General Star International Indemnity Ltd. v Stirling Cooke Brown Reinsurance Brokers Ltd & Anor

This is more film finance litigation. The court is concerned with matters of jurisdiction. It involves what is referred to as the Litto slate of films. For present purposes it suffices to record that the financing bank was Chase Manhattan Bank, the providers of shortfall insurance were Underwriters Reinsurance Company (URC) and URC was reinsured by (amongst others) Royal and Sun Alliance, Axa Reassurance SA, General Star International (“Genstar”) and a retained line of URC. There were also cut through clauses entitling Chase to seek recovery direct from Reinsurers. The main covers were expressly subject to a non-exclusive Texas jurisdiction clause and to Texan law. The brokers concerned were Stirling Cooke Brown Reinsurance Brokers Limited (“SCB”) and, although their role is a matter in issue, the English solicitors Richards Butler were concerned as advisers on the transaction to insurers and reinsurers.

There have been proceedings in New York. Axa sought a declaration of non-liability under its cover against Chase. Axa also made claims against SCB alleging fraudulent and negligent misrepresentations in the placement of the reinsurance. Chase made a claim under a working capital facility policy against Axa. The case was tried before Justice Gammerman and a jury from October 29 to December 6, 2000. Chase won and Axa lost not only against Chase but also in its claims over against SCB (and others). Chase has subsequently taken proceedings in Texas against both Axa and Genstar for payment under the reinsurance covers. Genstar was not a party to the New York proceedings. Nor were Richards Butler.

Following the jury’s decisions on matters of fact Justice Gammerman prepared a judgment on some matters which were reserved to him as well as recording his reasons for certain rulings made in the course of the trial. It is a substantial and, if I may say so with unqualified respect, impressive document which plainly justifies SCB’s submission that the Judge has a close and detailed knowledge and appreciation of the issues which were involved and, of course, of the questions of law which arose. In the present context it is relevant to note that in addressing the issues which arose on the claims made by Axa against SCB the Judge ruled that New York law was to be applied to them. He did so, I think it is fair to say, on the basis that Axa’s contention for French law was to be rejected (Axa is a French company and a subsidiary of an English company) and neither Axa nor SCB (which is an English company) sought the application of English law rather than New York law, albeit there was a basis for suggesting that English law might well be the governing law for consideration of SCB’s duty and liability. The jury found that SCB had not deceived Axa and Justice Gammerman ruled that there was insufficient evidence of a special relationship between Axa and SCB even to submit Axa’s case of negligent misrepresentation to the jury. Axa is appealing the decision of Justice Gammerman and the Jury.

After an exchange of correspondence between lawyers, on 11 October of this year Genstar issued a Claim Form in this court against SCB and Richards Butler. The Claim Form was served on SCB on 14 October. The claims are for damages and indemnification for such liability as Genstar may have to Chase and/or URC under the Litto cover. The claim against SCB is based on an alleged common law duty of care to advise Genstar about the transaction derived from an assumption of responsibility and/or proximate relationship. The duty alleged and its breach are set out in paragraphs 60 and 61 of the Particulars of Claim. The claim against Richards Butler is based on an alleged retainer to act for reinsurers and/or a common law duty of care also based on an assumption of responsibility. Richards Butler have recently served a very full defence to the claim including a denial of any retainer or duty.

On 1 November, a week before its defence was due, SCB issued a complaint against Genstar in the Supreme Court of New York in which SCB sought declarations that Genstar was liable under the cover, that SCB was not liable to Genstar and “a preliminary and permanent injunction restraining Genstar from prosecuting” its claim against SCB in these proceedings in any forum other than New York.

On 11 November SCB then applied to this court for a stay of the claims made against it pending the determination by the New York court of its motion for an anti-suit injunction. SCB also sought an extension of time for its defence.

The matter came before Thomas J on 15 November on SCB’s application for time to serve its defence. Thomas J expressed considerable surprise that SCB should be seeking an anti-suit injunction in New York rather than applying to this court for a stay of the proceedings on the ground of forum non conveniens pursuant to CPR Part 11 and the principles in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. Thomas J was in effect faced with the question on a time summons whether this court or the New York court should first decide whether this court was the appropriate forum for Genstar’s claim. Granted that all the parties before this court were English and the proceedings had been validly and properly served in England, Thomas J decided that this court should address and decide the question whether it was the appropriate court to decide questions of forum and if it decided it was, then to decide which court was the appropriate forum. To that end he enjoined SCB from taking any further steps in New York until the determination of those issues and gave permission to Genstar to seek, as it has done by Application Notice dated 18 November, orders by way of an anti-suit injunction against the New York claims by SCB and for a declaration that England is the most appropriate forum in which to decide Genstar’s claims.

Essentially, therefore, SCB seeks a stay of the English proceedings to permit the New York court to decide questions of forum and Genstar asks this court to decide the question, to do so in its favour and to order SCB to withdraw its complaint in the New York court.

I do not think the question of which court should act first and the question of whether this court is the appropriate forum can sensibly be considered in isolation. The fact now is that this court is seized of the issue and I, like Thomas J, and I would hope the court in New York, would think it plainly right that in a case involving proceedings in this country between parties each of whom is English and directly subject to this court’s jurisdiction it is, absent some quite exceptional circumstance, for this court to address questions of forum. If one adds that I do not think it can even be seriously contested that the issues of the existence and incidence of a cause of action are ones governed by English law then the matter is even plainer. In no sense is this an extortionate claim to jurisdiction by this court. Indeed it is one which I would expect a New York court would readily accept and acknowledge as would this court if the roles were reversed. Mr Millett’s submission that such an outcome would deprive SCB of their legitimate right to seek a decision from the New York Court begs the whole question in his favour. I see no such right where both parties are English and English law applies. Moreover I can see no justification for the course adopted by SCB in seeking to set on foot proceedings in New York after the issue of these proceedings rather than seeking to apply to this court to decline jurisdiction. If Mr Millett were right it would be open to any Defendant properly sued in an English court to take proceedings in another jurisdiction claiming an anti-suit injunction and to have the English proceedings stayed whilst the other court pronounced on the jurisdiction of this court. That cannot be right.

In my judgment this court is plainly the appropriate court to determine issues of proper forum for this claim.

What then are the factors which favour this forum? I have already mentioned the main ones. They are:

SCB seeks to put in the scale on the other side one major point: the fact that the New York court and Justice Gammerman in particular, is wholly familiar with the issues from the Axa proceedings such as to make it plainly more efficient and economic for Genstar’s claim to be tried in New York. It is also said that by New York law it is at least arguable that Genstar would be estopped by the outcome of the Axa case from advancing the claims against SCB which it makes in these proceedings whereas the English law of issue estoppel would not be effective to achieve that.

Whilst I readily accept Justice Gammerman’s knowledge and grasp of the background facts and indeed some of the foreground facts it is a matter of record that this court and even this judge has more than a little familiarity with the matter. Whether I, or indeed Justice Gammerman, would describe that as good fortune is of no relevance. But I do not think such familiarity of itself can begin to outweigh the other factors to which I have referred. It would indeed be to claim an exorbitant jurisdiction if it were claimed solely on the basis of familiarity with the issues. There are also real doubts as to whether the New York court even has exercised or would exercise jurisdiction over Genstar.

The overlap of issues is, I think, in any event, more apparent than real. Genstar’s case depends inevitably on its own relationship with and what was said to it by SCB; the Axa proceedings were of course addressing Axa’s relationships and Justice Gammerman plainly adverted to Axa’s own and singular conduct in his reasoning on the question of duty. He, of course, decided nothing about Genstar’s claims. Further, as I have said, in my judgment New York law has no application to the duty issues nor indeed to estoppel issues tried in this country. The laws of England and New York may well differ on both. But, again, SCB had and has no basis for expecting New York law to apply, rather the contrary. Moreover, its own evidence of New York law strongly suggests that New York law of collateral or issue estoppel would not provide it with the defence it asserts. The issues in these proceedings involve different facts and the application of a different law from those before Justice Gammerman. The only factual connection with New York is that some of the loan and insurance documentation was negotiated in New York and one of the covers was subject to New York law. But, as stated, the main cover was subject to Texan not New York law and hence the claims by Chase in Texas. The insurance itself is not in issue in these proceedings.

In my judgment England is plainly the natural forum for the trial of these proceedings and disputes and Genstar is entitled to a declaration accordingly.

The conclusion that England is the natural forum is not as a matter of law sufficient of itself for this court to grant an anti-suit injunction. That requires the extra ingredient that I must be satisfied that the complaint in New York is vexatious and oppressive or unconscionable: see Airbus Industrie v Patel [1999] 1AC 119. But in my judgment further pursuit of the New York Complaint would indeed be vexatious and oppressive. It was an attempt by SCB to hi-jack the hearing of forum issues to New York rather than England despite the logical and normal course, if thought to be sustainable, of arguing the matter in these courts in these proceedings which were of course begun first. To permit the two sets of proceedings to continue would, I think, plainly be oppressive. On the basis of my decision it would involve SCB, an English company subject to the jurisdiction of this court, not only pursuing parallel proceedings in an inappropriate forum but also seeking to restrain another English company from pursuing its claim in what I have held to be the natural forum. That SCB should not be permitted to do. I am of course conscious of the need for caution and observance of comity in this court granting anti-suit injunctions. It requires exceptional circumstances to grant such an injunction and there is always the alternative of leaving the New York court to decide for itself with such benefit as it might derive from my decision. But not only is it, as I have said, open to serious question whether the New York court even has claimed or would claim jurisdiction over Genstar but I would, with due diffidence and respect, expect the New York court to have the same distaste for parallel proceedings as this court and indeed to acknowledge this court’s decision that the claim is properly brought and will be pursued here. It is also, I think, the reality of SCB’s Complaint in New York that it seeks an anti-suit injunction and I can see no legitimate interest in SCB continuing to seek that relief or indeed pursuit of its claims on the merits in New York once it has been decided that the claims are to proceed in this jurisdiction. To do so would, I think, readily qualify as vexatious and oppressive. I shall therefore, as I said at the conclusion of the hearing, grant Genstar the anti-suit injunction which it seeks.

I will hear the parties on costs and any other ancillary matters when this judgment is handed down.