least on the facts of this case, not a “useful” exercise of the English court’s jurisdiction.

For the reasons I have given I would therefore grant permission to appeal, allow the appeal and set aside the order of Field J dated 28 September 2011 (in respect of Policies Nos (1) to (8).), whereby he granted permission to the Insurers to serve the Claim Form and Particulars of Claim on HNA out of the jurisdiction.

I agree.

I also agree.