Dornoch Ltd. & Ors v The Mauritius Union Assurance Company Ltd. & Anor

The Mauritius Commercial Bank Limited, the second defendant in these Proceedings (“MCB”), is a bank incorporated in Mauritius. For many years it has carried on business in Mauritius as a leading commercial bank. The Mauritius Union Assurance Company Limited, the first defendant in these proceedings (“MUA”), is an insurance company domiciled in Mauritius. From June 1999, MUA underwrote Bankers’ Blanket insurance for MCB and it did so for the period from 30th June 2002 to 30^th June 2003. The insurance covered losses sustained during the period of the insurance or discovered during that period. In fact, MUA issued three policies to MCB, each of which was based upon a standard Bankers’ Blanket insurance policy form known as “BRS 98”. The primary policy covered a number of risks including infidelity; premises; and transit. There were then two excess policies. The first covered various risks including infidelity; but that policy excluded cover for premises and transit. The second excess policy covered “All Risks of Physical Loss or Damage”, although in fact it covered only losses relating to premises and transit. This policy contained a “Condition” which extended coverage “to include Infidelity – 72 hour discovery period”. It is agreed that each of those insurance policies is governed by the law of Mauritius and each contains a clause giving the Courts of Mauritius jurisdiction over any disputes arising under the policy concerned.

Each of these direct insurance policies was reinsured for 100% in the London market. (Footnote: ¹) There were three Reinsurance policies, which matched the cover provided by the direct insurance. The primary Reinsurance covered a range of risks including employee infidelity, premises and transit. That was placed in the Bankers’ Blanket Bond market. This policy was led by Munich Re. The policy is on Form J(a), which is a London market form, but the policy incorporates a standard BRS 98 wording. Under the heading “Conditions”, which are applicable to all sections of this reinsurance, it states “Wording as per BRS 98”. Under that heading it states also “Mauritius Jurisdiction Clause”. Within the BRS 98 wording is a further heading “Conditions”. Under that heading, Clause 8 is titled “Jurisdiction”. It provides:

There was one Excess Reinsurance policy which covered various risks including employee infidelity, but excluding premises and transit. That was also placed in the Bankers’ Blanket Bond market and led by Munich Re. This case is not concerned directly with either of these two reinsurance policies.

It is concerned with the third Reinsurance policy, which is an “Excess All Risks of Physical Loss or Damage Reinsurance”, hereafter “the Excess Reinsurance” (Footnote: ²). This policy principally covered physical losses relating to premises or other insured property and physical losses in transit. But it had an extension to include infidelity, with the somewhat cryptic qualification “72 Hour Discovery Period”. That policy was placed in the Specie market in London and was led by the first claimants in these proceedings, who are managed by XL Insurance.

On 14^th February 2003, MCB announced that it had discovered a large-scale fraud which had resulted in the misappropriation of Mauritian Rupees (“MuRs”) 632,613,615. This misappropriation had taken place over a period of some ll years between 1991 and 2002. MCB (through its local insurance broker) notified MUA of this fraud on 17^th February 2003. On 9^th May 2003 MCB issued proceedings in the Supreme Court of Mauritius against 38 defendants claiming a total of MuRs 1,381,557,257, which MCB said represented the “totality of the loss and prejudice” that it had suffered as a result of the fraud: (“the Fraud Action”). On 30^th June 2003, MCB made a claim on MUA under the direct insurance policies for an indemnity of MuRs 737Million. On 30^th September 2004, MCB began proceedings in the Supreme Court of Mauritius against MUA, making a claim on the direct insurance (“the Mauritius Insurance Action”).

On 19^th January 2005, the claimants in the present proceedings notified MUA that the Reinsurance policies were avoided for misrepresentation and non-disclosure. On the same day the claimants applied for permission to serve the present proceedings (“the English Reinsurance Action”) out of the jurisdiction on MUA and MCB in Mauritius. The Brief Details of Claim sought: (i) a declaration that the Excess Reinsurance had been validly avoided on account of non-disclosure or material misrepresentation by MUA; (ii) a declaration that the claimants (“the Reinsurers”) were not liable to MUA because the claims, even if proved, fell outside the scope of the Excess Reinsurance; (iii) damages for misrepresentation pursuant to the Misrepresentation Act 1967, as against MUA; (iv) damages for deceit, alternatively damages for negligent misstatement, as against MCB.

On 1^st February 2005, I made an Order granting permission to serve the proceedings on MUA and MCB out of the jurisdiction in Mauritius. On 21^st February 2005 the Supreme Court of Mauritius gave permission to MUA to join the Reinsurers to the Mauritius Insurance proceedings, as “Defendants –in– Guarantee”. On 22^nd February 2005 Linklaters (Solicitors for MUA) sent to Clyde & Co (Solicitors for the Reinsurers) a copy of the Plaint joining the Reinsurers as Defendants –in- Guarantee in the Mauritius Insurance proceedings. On the same day the Reinsurers applied in the existing English proceedings for an anti-suit injunction and an anti-anti-suit injunction against MUA. I granted those injunctions ex parte on the following day. On 6^th April 2005 that injunction was replaced, by consent, with undertakings given by MUA.

On 29^th April 2005 MUA applied for a stay of the English Reinsurance proceedings and for an Order setting aside permission to serve those proceedings out of the jurisdiction. MUA also sought an Order to set aside the anti-suit and anti-anti-suit injunctions. On 9^th May 2005 MCB applied for a stay of the English Reinsurance proceedings as against them and for an Order to set aside the permission to serve those proceedings out of the jurisdiction on MCB in Mauritius.

These applications came on for hearing before me on Tuesday 28^th June 2005. I was provided with eight large and one small ring binder file of evidence. I was also supplied with three large ring binder files of authorities. By the end of the hearing there were some 90 authorities in five bundles. The so-called “Skeleton Arguments” ran, in total, to 106 pages. More written submission were provided during the course of the hearing. The hearing itself had been estimated at 2 days. In fact, by the end of the third day, the submissions on behalf of the Reinsurers, in response to those of MUA and MCB, were not complete. Because of the Court’s and Counsels’ commitment the case had to be adjourned for over a week. Submissions were completed on Monday, 11^th July 2005. I reserved judgment.

The question at issue in relation to both claims by the Reinsurers is whether England is clearly the appropriate forum for the just resolution of these disputes. The general legal principles are well settled. It is also established that on applications of this kind, the Judge must not make final conclusions on issue of fact. This is clearly not one of those cases, referred to by Lord Templeman in Spiliada Maritime v Cansulex Ltd, (Footnote: ³) where I could have made the decision after submissions lasting hours rather than days, having studied the documents in the quiet of my room. But I do question whether it was necessary or wise to immerse the Court in as much detail on the underlying facts as the parties did.

The Insurance Contracts

It is not in dispute that the direct policies have the following features:

When the direct insurance had been arranged in 1999, MUA had agreed an extension to the Excess All Risks of Physical Loss or Damage cover. The extension was granted by an endorsement in 1999 which provided:

The Reinsurance Contracts: The Primary Policy

The Form BRS 98 is also attached to this slip policy. In the bottom left hand side of each page of this form are the words: “Form BRS 98 Mauritius”. Clause 8 of the “Conditions” of the form BRS 98 is the Jurisdiction clause which I have already set out above. A “Wording Schedule” is also attached to this policy. Item 9 states: “Country of Jurisdiction: Mauritius”.

The Excess All Risks of Physical Loss or Damage Reinsurance

Annex E, as completed, did not contain details of any of the losses now claimed. Nor did it refer to any of the payments from MCB accounts which have become the subject of the Fraud Action in Mauritius. There were other questions and answers to which I will refer below. The Proposal Form was signed by Pierre Guy Noel, the General Manager of MCB, the Chief Accountant of MCB and also the Chief Internal Auditor. The form, which was signed in May 2002, was used by BRS to broke the “Excess Reinsurance” in June 2002.

The broking of the Excess All Risks of Physical Loss or Damage Reinsurance.

The Excess All Risks of Physical Loss or Damage Slip Policy was presented to Ms Seago on 19^th June 2002. She scratched it and dated it. (Footnote: ¹¹) The Slip Policy is on a standard form and it states, at the top: “Form: Slip Policy NMA 1779/Lirma Pol/CP 2”. The Slip Policy has a number of clauses, one of which is headed “Conditions”. Under that heading are the words:

It is agreed on all sides that the words “the primary policy” in the phrase “to follow all terms and conditions of the primary policy, together with riders and amendments applicable thereto” that is set out in the Slip Policy for the Excess All Risks of Physical Loss or Damage Reinsurance is a reference to the primary Reinsurance Policy. I have already set out the relevant terms of that policy.

MCB’s Allegations of Fraud

Paragraph 22 in the Plaint in the Fraud Action sets out “the primary recipients” of the siphoned off and fraudulently misappropriated funds. It is alleged that the recipients were paid by cheques, which are identified in the pleading. Of the many cheques identified, there is only one, which is a payment made to Handsome on 19^th December 1994, that is above MuRs 50 million. The total of that cheque was MuRs 55 million.

The Plaint in the Fraud Action alleges (at paragraph 33) that Mr Appasamy was the recipient of some of the siphoned off and fraudulently misappropriated funds. It also alleges that Mr Appasamy, together with Mr Lesage and two other defendants, conspired to defraud of MCB “either individually or through their respective Corporations”.

The Claim by MCB against MUA in Mauritius

The total claim made under the three direct policies is for MuRs 737 million. MUA has yet to file a defence to this claim. Mr Roger Montocchio QC, who is the legal adviser to MCB, has stated in a witness statement given in these proceedings that MUA has had ample time to give its defence to the Plaint “and yet has failed so to do”. (Footnote: ¹⁵)

When Clyde & Co sent their letter of 19^th January 2005 to MUA asserting that the Reinsurance was avoided for misrepresentation and non-disclosure, the Mauritius lawyers of MUA wrote back on 11^th February 2005, giving notice that MUA would apply to join the Reinsurers as “Defendants –in- Guarantee” in the Mauritius Insurance Action. That Application was granted on 21^st February 2005. The “Plaint –in- Guarantee” proceedings are, effectively, third party proceedings. The Plaint document (Footnote: ¹⁶) is short. It refers to the reinsurance policies; the fact that a claim is being made by MCB against MUA under the direct policies; and the Reinsurers’ avoidance letter of 19^th January 2005. It alleges that the reinsurances are legally binding and enforceable. Paragraph 8 of the Plaint requests the Mauritius Court to order the Defendants in- Guarantee either to pay directly to MCB or to indemnify MUA the amount for which they are liable under the Excess Reinsurance. The Plaint states that the Reinsurers must appear on 15^th September 2005 to respond to this Plea.

On 15^th March 2005, MUA asked the Mauritian Court to postpone the action between MCB and MUA until September 2005, because it had joined the Reinsurers as Defendants -in- Guarantee and also because of the proceedings in London. This application was opposed by MCB on the ground that there is no relationship between MCB and the Reinsurers and it is solely MUA that is answerable to MCB. My understanding is that there have been no effective proceedings in Mauritius since March 2005 and nothing further will happen in the Mauritian Insurance Action until 15^th September 2005.

As I have stated above, I gave permission to serve the Reinsurance proceedings on MUA and MCB on 1^st February 2005. The application for permission to serve out of the jurisdiction was supported by evidence from Miss Jane Andrewartha. Exhibited to this were draft Particulars of Claim. Subsequently the Reinsurers have produced amended Particulars of Claim. (Footnote: ¹⁷) These were referred to in the hearing before me and I will use them to set out the Reinsurers’ case as against both MUA and MCB.

The Claim against MUA

The facts and matters are not within the extension of the Excess Reinsurance cover provided “to include infidelity – 72 hour Discovery Period”. It is pleaded that the purpose of this clause is precisely to exclude cover in respect of any systematic infidelity going back over a period longer than 72 hours before its discovery.

In any event both the Excess Reinsurance and the underlying direct excess insurance provide for cover subject to the original Insured (i.e. MCB) and the Reinsured bearing the first MuRs 50Million per loss. It is pleaded that the facts, as related in the Fraud Action indicate that only one transfer of funds exceeds the excess figure of MuRs 50Million i.e. the cheque transfer dated 19^th December 1994 (ie. many years before the discovery of the fraud). Each cheque constitutes one “loss”. Therefore, none of the claim is recoverable under this Reinsurance.

This pleading and the evidence in support of the application for permission to serve the proceedings out of the jurisdiction draw heavily on a report prepared by Tan Corporate Advisory PTE Limited (“the Tan Report”). Tan are forensic accountants based in Singapore. In March 2003, the Bank of Mauritius, which is the Central Bank of Mauritius, engaged Tan to prepare a report on MCB and to make recommendations. It was intended that this should be a private report. However on 19^th March 2005 the newspaper “Le Mauricien” published the final version of the Tan Report as a supplement to its regular edition. The Tan Report is referred to in the draft Amended Particulars of Claim in relation to serious irregularities within MCB and MCBFC. The pleading also refers extensively to allegations, made in Mauritius, of impropriety by senior staff of MCB and Air Mauritius. It is also alleged that, because of senior board level links between MCB and MUA, MUA had or ought to have had knowledge of the irregularities at MCB. (Footnote: ²¹)

The misrepresentations of MCB and MUA which are relied upon are all based on answers to the Proposal Form. It is said that MCB and MUA (in using the Proposal Form as the basis of the presentation to Reinsurers) made false representations in respect of questions 5, 18 (a), 18(c), 21(b)(i), 22 and 23(d)(i).

In summary it is said that misrepresentations were made on the following topics:

The Reinsurers seek two sets of relief in their Particulars of Claim. As against MUA the Reinsurers seek (1) a declaration that the Reinsurance has been validly avoided for non-disclosure and/or material misrepresentation; (2) a declaration that the Reinsurers are not liable on the Reinsurance because the events (even if proved by MCB) fall outside the scope of the Reinsurance; (3) damages for misrepresentation pursuant to the Misrepresentation Act 1967.

The case against MCB

The Reinsurers assert that the governing law of their claim against MCB is English law, pursuant to sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995, “since the events constituting the tort occurred in London” or “the most significant element or elements of those events occurred in London” so it is substantially more appropriate for English law to apply to the tort. (Footnote: ²²)

It is alleged that MCB owed the Reinsurers a duty of care and that MCB knew that the Reinsurers would rely on the information set out in the Proposal Form to decide whether to participate in the proposed Reinsurance and if so on what terms. It is said that the contents of the Proposal Form constitute statements of fact by MCB, made with the intention that the Reinsurers would rely on them. It is alleged that MCB knew that the representations made were false.

The Reinsurers claim against MCB damages for deceit or for negligent misstatement. In particular, the Reinsurers say that if they are liable to MUA on the Reinsurance, then they are entitled to recover those sums from MCB as damages.

The basis on which leave to serve out of the jurisdiction was sought and granted .

The Argument of MUA

As for the anti-suit injunction, MUA’s submission is that its decision to join the Reinsurers as Defendants -in- Guarantee in the Mauritius Insurance Action was a perfectly reasonable one. It cannot be characterised as vexatious or oppressive. Therefore the anti-suit and the anti-anti-suit injunctions should be set aside, even if (contrary to MUA’s argument), the Reinsurance action is not stayed.

The arguments of MCB

Between the Reinsurers and MUA

If I am not satisfied that the Reinsurance contains an exclusive jurisdiction clause then it is agreed that the issue is whether England is clearly and distinctly the convenient forum in which to determine the dispute between the Reinsurers and MUA. It is accepted that the Reinsurers have the burden of proof on this issue. (Footnote: ²⁶) In dealing with that I shall have to consider: (i) the proper (Footnote: ²⁷) law of the Reinsurance Contract; (ii) any other important factors, such as the nature of the issues raised as between the parties; where the witnesses and documents will be found; the fact that the Fraud Action and the Mauritius Insurance Action are continuing; and whether or not there is any “clear and cogent” evidence that the dispute between Reinsurers and MUA cannot or would not be properly dealt with in Mauritius within a reasonable time.

As between Reinsurers and MCB

I appreciate, of course, that I cannot consider the two proceedings brought by the Reinsurers separately. The fact that the Reinsurers have brought proceedings against both MUA and MCB is important, as is the fact that there are existing proceedings between MUA and MCB in Mauritius and the Fraud Action is being prosecuted by MCB in Mauritius. MCB have also started proceedings against Mr Appasamy in London. MCB says that these claims are “straightforward” claims under guarantees and have nothing to do with the insurance or reinsurance disputes.

The Law.

In argument, Mr Malek QC, for MUA, accepted that there was no need to go into the issue of the proper law of the excess reinsurance in order to determine whether the jurisdiction clause applies. He accepted that the issue could be decided on English law principles. Mr Kealey QC, for MCB, submitted that if the excess reinsurance contract was governed by Mauritius law, then it would be Mauritius law that decided whether that contract contained a valid jurisdiction clause. MCB put in evidence a witness statement of Roger Montocchio QC, (Footnote: ³⁰) who was called to the Mauritius Bar in 1953 after he had been called to the English bar by the Middle Temple in 1952. He was appointed QC in Mauritius in 1976 and has been the legal adviser to MCB since 1984. He expresses his opinion on how a Mauritius court would consider the question of the jurisdiction clause if the Mauritius court concluded that the excess reinsurance was governed by Mauritius law.

I believe that I should consider the issue of whether there is a valid jurisdiction clause in the excess reinsurance in accordance with English law principles. I say this for two reasons. First, because I can and should approach this question as part of the exercise of discovering the proper law of the excess reinsurance contract. In the English court, that exercise must be done by English conflicts of laws rules, ie. by using the Rome Convention, in particular Articles 3(1) and 4. All parties accept that there was no express choice of law in the Excess Reinsurance contract. Therefore, under Article 3(1), I have to see if a choice of law is “demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case”. In this case, that involves a consideration of whether there is a jurisdiction clause in the contract. At this stage of the operation, before a proper law has been determined, the only law that I can use to analyse the position must be the law of the forum, ie. English law; and so I must employ English rules of construction. That was the method used under the common law, (Footnote: ³¹) and has been used also under the regime of the Rome Convention. (Footnote: ³²) Therefore I should consider the question of whether there is a jurisdiction clause using English rules of construction. The second reason, which is much less important, is that both the parties who are directly concerned with this issue, ie. MUA and the reinsurers, were content that I should consider this matter using English law principles of construction.

The second preliminary point is: up to what standard do I have to be satisfied that a jurisdiction clause is incorporated? Mr Malek, for MUA, argued that he need only demonstrate that there is a “good arguable case” that the reinsurance contract contained a Mauritian jurisdiction clause. Mr Swainston did not contest that submission. I think that he was right not to do so. It is well established that when an English court has to decide issues involving only law or the construction of a document for the purposes of determining whether it will accept jurisdiction, then the court makes a decision on the point, rather than saying whether or not there is a good arguable case on the issue. This is particularly so if the issue is not going to arise again at the trial stage. But if any factual investigation is involved, then, particularly if the point will also arise again at the trial stage, the “good arguable case” test has to be applied. This was the analysis adopted under the old law, (Footnote: ³³) and appears to be endorsed by Dicey & Morris (13Ed, 4^th Supplement) (Footnote: ³⁴) in relation to the law since the Rome Convention became applicable. In this case there has to be some factual investigation into what happened at the underwriters’ box on 29 May 2002. Therefore I think that the “good arguable case” standard has to be adopted.

The next question is: what are the English law principles of construction that must be applied to see if there is a good arguable case that the reinsurance contract contains a Mauritian jurisdiction clause? The ultimate issue is, as always, what, objectively, did the parties intend by their agreement? The difficulty arises in cases, as here, where it is said that the jurisdiction clause has been agreed by a process of “incorporation”.

The courts’ attitude, as always, is to ascertain the parties’ intention from the wording of the contract as a whole and also the surrounding circumstances. However, where there is no express choice of jurisdiction in the contract wording, but it is said that the parties have agreed one by incorporating the wording of another contract, the courts have adopted a fairly strict approach. The analysis has proceeded by analogy with that which the courts have developed in relation to the incorporation of arbitration or jurisdiction clauses into bills of lading from charterparties. The leading case on this topic (in reinsurance) is the Court of Appeal’s decision in AIG Europe (UK) Ltd v The Ethniki. (Footnote: ³⁵)

In that case the direct insurance included a term (under the heading “Condition”) that both parties agreed to submit to the jurisdiction of the Athens Courts “the trial of any dispute, which shall arise out from [sic] the present policy…”. The reinsurance slip policy provided: “CONDITIONS: Wording as original”. Both Colman J and the Court of Appeal rejected a submission that the general words in the reinsurance incorporated the jurisdiction clause from the direct insurance. Evans LJ, who gave the principal judgment with which Thorpe and Jonathan Parker LJJ agreed, said that the question was: “did the parties to the contract in which the general words of incorporation appear intend that their contract should include the particular term from the other contract referred to?”. He concluded that they did not for the following reasons: (Footnote: ³⁶)

Evans LJ clearly considered that the parties to the reinsurance used general wording of incorporation with the intention only of incorporating into the reinsurance those terms of the direct insurance that were relevant to the risk. This, he said, was consistent with the intention of the parties to the reinsurance that the subject matter of the two contracts should be the same. It did not follow that the parties to the reinsurance intended to incorporate terms that were not relevant to the risk, such as a jurisdiction clause.

This approach was followed in AIG Europe v QBE International Insurance. (Footnote: ³⁸) In that case Moore – Bick J thought that the proper law of the reinsurance contract was probably French law. Despite that, he followed the English law principles of construction propounded in the Ethniki case to decide whether a jurisdiction clause was incorporated. (Footnote: ³⁹) Those principles of construction were also applied by Colman J in Assicurazioni Generali SpA v Ege Sigorta AS. (Footnote: ⁴⁰)

Application to this case

I do not accept that MUA has established that there is a good arguable case that the Excess Reinsurance contains a Mauritius jurisdiction clause. My reasons for this conclusion are these:

The consequence of this conclusion is that I have to decide the question of whether there should be a stay of the English Reinsurance proceedings as against MUA on Spiliada principles, rather than those cases concerned with the enforcement of jurisdiction clauses, most recently considered by the House of Lords in Donohue v Armco Inc. (Footnote: ⁴⁵) Although I heard argument on the points, I do not need to decide: (a) whether this is an exclusive jurisdiction clause; and (b) whether the clause is invalid or ineffective because the Excess Reinsurance was (allegedly) induced by fraudulent misrepresentation by MUA/MCB.

Having concluded that there is not a good arguable case that there is a Mauritius jurisdiction clause in the reinsurance contract, I have to consider next whether the reinsurers have satisfied me that England is clearly and distinctly the appropriate forum in which to decide the issues arising on the Excess Reinsurance. If it is not, the present action must be stayed; the permission to serve out of the jurisdiction set aside and the undertakings given in lieu of the anti – suit injunctions discharged.

I have already referred to the matters that I will have to take into account. The factor that was most emphasised by both MUA and the Reinsurers was the proper law of the Excess Reinsurance contract. The Reinsurers say that this is of fundamental importance because if the contract is governed by English law then there are three short points of construction of the policy that can quickly and easily be determined in the English court; and if the Reinsurers win on any one of those, then they cannot be liable on the policy. MUA (supported by MCB) say that the point is not quite so simple.

What is the governing law of the Excess Reinsurance policy?

It is, of course, well established that in cases where a Claimant wishes to sue in the English courts a defendant who is resident outside the UK (and not subject to the Judgments Regulation of the EU), then the burden of proof rests upon the Claimant to persuade the court that England is clearly the appropriate forum. (Footnote: ⁴⁷) If part of the Claimant’s case in showing that England is clearly the appropriate forum is that the proper law of the contract concerned is English law, then it must be for the Claimant to show, on the material available, that he has a much better argument on that point.

All parties agreed that I must consider this question by reference to the tests set out in the Rome Convention as scheduled to the Contracts (Applicable Law) Act 1990. That provides:

It was accepted by all parties that if the Mauritius Jurisdiction clause was not incorporated into the excess reinsurance, then there was no express choice of law by the parties to that contract. Therefore, if there is to be an implied choice, then one or other party had to show it had the better of the argument that it had “demonstrated [the proper law of the contract] with reasonable certainty by the terms of the contract or the circumstances of the case”. It is generally accepted that, despite the use of the word “or” in Article 3(1), the court should consider both the terms of the contract and the circumstances of the case in order to decide on the implied choice of law of the parties. (Footnote: ⁴⁸) This means that, if necessary, the court will have to consider the negotiations that took place between the parties to the contract. (Footnote: ⁴⁹)

Mr Swainston submitted that the relevant factual matters were these: (i) the excess reinsurance contract for 2002/2003 was placed before the direct insurance; (Footnote: ⁵⁰) (ii) the slip for this excess reinsurance was placed on the London Market with a London Market underwriter as leading underwriter; (iii) this excess reinsurance was on a standard Lloyd’s Non Marine Association Form and contains standard London Market clauses. Mr Swainston draws attention to the reference to NMA 1779 as the form of the policy; the Terrorism Exclusion Clause NMA 2921 and the incorporation of a standard clause for a premium payment warranty – “LSW 3000 – 90 days”. He submits that the remark of Hobhouse J in Forsikringsaktieselskapet Vesta v Butcher (Footnote: ⁵¹) that “there remains something surprising and improbable about the conclusion that the Lloyd’s slip and the Lloyd’s policy are governed by anything other than English law” is equally apt in the present case; (iv) the wording on the face of the Proposal Form (set out above) plainly had in mind English law obligations of disclosure and the consequences of a failure to comply with those obligations.

In these circumstances, Mr Swainston relied heavily on the decision of the Court of Appeal in Gan Insurance Co Ltd and Eagle Star Insurance Co Ltd v Tai Ping Insurance Co Ltd. (Footnote: ⁵²) In that case the defendant, Tai Ping, a Korean insurance company, insured the construction of a large electronics factory in Taiwan for “Erection All Risks”. The direct policy contained a clause (clause 22) that was taken by all parties to be an express choice of Taiwanese law. Tai Ping sought and obtained facultative reinsurance on the London market with Gan. The reinsurance slip policy was on form “NMA 1779 following original”. It contained the terms “CONDITIONS: Full Reinsurance Clause NMA 416…” and “ORIGINAL CONDITIONS: All risks as per local standard EAR policy wording…NMA 464 unless war and civil war exclusion contained in original policy wording”. There was a fire at the factory. The direct insurers avoided the policy for non – disclosure and misrepresentation. The reinsurers, Gan, did the same. Gan then sued Tai Ping in England for various declarations, to the effect that it was not liable on the reinsurance or it had validly avoided it. Gan sought to serve their claim out of the jurisdicton on Tai Ping. One of the grounds on which leave was sought was that the reinsurance was governed by English law. Cresswell J and the Court of Appeal held that, applying Article 3(1) of the Rome Convention, it was demonstrated, with reasonable certainty, that there was an implied choice of English law for the reinsurance contract. Alternatively, the proper law of the reinsurance contract was English law on the basis of Article 4(2) of the Rome Convention, because England was the country with which the contract was mostly closely connected, based on the presumption to that effect as England was the principal place of business of the reinsurers.

Beldam LJ said that it was not possible to infer from the wording of the reinsurance slip policy that the parties to that contract intended to incorporate all the terms of the direct policy. (Footnote: ⁵³) He continued:

Mr Malek and Mr Kealey submitted that this analysis was wrong. First, they drew attention to the fact that in the Gan case, the Court of Appeal had not had cited to them either The Njegos, (Footnote: ⁵⁶) nor Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (“The San Nicolas”). (Footnote: ⁵⁷) Both those cases were concerned (under the pre – Rome Convention law) with the question of the implied choice of law in a bill of lading contract, where the bill of lading incorporated the terms of the charterparty (but not the arbitration clause which provided for disputes to be arbitrated in London.) In the first case, the President held that the bill of lading was impliedly governed by English law on the basis that the two contracts were so closely connected and contained so many common terms that the parties to the bill of lading contract must have intended (by implication) that the terms of that contract should be governed by the same proper law as the charterparty. The same approach appears to have been used by the Court of Appeal in the San Nicolas. However, Lord Denning MR simply said in that case that “the clause which defines the proper law of the charterparty is incorporated”. (Footnote: ⁵⁸) The reasoning was not elaborated further. Mr Kealey went so far as to argue that, because these two cases were not cited to the courts in the Gan case, it was decided per incuriam; so it was wrong and was either not binding or should not be followed. (Footnote: ⁵⁹)

Secondly, both Mr Malek and Mr Kealey also submitted that, on the correct analysis of the terms of the excess reinsurance and the factual circumstances leading up to Ms Seago scratching the slip policy on 19 June 2002, MUA had “a much better argument on the material available” that the parties had impliedly chosen Mauritius law as the proper law of the Excess Reinsurance contract.

In support of their submission that the parties had impliedly chosen Mauritius law, they pointed to the facts that: (i) the reinsurance (whether primary or excess) was intended to be “back to back” with the direct insurance; (ii) the three direct insurances were governed by Mauritius law; (iii) the interest of the reinsurance was the same as that of the direct insurance, ie. (broadly) losses of MCB in Mauritius; and (iv) the primary reinsurance policy was governed expressly by Mauritius law and the Excess Reinsurance incorporated its terms and conditions applicable to the subject matter and the risk of that policy. All these factors pointed to an implied choice of Mauritius law for the Excess Reinsurance.

In my view neither side has a “much better argument on the material available” in relation to Article 3 of the Rome Convention. Mr Swainston can point to the factors which might suggest that there was an implied choice of English law as the proper law of the excess reinsurance, in particular the fact that the reinsurance was broked by English brokers to the leading underwriter in London; the use of the English market form and standard clauses and the proposal form which implies an English law duty of disclosure. (Although it is fair to point out that the duty of disclosure, as a part of the duty of good faith, is not a contractual duty – on either side, under English law. It arises by virtue of the general law). He also has the powerful support for this approach in the Court of Appeal’s decision in the Gan case, where, as here, the policy from which terms were incorporated included an express choice of law and jurisdiction clause, yet the reinsurance was still held to be governed by English law.

Mr Malek and Mr Kealey can point to the wording in the “Conditions” of the excess reinsurance; to the fact that the primary reinsurance is governed by Mauritius law and the general principle that interrelated contracts should prima facie be governed by the same proper law. But I have to be satisfied that one or other party has the better of the argument that, in the words of Article 3 of the Rome Convention, the choice of the parties as to the proper law of the Excess Reinsurance is “demonstrated with reasonable certainty”. I must have proper regard for the words “reasonable certainty”. In my view the key lies in what happened during the negotiations between Mr Gooding and Ms Seago on 29 May and 19 June 2002. The evidence on that is entirely unclear on the material available. Therefore there is a stale mate in relation to Article 3(1).

That means that I must consider Article 4 of the Rome Convention, which provides that if the proper law is not chosen in accordance with Article 3(1), then the applicable law of the contract is to be that of the law of the country with which the contract is most closely connected. Article 4(2), which I have already set out, is particularly important here. That provides that it is to be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, either (i) at the time of the conclusion of the contract, its habitual residence or (ii) its “central administration”, in the case of a body corporate; or (iii) if the contract is entered into in the course of that party’s trade or profession, the country in which the principal place of business is situated.

On Article 4 it seems to me that Mr Swainston has much the better of the arguments. The characteristic performance of a reinsurance contract must be the payment of the reinsurance in the event of a valid claim being made. (Footnote: ⁶⁰) The leading reinsurers are based in England and it is clear that the characteristic performance of the excess reinsurance would be performed in England. Although, ultimately, the interest with which the reinsurance is concerned is the MCB, that does not persuade me that, overall, the excess reinsurance is more closely connected with another country, so as to trigger the second part of paragraph 5 of Article 4.

Therefore, for the purposes of deciding the present jurisdiction issue, I will proceed on the basis that there is a good arguable case that the applicable or proper law of the Excess Reinsurance is English law.

What is the consequence of a conclusion (for present purposes) that the proper law of the Excess Reinsurance is English law?

First, at the threshold, the Mauritius courts have a different approach to the question of deciding the proper law of the excess reinsurance contract. This is clear from the evidence of Mr Montocchio QC. He states that in matters of private international law, Mauritius is guided by the French private international law principles. (Footnote: ⁶²) Therefore the Rome Convention principles would be irrelevant in those courts. (Footnote: ⁶³)

Secondly, Mr Montocchio also makes it plain that, in his view, a Mauritius court would be likely to conclude that the Excess Reinsurance is governed by Mauritius law and that Mauritius is “quite clearly” the appropriate forum to determine issues under the reinsurance. (Footnote: ⁶⁴) Doubtless this is also the advice that MUA has received.

Thirdly, it appears from Mr Montocchio’s statement that if Mauritius law is applied, then the principles concerning the central issues of (a) the construction of the 72 hour clause; and (b) the issues of non – disclosure and misrepresentation may be significantly different to those applied by an English court applying English insurance law principles. On the first point, although the principles of interpretation under Mauritius law, as set out in Mr Montocchio’s statement, (Footnote: ⁶⁵) appear to be similar to English law principles, Mr Montocchio goes on to point out that as to the interpretation of agreements, the Mauritius court will seek guidance from the French case – law and textbook writers. In particular he notes that, in relation to insurance policies, Article 1162 of the Civil Code will find application, so that if there is ambiguity in policy wording then it will be interpreted in favour of the insured against the insurer, because it is the insurer who draws up the policy. (Footnote: ⁶⁶) It is not clear whether this principle applies to reinsurance, but Mr Montocchio does not state the contrary.

In relation to issues of non – disclosure and misrepresentation, the relevant provisions are found in Articles 1983 – 1 to 1983 – 92 of the Code Napoleon, which were inserted into the Mauritian Civil Code in 1983. (Footnote: ⁶⁷) Those provisions do not apply to reinsurance. But it is clear from Mr Montocchio’s statement that, in relation to the direct insurance, the duty of disclosure is different from English law. (Footnote: ⁶⁸) Furthermore, the scope for avoiding the insurance for non – disclosure or misrepresentation is much reduced compared with English law. In essence, there can only be avoidance if it is demonstrated that a non – disclosure or false declaration was intentional by the insured. (Footnote: ⁶⁹) Settled case law in France, which would be followed in the Mauritius court, states that it is on the insurer to prove the bad faith of the insured and that the wilful non – disclosure or false declaration changed the object of the risk or made a risk less important in the insurer’s opinion. (Footnote: ⁷⁰) Mere incorrect declarations are not enough to establish bad faith. Mr Montochhio states:

The importance of these principles, which apply to insurance, as opposed to reinsurance, is that in relation to the claim by MCB against MUA, Mr Montocchio appears to be saying that MCB has a very strong claim and the defences of non – disclosure and misrepresentation are very difficult to mount successfully under Mauritius law. When it comes to reinsurance, Mr Montocchio says that, assuming the Excess Reinsurance is governed by Mauritius law, then the relations between MUA and the Reinsurers will be governed by principles of good faith and cooperation between the parties. He states that French authors say that Article 1134 of the Civil Code will apply as between a reinsurer and the reinsured (the cédant). He continues:

The implication of this statement is clear; namely that if the claim of MCB against MUA succeeds, then the Reinsurers will have to “follow the fortunes” of MUA and pay under the excess reinsurance. In short any independent defences that the Reinsurers might have if the matter were being considered under English law are unlikely to be available if the reinsurance claim is considered under Mauritius law.

Fourthly, if this analysis of the effect of Mauritius law is correct, there is a danger, at the least, that if the Reinsurance claim were tried in Mauritius, then, in the eyes of English conflicts of laws rules, the wrong proper law and thereafter the wrong principles of law would be applied to all the issues that arise in this case as between the Reinsurers and MUA. If this is so, then it seems to me to be legitimate for the Reinsurers to say, first: that it is justifiable for them to try and ensure that the correct proper law and principles determine the issues as between them and MUA; and, secondly, that it is reasonable for them to institute proceedings in England for a negative declaration as to liability and for a further declaration that the contract was properly avoided in order to ensure that those issues are decided in a court where the correct proper law and principles will be applied. (Footnote: ⁷³)

The “Vesta v Butcher” point

In Vesta v Butcher the original insured was a Norwegian fish farmer. He insured his fish farm with Vesta, a Norwegian insurance company. That contract was governed by Norwegian law. It contained a “Stock control clause” by which the insured agreed to maintain a written record of stock. It also contained a warranty that a 24 hour watch would be kept on the fish. Neither clause was fulfilled by the insured. Vesta reinsured 90% of its risk on the London Market. It was expressly agreed that the reinsurance was to be on the same terms and conditions as the original insurance. There was a violent storm and many of the fish being farmed escaped. The insured’s claim against Vesta was settled. Vesta sued the reinsurers. The reinsurers denied liability on the ground (amongst others) that neither warranty had been kept. So, as a matter of English law, which they argued was the proper law of the reinsurance, they were entitled to avoid the reinsurance, despite the fact that neither breach of warranty was causative of the loss of the fish. Hobhouse J held that under Norwegian law the breach of warranty would not have entitled the insurers to avoid the policy of insurance. The questions that therefore arose in relation to the reinsurance were: (a) what was the proper law of the reinsurance; and (b) if it was English law, could the reinsurers avoid the reinsurance for breach of the warranties?

Hobhouse J held that the reinsurance was governed by English law. But he held that he had to take into account the fact that the parties to the reinsurance must have contemplated that the original insurance was governed by Norwegian law so that:

In the House of Lords the principal speech was given by Lord Lowry. Lord Templeman gave a shorter speech, also dismissing the reinsurers’ appeal. Lord Bridge and Lord Ackner agreed with Lord Lowry and Lord Templeman. Lord Griffiths also did so, although he added reflections of his own concerning aspects of insurance and reinsurance and the obscurity of the reinsurance form used in that instance. (Footnote: ⁷⁵)

The problem facing all the courts was that the direct insurance was governed by Norwegian law, which treated a breach of warranty in one way, and a reinsurance of that risk (as to 90%) under English law, which treated a breach of warranty in the opposite way; so how could the two be reconciled? The answer that Lord Lowry gave, with which all the other Law Lords agreed, was to treat the problem as “one of construing the words in the reinsurance contract and not one involving an imputed choice of law.” (Footnote: ⁷⁶) He held that there was no need to treat the reinsurance contract as partly governed by Norwegian law, “except in the special sense that one must resort to Norwegian law in order to interpret and understand the meaning and effect of the [relevant warranties] in both contracts.” (Footnote: ⁷⁷) The essence of Lord Lowry’s reasoning is that the real intention of the parties to the reinsurance contract was that the words which were common to both contracts, in particular the warranties, should be construed in the same way and in accordance with “a Norwegian legal dictionary” to ascertain the meaning of the relevant terms and conditions. (Footnote: ⁷⁸)

If I proceed by analogy with the analysis of Lord Lowry in Vesta v Butcher, then I have to ask: what, on the material currently available, appears to the intention of the parties to the Excess Reinsurance as to the construction of the 72 hour discovery clause in that policy? There is no evidence from either Ms Seago or Mr Gooding concerning the surrounding circumstances leading to the inclusion of that clause in the slip policy wording for 2002. The situation is not the same as in Vesta v Butcher, because there the wording of the reinsurance incorporated the wording of the direct insurance; whereas in this case the wording incorporated is that of the primary reinsurance policy. The latter policy does not contain a 72 hour discovery clause at all. Therefore, on the material currently available I cannot conclude that there is even a “good arguable case” that the parties to the Excess Reinsurance would have intended that the 72 hour discovery clause in the excess reinsurance should be interpreted in the same way as that in the Excess All Risks Physical Loss and Damage direct insurance and “in accordance with a Mauritius law dictionary”. This is quite apart from the fact that it appears to be Mr Montocchio’s evidence that the principles of construction of contracts under Mauritius law are, (as it seems to me), similar to those of English law.

Therefore, my conclusion that the Excess Reinsurance is (or may well be) governed by English law is, in the circumstances of this case, a powerful factor in favour of England being the most appropriate forum in which to decide the reinsurance dispute.

The Preliminary Issues argument

Mr Malek and Mr Kealey did not appear to dispute that these preliminary issues of construction of the excess reinsurance could be determinative of MUA’s claim against the Reinsurers. But they relied on the evidence of Mr Montocchio QC, (Footnote: ⁸¹) who stated that the Mauritius court can hear and determine preliminary issues prior to the trial “on the merits”, particularly if those issues might be determinative of the dispute between the parties. If relevant, the “London Market understanding” evidence could be adduced in the Mauritius court. (Footnote: ⁸²)

It seems to me, on the present material, that there is a strong argument in favour of a court determining these three points of construction or “coverage” at an early stage. The facts could probably be taken as those set out in the pleadings of MCB in the Fraud Action and the Mauritius Insurance Action. There would be no need for further evidence. If the matter were being dealt with in the English court it would obviously be imperative to deal first with the threshold question of the proper law of the Excess Reinsurance. That would need evidence, but not a great deal and the principal witnesses would be Ms Seago and Mr Gooding who reside in England. All four preliminary issues could be decided quickly.

However, as Phillips LJ pointed out in the New Hampshire Insurance case (at page 64), the fact that preliminary issues of construction can be quickly and easily decided in the court of what is or may be the proper law of the contract does not determine that, overall, that court is the most appropriate forum. This will depend on the importance of the preliminary points in relation to the rest of the case. So I cannot determine the weight of the “preliminary issues factor” as a point in favour of England being the most suitable forum at this stage. I must next consider the other aspects of the reinsurance claim, those concerning non – disclosure and misrepresentation.

Non – Disclosure and Misrepresentation

Mr Malek and Mr Kealey made it plain that the factual allegations made by the Reinsurers are hotly contested. In this respect MUA is obviously dependent on MCB to deal with the allegations. MCB does not accept the contents or conclusions of the Tan Report. It denies that the irregular transactions alleged were committed with its knowledge. It denies that there were fraudulent misrepresentations in the Proposal Form.

In these circumstances, it seems to me that Mr Swainston was unrealistic when he argued that many of the factual issues concerning non – disclosure and misrepresentation would either disappear or could easily be resolved on the documents. If the alleged non – disclosures and misrepresentations have to be investigated, there will have to be a detailed factual inquiry and many witnesses will have to be called and many documents considered. All the relevant witnesses and documents are in Mauritius.

Therefore, so far as the factual investigation of the non – disclosure and misrepresentation aspects of the Reinsurance case go, it is clear, in my view, that the balance of convenience (as between MUA and the Reinsurers) lies in the case being tried in Mauritius.

The multiplicity of proceedings issue.

Other factors pressed by the Reinsurers

I reject both of these arguments. As to the first, there is no evidence that the trial of these matters would be unduly delayed if they took place in Mauritius. It may be that the process would be slower than in the Commercial Court, but that in itself does not add anything to the scales in making England clearly the more appropriate forum. As to the second, I regard it as most unfortunate that these statements were made at all by Miss Andrewartha. It is very well established law that allegations of political, governmental or judicial impropriety in other jurisdictions should not be made and will be rejected out of hand unless there is clear and cogent evidence to support them. Here there is no more than press or political comment, which is wholly unsubstantiated by independent evidence. Moreover, whatever the evidence about press and Opposition comment concerning the role of politicians and other authorities, there is not a shred of evidence to suggest, let alone clearly demonstrate, that there is any impropriety amongst the judiciary in Mauritius.

“The Overall Test” (Footnote: ⁸⁵)

The bulk of the argument between MCB and the Reinsurers concerned the proper law of the torts alleged to have been committed by MCB. It is alleged that MCB answered and signed the Proposal Form that was then given to its brokers in Mauritius, City Brokers Ltd, who presented the form to MUA, who sent it to BRS, who presented it to the London Market as part of the renewal of MUA’s reinsurance programme. The Reinsurers say that the answers were fraudulent; that they relied on them to conclude the excess reinsurance and they have suffered loss as a result, or will do of they have to pay on the excess reinsurance.

There was less argument about other factors, although Mr Kealey naturally urged the point that the Fraud Action and the Mauritius Insurance Action had begun in Mauritius and would continue whatever happened in England. Mr Swainston repeated his argument that the factual issues concerning the alleged fraudulent misrepresentations in the Proposal Form could be dealt with largely on the documents. Mr Kealey argued to the contrary. I have already rejected Mr Swainston’s submission on that point and I need not say more about it.

The Proper law of the alleged tort

Mr Kealey accepted that the events constituting the torts alleged took place in both Mauritius and England. But he submitted that the most “significant” events took place in Mauritius. That was where the negligence and dishonesty allegedly occurred and where the negligent or dishonest statements on the Proposal Form were made. It was in Mauritius that the alleged irregularities took place and allegedly came to the knowledge of officers and directors of MCB. So the substance of the alleged wrongdoing was in Mauritius. (Footnote: ⁸⁶) Mr Kealey also submitted that it was significant that the Proposal Form was completed in connection with two insurances. First, the direct insurance, which is governed by Mauritius law; and secondly, a reinsurance whose putative proper law was, he submitted, Mauritius law.

Mr Swainston submitted that by far the most significant element in the torts alleged is the presentation of the misrepresentations in the answers in the Proposal Form to the Reinsurers in London and their reliance on them here. He relied on the analysis of Mance LJ in Morin v Bonhams & Brooks. (Footnote: ⁸⁷) That case concerned a misrepresentation made in a catalogue for a car auction in Monaco. The claimant received the catalogue in England, but, armed with the catalogue, he went to the auction in Monaco to buy the Ferrari advertised. He did so. But the car suffered mechanical faults and he sued for damages for misrepresentation. The question was: was the law applicable to the tort English or Monagasque law? Mance LJ said, at paragraph 16 of the judgment:

I would respectfully add that “significant element or elements” cannot simply mean those elements which involve the most elaborate factual investigation. It is the significance of the particular element or elements in making up the tort alleged that counts.

It seems to me that there are six significant elements that make up the torts alleged in this case, ie. deceit and fraudulent or negligent misrepresentation. First there is the situation in MCB during the period 1991 to 2002 as it actually existed; were there irregularities and failures in regulation and did officers and directors of MCB know of them? That element is connected to Mauritius. Secondly, there is the completion of the Proposal Form by the directors and officers of MCB, which is said to have been done fraudulently. That was all done in Mauritius. Thirdly, there is the transmission of the Proposal Form to City Brokers Ltd in Mauritius and then to BRS in England, with the implication that MCB were content that the answers given should be used for presentation to the Reinsurers. That continuing representation took place in both Mauritius and England. Fourthly, there is the presentation of the Proposal Form by BRS to the Reinsurers as part of the renewal programme for 2002, with the continued implication that MCB continued to stand by the statements made in the Proposal Form. The presentation took place in England. Fifthly, there is the reliance by the Reinsurers (so it is said) on the Proposal Form, so as to conclude the Excess Reinsurance. That took place in England. Sixthly, there is any loss that the Reinsurers have suffered or will suffer as a consequence of the alleged deceit. If loss is suffered, it will be in England.

What is the proper “value judgment” regarding the significance of those six elements? In considering this I think I must assume for the present that the alleged torts did occur; I cannot see how one can proceed otherwise. That is not to say that I must reach a concluded view on the law applicable to the torts; other facts may come to light at a trial which change the analysis. But, in my view the most significant elements of the torts of deceit or fraudulent misstatement are those which concern making the untrue statements in the Proposal Form (knowing them to be so), presenting the untrue statements to the other person with the intent that he should rely on it and then the actual reliance by that person on the untrue statement to his loss. Although the first of these elements starts in Mauritius, it is continued in England, because the Proposal Form, with the MCB signatures, comes to England and MCB continues to make the fraudulent misrepresentations here. The intention that the Reinsurers should rely on them continues to operate here in England where the Reinsurers receive the Proposal Form. The reliance, which is the most significant element of all, in my view, takes place in England.

The antecedent facts concerning the true situation in MCB are important, but it is what is done with those facts that really matters so far as the tort of fraudulent misrepresentation or deceit is concerned. In short, it is (on the assumptions I have made) MCB’s decision not to tell the facts as they are and to continue to mislead that matters most, not the true facts themselves.

On this basis the proper law of the torts alleged will be English law, applying section 11(2)(c) of PILA.

Mr Kealey appeared to rely on the fact that, as he submitted, the Excess Reinsurance is governed by Mauritius law, in order to invoke section 12 of PILA. I have held, provisionally, that the proper law of the Excess Reinsurance is English law. But even if I had concluded to the contrary, that would not help him establish that the law applicable to the torts of MCB is Mauritius law. I must confess to finding section 12(1) difficult to apply in relation to all the issues in this case. Section 12(1) appears to say that, if having considered the matter under section 11(2(c) you decide that the most significant elements lead to the proper law of the tort being that of country A, nevertheless, you may consider it more appropriate to conclude that the proper law should be that of country B (“the other country”), bearing in mind the factors set out in section 12(2). But, in this case at least, that involves considering precisely the same elements all over again. In any event, the fact that the fraudulent misrepresentations were made in order to induce the Reinsurers to enter the Excess Reinsurance whose proper law would be that of Mauritius seems to me to have nothing to do with the tort in question. Nor does the fact that the Proposal Form was also used in respect of the direct insurance, which is governed by Mauritius law.

The significance of the proper law of the tort being English law

The multiplicity of proceedings issue.

Mr Kealey and Mr Malek relied strongly on the general policy of English courts to discourage litigation of the same issues between the same parties in different jurisdictions. They reminded me of the observations of Lords Diplock and Brandon in The Abadin Daver. (Footnote: ⁹¹) However, I must also recall the observation of Bingham LJ in Du Pont v Agnew (Footnote: ⁹²) that “the general undesirability of such concurrent proceedings is, however, but one consideration to be weighed as part of the overall assessment…The policy of the law must nonetheless be to favour the litigation of issues once only, in the most appropriate forum”.

What is the relationship between the Reinsurance claim, the Mauritius Insurance Action and the Fraud Action?

There is no “follow the settlements” clause in the Excess Reinsurance, so that whatever the outcome of the claim between MCB and MUA, it will be for MUA to prove (as against the Reinsurers) that MUA was liable to MCB under the direct policies. If both the Insurance and the Reinsurance claims were to be dealt with in the Mauritius courts, then it appears likely (given the advice of Mr Montocchio) that the Mauritius court would treat the Excess Reinsurance as also being governed by Mauritius law. If so, then the same principles will be applied in relation to the construction issues. Furthermore, the Mauritius law principles relating to the obligations of a Reinsurer to “follow the fortunes” of the reinsured, will be applied. But if the court trying the Excess Reinsurance claim concluded that the reinsurance is governed by English law, then the approach to construction, non – disclosure and misrepresentation in relation to the Excess Reinsurance may be markedly different. Further, if the English reinsurance action continues and holds the Excess Reinsurance is governed by English law and the Defendant in Guarantee proceedings continue in Mauritius and that court holds that the excess reinsurance is governed by Mauritius law, then it is almost certain that there would be inconsistent conclusions on the Excess Reinsurance claim.

As between MCB’s Fraud Action and the Reinsurers’ action against MCB, there will be some overlap of the facts, but I suspect very little. MCB’s aim is to recover money which it claims it can trace into the hands of the defendants to that action. It is not directly concerned with whether there were irregularities in the internal dealings of MCB. The danger of inconsistent conclusions here is minimal.

Mr Swainston argued that one factor in favour of England as the appropriate forum for the Reinsurers case against MCB was that MCB was pursuing Mr Appasamy in proceedings in this country. This is not a strong factor. The claim is on guarantees. Mr Appasamy has, so far, not raised active defences. On the material I have at present it seems unlikely that there will be any substantial overlap between that action and the Reinsurers’ case against MCB.

I must now try and draw up a balance sheet of all the aspects of the case, although for convenience of analysis I will keep the claims of the Reinsurers against MUA and MCB separate.

Reinsurers against MUA: the factors in favour of the English forum

I regard all these factors as being strongly in favour of England being the forum to try the case between MUA and the Reinsurers.

Reinsurers against MUA: the factors against England being the appropriate forum

In relation to the MUA/Reinsurers dispute, in my view the weight of the factors in favour of England as the appropriate forum is far greater than the weight of the factors against. But before making a final decision I must go on to consider the position as between the Reinsurers and MCB.

Reinsurers against MCB: the factors in favour of England as the appropriate forum

Reinsurers against MCB: the factors against England being the appropriate forum

The Overall Position as between Reinsurers and MCB

Conclusion

I am conscious of the fact that this conclusion rests squarely on my decision that the proper/applicable law of the Excess Reinsurance and the alleged torts is (or may well be) English law and rests on the analysis which results from that decision. If that view is wrong, then the balance alters radically in favour of Mauritius. As I said in the course of argument, it may be sensible for the English court to consider urgently – and first of all - the proper/applicable law points. If, in the end, the appropriate law is Mauritius law, then it seems to me possible that MUA and MCB could re-apply to stay the English actions. I know of no legal reason to prevent such an application at a later stage.

The injunctions were obtained without notice after Clydes, solicitors for the Reinsurers, had been notified that MUA intended to join the Reinsurers to the Mauritius Insurance Action as Defendants in Guarantee. (Footnote: ⁹⁵)

The Reinsurers are entitled to an anti – suit injunction if the court is satisfied that the pursuit of the Defendant in Guarantee proceedings in the Mauritius Insurance Action is vexatious and oppressive. The fact that there would be proceedings in two courts, England and Mauritius, is not in itself, evidence of vexation and oppression. But such action may be vexatious and oppressive if (a) England is the “natural forum” for the trial of the dispute; and (b) justice does not require that the party who wishes to pursue the foreign proceedings should be allowed to do so. Moreover the English court must have regard to comity when deciding whether to restrain a party from proceeding in a foreign court. Therefore the English court will be reluctant to take upon itself the task of deciding whether the foreign forum is inappropriate. (Footnote: ⁹⁶)

I have concluded that England is the more appropriate forum than Mauritius for the Reinsurance Action to be tried. But is the action of MUA in starting the Defendant in Guarantee proceedings “vexatious and oppressive”? I do not regard it as such, in the circumstances in which MUA was already defending the claim by MCB. As the cases emphasise, the fact of two concurrent proceedings relating to the same subject matter is not itself vexatious or oppressive. There is no other evidence on which the Reinsurers can say that the Defendant in Guarantee proceedings are vexatious and oppressive.

Therefore, quite apart from the factor of comity, I am satisfied that I was wrong to grant the ex – parte anti – suit and anti – anti – suit injunctions and they and the undertakings that replaced them, must be discharged.