XL Insurance Company SE v AXA Corporate Solutions Assurance

This is an application by the Defendant, AXA Corporate Solutions Assurance (“AXA”) a French insurance company, disputing the jurisdiction of the English Court to hear and determine proceedings brought by the Claimant insurance company, XL Insurance Company SE (“XL”), a European insurance company domiciled here.

XL and AXA are co-insurers of a Delaware company called Connex Railroad LLC (“Connex”), an affiliate of Veolia Environment SA (“Veolia”), part of the French Veolia Group. On 12 September 2008 in Chatsworth, California, there was a serious collision between a freight train and a passenger train operated by Connex on behalf of the Southern Regional Rail Authority trading as Metrolink. 24 people died and many more were injured. Proceedings on behalf of the victims were commenced in California against Metrolink and Connex. XL had insured Metrolink pursuant to three policies of insurance dated 23 September and 13 and 22 October 2008 for the purposes of which Connex was an insured party. AXA insured Violia and its associates which also included Connex pursuant to a policy dated 1 July 2008 (“the AXA Policy”)

On behalf of the victims and within the California proceedings, a Federal Interpleader Fund of

XL claims that this is a case of double insurance and seeks a contribution from its co-insurer AXA in the sum of $7.8m being the amount which it says AXA should have paid in, but which instead XL was obliged to pay, having regard to the proportions of the risk insured by each. If XL’s claim is allowed to continue here, the issue of whether AXA has a defence as against its insured, will be litigated here.

Since these proceedings were commenced after 15 January 2015, questions of jurisdiction are governed by the “recast” Brussels Regulation 1215/2012. This replaced (with significant amendments in some areas), the previous Brussels Regulation 44/2001. I shall refer to the former as Brussels I Recast and the latter as Brussels I.

AXA contends that as a French – domiciled defendant, it should have been sued in France pursuant to Article 4 of Brussels I Recast. XL says that it is entitled to sue here because of the operation of Article 7 (2), alternatively Article 7 (1) thereof. It accepts that it has the burden of showing that there is a good arguable case that it is right on one or other count.

Article 4(1) of Brussels I Recast provides that

“Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.”

Article 7 provides that:

“A person domiciled in a Member State may be sued in another Member State:

(1)(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(b)for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

—

in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

—

in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided;

(c)

if point (b) does not apply then point (a) applies;

(2)

in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;”

Article 7 (1) and (2) reproduce in materially the same form Articles 5 (1) and (3) of Brussels I . For obvious reasons all of the cases discussed below (save Iveco SpA and Iveco Limited v Magna Electronics [2015] EWHC 2887) concerned Articles 5 (1) and (3). References to those articles are therefore in the context of Brussels I .

AXA contends that a contribution claim of the kind made here by XL is a “matter relating to a contract” within Article 7 (1), namely the underlying insurance contracts between XL and AXA and their insureds respectively but if so, the place of performance of the “obligation in question” is not England. And if not within Article 7 (1), the claim is not a matter relating to tort, delict or quasi-delict within Article 7 (2). Or if it is, on any view the place where the relevant “harmful event” occurred was not England. On any analysis therefore, the derogations from Article 4 (1) do not operate and AXA must be sued in France.

For its part, XL contends that its claim does not fall within Article 7 (1) but it does fall within Article 7 (2) as to which, the place where the harmful event occurred is England. If, contrary to that, the claim is not within Article 7 (2), then (and very much as a longstop argument) XL contends that if the claim was within Article 7 (1), the place of performance of the relevant obligation is England.

It is not necessary to delve into the facts in any more detail.

The following general principles derive from Recitals 15 and 16, and Article 4 of Brussels I Recast and the case-law and are not controversial:

At some points in her arguments, Ms Buehrlen QC for AXA appeared to suggest that apart from the relevant provisions the Court should also take into account some supervening requirement of “close connection” akin to “forum conveniens”. There is no basis for that gloss, however. See the observations of Christopher Clarke LJ in AMT Futures v Marzillier [2015] 3 WLT 282 at para. 33. Either an exception (properly construed) applies or it does not. If it does, that is the end of the matter and the relevant Court has jurisdiction without more.

It is common ground that any contract that might be relevant is not one for the sale of goods or provision of services, and so only Article 7 (1) (a) is relevant. Two questions arise:

As a matter of broad analysis, this claim “relates” to a contract, in fact two contracts because it arises out of the fact that both XL and AXA are liable (or in AXA’s case allegedly liable) to Connex as their insured under the insurance polices. However there is no contract of any kind between XL and AXA. Although the right of a co-insurer’s contribution in cases of double insurance has sometimes been referred to as an “equitable” right of contribution, it is probably more accurate to say that it arises by operation of law, the object being to ensure that the co- insurers are put in the position they would have been in, had the insured claimed against both of them, instead of going against only one. It arises once a co-insured has paid out more than his share, as against the other co-insured, or to put it another way, once he has “overpaid”. See the judgment of Lord Mance in International Energy Group v Zurich Insurance [2010] EWHC 773 at para. 15. See also McGillivray Insurance Law 12th Ed para. 24-032 which states that:

Here it is common ground that payment into the Fund was the equivalent of payment out to the insured.

While the necessary preconditions for liability on the part of AXA to make contribution to XL include the occurrence of the insured event, the liabilities of both under their insurance policies and overpayment by XL, the legal basis for XL’s claim against AXA is the right at law to contribution.

In my judgment, and as explained below, the relevant case-law supports the general proposition that for Article 7 (1) to be engaged at all, the defendant must have an obligation founded in contract to render a performance of some kind to the claimant, and the claimant must be seeking that performance or compensation for the lack of it.

The starting point is the decision of the ECJ in Handte v TMCS [1992] ECR 1-49. Here, the French claimant brought an action against, among others, the German manufacturer of allegedly defective goods which sold them to its French associate who sold on to the claimant. The Court held that the claim against the manufacturer did not fall within (the then) Article 5 (1). Having noted the need to interpret such provisions restrictively, it said in paragraph 15 that Article 5 (1) did not cover a situation where “there is no obligation freely assumed by one party to another” a formula oft-repeated in later cases. It was then said that there was no contractual relationship between the claimant and the defendant manufacturer because the latter undertook no such obligation to the former. Moreover, to interpret Article 5 (1) more widely so as to bring the claim within it would be to interpret it otherwise than so as to enable a normally well- informed defendant reasonably to predict where else he may be sued other than his domicile, since he may well not know of the identity of any sub-purchaser.

Ms Buehrlen QC accepted the need for there to be a contractual obligation assumed by one party to another but submitted that this did not have to be an obligation as between the parties to the claim in question. If that were correct, then it could be said that the instant claim did fall within Article 7 (1). However, in my judgment, it is not correct.

First, the clear sense of the decision in Handte is that the obligation concerned must be owed to the claimant. Second, this is plain from the ECJ decision in Brogsitter v FMN 13 March 2014 C-548/2012. In a preliminary ruling the Court stated at paragraph 24 that in order for a claim to be within Article 5 (1) the conduct complained of must “be considered a breach of contract”. And as more particularly set out in para. 26:

“It is therefore for the referring court to determine whether the purpose of the claims brought by the applicant in the case in the main proceedings is to seek damages, the legal basis for which can reasonably be regarded as a breach of the rights and obligations set out in the contract which binds the parties in the main proceedings, which would make its taking into account indispensable in deciding the action.”

In Atlas Shipping v Suisse Atlantique [1995] 2 Lloyds Rep. 188, the claimant broker sought to enforce a term of the contract between the defendant buyer and the third party seller which permitted the buyer to deduct the broker’s commission from the purchase price provided it then remitted the commission directly to the broker. The defendant buyer here made the deduction but then did not pay the broker. The sellers were joined as additional defendants. Rix J (as he then was) held that the claim fell within Article 5 (1) because the buyer had a contractual obligation to pay the broker albeit that the broker was not itself a party to the contract and thus the broker could only enforce the same by means of equitable principles. He said that to suggest that the decision in Handte would prevent that outcome was to read it too narrowly. I respectfully agree. Where there is a contractual obligation upon the defendant to render a performance to the claimant, the fact that there was (or is) no privity between defendant and claimant will not matter for the purposes of Article 7 (1) provided that the basis of the defendant’s liability to render the performance to the claimant is a contract. That explains why, in my view, there is no difficulty with a claimant who is an assignee of the original contracting party being able to invoke Article 7 (1) against the defendant who is the defaulting contracting party.

Equally, if the beneficiary of, but not a party to, a contract made between the defendant and a third party is able to enforce the defendant’s contractual promise to render a performance to him by reason of s1 (1) of the Contracts (Rights of Third Parties) Act 1999, Article 7 (1) will be engaged. See the decision of the Court of Appeal in WPP v Benatti [2007] 1 WLR 2316 at paras. 53 and 54 of the judgment of Buxton LJ which also cites a passage from Briggs’ Civil Jurisdiction and Judgments 4th Edition at para. 2.126 (see now para. 2-167 of the 6th Edition).

In such cases, therefore, there is a contractual obligation on the defendant to render a performance to the claimant which the latter wishes to enforce. The only question is the claimant’s locus to do so. Where the claimant was not a party to the contract some further provision or rule of law may be required. But the case before me is not a “locus” case. AXA has no contractual obligation to make contribution to XL at all.

AXA seeks to avoid this problem by arguing that AXA did have a contractual obligation to indemnify its insured which it failed to discharge. Quite so, but XL is not suing on that obligation. Indeed, if it were all it could achieve would be an order that AXA make payment to Connex or the Fund, which is no use to it now and anyway is not being claimed. Nor does the fact that the contractual liabilities of XL and AXA to their insured are pre-requisites to XL’s claim for a contribution turn it into a contractual claim for the purposes of Article 7 (1).

The difficulty with AXA’s reliance on the contract of insurance as the relevant one for the purpose of Article 7 (1) is illustrated by the fact that if the obligation under that contract, which is to indemnify the insured, is the obligation in question (as AXA contends) then (obviously) the place of performance of that obligation will have no relevance to XL at all since it will be the place where the insured is to be indemnified either in France or in California. It makes no sense for the Court to decide the place of performance of an obligation which is not the obligation that the claimant seeks to enforce. It is the latter obligation which is central – see for example Shenavai v Kreischer [1987] ECR 239 at paras. 18 and 19.

It is therefore not enough for Article 7 (1) purposes to show that there is a contract with freely assumed obligations which is somewhere in the background, or even one which is a stepping stone to the ultimate liability of the defendant. It must be the basis for the obligation actually relied upon by the claimant as against the defendant. This is borne out by the ECJ decision in Verein für Konsumenteninformation v Henkel [2003] I.L.Pr. 1 where the claimant was a consumer organisation which sought an injunction against the defendant trader to prohibit him from using unfair contract terms in his contracts with his customers. Unquestionably the contracts concerned lay at the heart of the action. But nonetheless, the claimant association was not in any kind of contractual relationship with the defendant. Accordingly the Court held that the claim was not within Article 7 (1).

Following the hearing, I received a copy of the decision of Edwards-Stuart J in Iveco, handed down on 17 November 2015. I invited both sides to make further submissions in the light of it and they have done so. I am fortified in my conclusion on Article 7 (1) by that decision. It concerned contribution claims made by the claimants under the 1978 Act against the Italian manufacturer of grid relay heating systems installed in vehicles which led to them catching fire and damaging various commercial premises in England. The second claimant was the Italian manufacturer of the vehicles and the first defendant was the distributor in England. Both claimants settled the claims made against them in tort which arose out of the fires and now sought contribution against the defendant on the basis that it was a tortfeasor too. The defendant sought to strike out the claim, arguing that this Court had no jurisdiction under Brussels I Recast and it must be sued in Italy. Although there was no contract between the first claimant and the defendant it was said that the claim nonetheless fell within Article 7 (1) because of the underlying contract between the second claimant and the defendant whereby the latter sold the offending heating systems to the former. Edwards-Stuart J rejected this argument since there was no contract between the relevant parties. The fact that there was a contract “somewhere along the line” was not enough. There needed to be a contract between the claimant and the defendant or something very close to it. See paragraph 29 of his judgment.

I was also referred to a recent opinion of the Advocate General (“AG”) given on 24 September 2015 in the case of Ergo Insurance v P & C Insurance Cases C-359 and 475/14. The question was whether a co-insurer’s claim for contribution following payment out in full to the insured fell within Brussels I. At para. 58, the AG opined that such a claim fell within Article 5 (1) because each insurer was subject to an underlying contract with the insured and so this was a matter “relating to a contract”. At para. 62 she said that the centre of gravity of the obligation to indemnify the insured is the insurer’s contractual obligation and that for the purposes of applicable law, the co-insurer’s claim would fall under Rome 1. However for all the reasons given above, I do not believe that this is the correct analysis of the claim to contribution so far as Article 5 (1) is concerned. Nor do I need to express any concluded view as to whether Rome 1 and 2 on the one hand, and Brussels I (or I Recast) on the other are to be construed consistently with each other so far as the “demarcation line” between claims founded in contract and those founded otherwise, are concerned.

The simple reality here is that the relevant obligation is the obligation on AXA to contribute to XL, not to indemnify the insured. Ms Buehrlen QC sensibly conceded that if I took that view, then Article 7 (1) is not engaged at all. Accordingly it is unnecessary to deal with the second question, namely the place of performance of the obligation in question save to say that had the obligation in question been the insurers' liability to indemnify the insured, then obviously the place of its performance was not England, which disposes of XL's "longstop" argument.

Here two questions arise:

It is common ground that the place where the harmful event occurred is (a) the place where the damage occurred or (b) the place of the event giving rise to it. See Bier v Mines de Potasse d’Alsace [1976] ECR 1735 at paras. 14-19. The claimant may seek to establish either in order to found jurisdiction under Article 7 (2). Here XL contends that the place where the damage occurred is England. It does not rely on the alternative limb, being the place of the event giving rise to it.

This questions turns fundamentally on the true scope of the words “matters relating to tort, delict or quasi-delict”.

The starting point is the decision of the ECJ in Kalfelis v Bankhaus Schroeder [1988] ECR 5565. The claimant, domiciled in Germany, brought a claim arising out of futures transactions made with the second defendant bank, domiciled in Luxembourg, through its German intermediary the first defendant. He said that both were liable for substantial losses arising out of those transactions. He claimed there was a breach of contractual liability to provide information, a liability in tort on the basis of a breach of the duty of good faith, and unjust enrichment on the basis that the transactions were not binding and so the monies he paid over should be returned.

The Luxembourg bank challenged the jurisdiction of the German Court. The first set of questions for a preliminary ruling concerned what was then Article 6 (1) in relation to claims against more than one defendant. But the second set of questions were as follows:

“(a)

Must the term "tort" in Article 5 (3) of the EEC Convention be construed independently of the Convention or must it be construed according to the law applicable in the individual case (lex causae), which is determined by the private international law of the court applied to?

(b)

Does Article 5 (3) of the EEC Convention confer, in respect of an action based on claims in tort and contract and for unjust enrichment, accessory jurisdiction on account of factual connection even in respect of the claims not based on tort?”

In answer to (a) the Court stated (unsurprisingly) in paragraph 16 that

“..the concept of matters relating to tort, delict or quasi-delict must be regarded as an autonomous concept which is to be interpreted, for the application of the Convention, principally by reference to the scheme and objectives of the Convention in order to ensure that the latter is given full effect.”

But it then went on to say in paragraph 17:

“In order to ensure uniformity in all the Member States, it must be recognized that the concept of ‘matters relating to tort, delict and quasi-delict’ covers all actions which seek to establish the liability of a defendant and which are not related to a 'contract' within the meaning of Article 5 (1).”

In paragraph 18 it recited what it had just said in paragraph 17 as the answer to (a).

In paragraph 19 the Court went on to say that derogations from the general rule must be interpreted strictly, and so

“a court which has jurisdiction under Article 5 (3) over an action in so far as it is based on tort or delict does not have jurisdiction over that action in so far as it is not so based.”

In paragraph 20 the Court recognised that this could mean that different elements of the same dispute might be litigated in different places but on the other hand the claimant could avoid that by suing the defendant in its place of domicile. In paragraph 21 the statement made in paragraph 19 became the answer to (b).

Paragraph 17 of the judgment (“paragraph 17”) has been cited in numerous later cases, some of which are considered below. However it is first necessary to set out the parties’ rival contentions as to what it means.

Mr Layton QC does not suggest that paragraph 17 means that Article 5 (3) is a purely residual category so that any claim of any kind which is not within Article 5 (1) falls within Article 5 (3). He could not, if only because the ECJ in Reichert v Dresdner Bank [1992] I.LPr-404 held that one particular non-contractual claim did not fall within either provision. See paragraph 55 below. Instead, he said that any claim which (if proved) entailed a liability on the part of the defendant to the claimant would engage Article 5 (3) once it was clear that it did not fall within Article 5 (1). XL’s claim here for a contribution from AXA was just such a claim because AXA is liable to make the contribution in the sum of $7.8m claimed in the Claim Form.

Ms Buehrlen QC contended that something more was needed. Recognising that an autonomous interpretation had to be given to “tort, delict or quasi-delict” she argued that what was required was not just any liability but liability for some kind of “wrong”. But the claim for contribution, founded as it is on a right arising by operation of law, cannot be said to involve the commission of a wrong and so the claim is outwith Article 5 (3) altogether.

Before turning to the cases I would make the following initial observations:

I now consider the subsequent cases.

In Brogsitter, the German claimant alleged that the defendants were in breach of the contract between them in that they developed and sold watches which derived from development work they had agreed to undertake exclusively for the claimant. But the claim made was in tort, for damages for unfair competition. The question was therefore whether, since there was a contract between them which the claimant said had been broken, the claim should be considered by reference to Article 5 (1). The Court said it should, having found that the claim fell within Article 5 (1) properly construed (see paragraph 26, quoted in paragraph 22 above) and thus not within Article 5 (3). In paragraph 20 the Court quoted directly paragraph 17 of Kalfelis. And in paragraph 27 it reiterated that “Otherwise [ie if the claim did not fall within Article 5 (1)] …..they must be considered as falling under matters relating to ‘tort, delict or quasi-delict’ within ..Article 5 (3).” That might be said to exclude the need to find, additionally, some form of wrong although there clearly was a wrong alleged in that case.

In Tacconi v Wagner [2002] ECR 1-7537, a case where a breach of the duty to act in good faith in pre-contractual negotiations was alleged, the ECJ cited paragraph 18 of Kalfelis without qualification. Having held that such a claim did not fall within Article 5 (1) it said that in the circumstances of this case it was a claim for tort within Article 5 (3). So expressed, I do not consider that this case sheds any real light on the debate.

In Reunion v Spliethoff [1998] ECR 1-6511, a subrogated claim was brought by the insurers of the consignee of a cargo of pears which had been damaged in transit due to a lack of refrigeration against the issuer of the bill of lading, the actual carrier and the master of the ship. The ECJ held that the claims against the carrier and Master did not fall within Article 5 (1). It went on to say in paragraph 24:

“In those circumstances, it must be held that such an action is a matter relating to tort, delict or quasi- delict within the meaning of Article 5(3) of the Convention and that, therefore, the general principle that the courts of the State in which the defendant is domiciled are to have jurisdiction, laid down in the first paragraph of Article 2 of the Convention, is inapplicable.”

Once more, there can be little doubt that in broad terms a tort was in fact alleged and so the point in issue was not tested.

In OFAB v Koot [2015] QB 21, the ECJ took a similar approach to a claim by a creditor against the directors of a company who had allowed it to trade while under-capitalised and so that it was forced into liquidation. The creditor claimed that the directors should be held personally liable for the company’s debts. Having found that the claim fell outside Article 5 (1), the Court then said:

“Nevertheless it is settled case law that the term “matters relating to tort, delict and quasi-delict” within the meaning of article 5 (3) [of Brussels I] covers all actions which seek to establish the liability of a defendant and which are not related to a “contract” within the meaning of Article 5 (1) (a) thereof...”

Again, however, it could be said there was a “wrong” giving rise to that liability being the effective wrongful trading by the company brought about by the directors.

In Kolassa v Barclays Bank Plc 28 January 2015 C-375, the claimant suffered loss as a result of buying bearer bonds issued by the defendant bank and bought though an Austrian bank. He sued the bank in the Austrian Court on the basis of contractual and tortious liability and the bank challenged jurisdiction. It held that as the bank had assumed no contractual obligation to the claimant, there was no contractual claim which could fall within Article 5 (1). See paragraphs 39-41. It then had to deal with whether Article 5 (3) applied. It stated thus:

“44.

The fact remains that the concept of 'matters relating to tort, delict or quasi-delict' within the meaning of Article 5(3) of Regulation No 44/2001 covers all actions which seek to establish the liability of a defendant and do not concern 'matters relating to a contract' within the meaning of Article 5(1)(a) of that regulation (see judgment in Brogsitter, C-548/12, EU:C:2014:148, paragraph 20). Thus, it must be assessed whether actions for damages brought against an issuer on the basis of the prospectus and for breaches of other legal information obligations towards investors are matters of delict or quasi-delict in as much as they are not covered by the concept of matters relating to a contract as defined at paragraph 39 of this judgment.”

The same point can be made as previously given the allegations of breach of obligation.

In Reichert v Dresdner Bank [1992] I.LPr-404, the ECJ held that a claim by a creditor to set aside a transaction entered into between the debtor defendant and a third party did not fall within Article 5 (3), having first cited without qualification paragraph 17 of Kalfelis. It went on to say that the nature of the claim was such that it could succeed even where the third party beneficiary of the impugned transaction had acted in good faith. It then said:

“[19] The object of such an action is not to compel the debtor to make good the damage he has caused the creditor by his fraudulent act, but to set aside, as against the creditor, the effects of the disposition by the debtor. It is directed not only against the debtor but also against the beneficiary of the disposition, viz. a third party in relation to the debtor's obligation to the creditor, even if, where the disposition is by way of gift, the debtor does not commit a wrongful act. [20] Under these circumstances, an action like the action paulienne of French law cannot be regarded as an action which seeks to establish the liability of a defendant in the sense understood in Article 5(3)..and it is not therefore within the scope of that Article.”

One can conclude therefore, that the precise scope of the “liability” requirement of paragraph 17 of Kalfelis has not really been tested in European law, other than in Reichert.

Having reviewed the ECJ case-law, I remain of the view that if it is not possible to state the relevant harmful event in respect of a particular claim, it suggests that the claim does not fall within Article 5 (3) at all. That was surely the underlying point in Reichert. Accordingly, while one need not find a tort, delict or quasi-delict strictly so-called or perhaps even a “wrong”, what one needs is some event caused by the defendant which causes damage to the claimant, which may be paraphrased as “harmful event”, resulting in a liability of the defendant to pay the claimant. I consider that this is what is implicit in paragraph 17 of Kalfelis.

I now turn to the relevant English cases.

In Santa Fe v Gates Europe and Taurus 16 January 1991, the Court of Appeal had to consider whether a contribution claim by one joint tortfeasor against another fell within Article 5 (3) and if it did, whether the “harmful event” was in England, as the claimant contended, or whether it was in Scotland being the site of the accident on an oil rig. Since the Court of Appeal held that Article 5 (3) would not assist the claimant anyway (because the harmful event was plainly in Scotland), they held that it was unnecessary for them to decide the first question which was whether the claim engaged Article 5 (3) at all. Nonetheless it is worth noting that Ralph Gibson LJ had doubts as to whether it did.

As to the harmful event, of course here the claimant was also one of the tortfeasors and thus responsible for the underlying act of negligence. The Court held that the harmful event could only be the underlying accident, not surprisingly, for at that point, both tortfeasors had a right of contribution against each other without more. The fact that it was only later, when, in England the victim of the accident obtained a judgment against the claimant, which then became the immediate cause of the contribution claim, was not relevant.

In Hewden v Wolfkran [2007] 2 Lloyd’s Rep. 138, the operator of a crane in Canary Wharf which fell, causing fatalities and serious injuries, sued the German company from which it had purchased the crane on the basis of the 1978 Act. The operator had previously settled the claims made against it. The defendant relied upon a jurisdiction clause in favour of Germany in the sale contract with the claimant and further argued that if the jurisdiction clause did not apply, a claim for contribution did not fall within Article 5 (3), even if the underlying negligence claim against the claimant, did. Having reviewed the authorities, Jackson J (as he then was) held that in order to decide the question of whether Article 5 (3) is engaged, it was necessary to look at the substance of the claim brought and the factual basis of the defendant’s liability. He then held that the substance of the claim was the defendant’s liability to the victims of the accident in negligence as a result of which it would be liable to the claimant under the 1978 Act. Since the harmful event ie the accident occurred here, Article 5 (3) conferred jurisdiction on the English Court if (as he went on to find) the jurisdiction clause did not apply.

I make three observations about that case. First, with respect to Jackson J, I think there are difficulties with seeing the harmful event in a joint tortfeasor's contribution claim as being the underlying tort, albeit that is fundamental to that claim, because it is hard to see that as causing damage to the claimant. But second, and in any event, the contribution claim here is not between tortfeasors but joint insurers. What is key here is the fact of “overpayment” by the claimant. Finally, if the event is the underlying tort, that does not assist XL here (see below).

In Iveco the Court had to consider whether Article 7 (2) vested it with jurisdiction to hear the first claimant’s contribution claim, it having fallen outside Article 7 (1) (see paragraph 29 above). Edwards-Stuart J concluded that if the claim were to be categorised as a matter relating to tort etc, then the relevant harmful event was each of the fires at the premises in England. In terms of the place of the harmful event it was common ground that the event giving rise to the damage was the defendant’s negligent manufacture of the systems which took place in Italy. The core issue between the parties was the place where the damage occurred. Here he held that this was England, the locus of the fires which occurred as a result of the defective systems and not, for example the place of their delivery to the second claimant or their incorporation in the manufacture of the vehicles, all of which occurred in Italy. On the assumption that Article 7 (2) was engaged, I would respectfully agree.

However, the defendant also argued that Article 7 (2) did not cover the contribution claim. Edwards-Stuart J rejected this on the basis that the contribution claims concerned the liabilities of both claimants to the underlying claimant, in tort. See his paras. 48 and 50. In that regard, he effectively followed the approach taken by Jackson J in Hewden as to which I expressed some reservation in paragraph 62 above. But as with Hewden, such a finding does not affect the outcome in this case: first, because it was concerned with joint tortfeasors who were indeed liable (in tort) for the underlying fires and not co-insurers, and second, the damage caused by the underlying tort here did not occur in England (see paragraph 77 below).

Reference was also made to the case of Dolphin v Sveriges [2009] 2 Lloyd’s Rep. 123 where the claimant alleged inducement to breach of contract on the part of the defendant as a result of which the claimant did not receive a payment from the other party, being insurers of a cargo lost in a ship collision. It appears that there was no issue but that the nature of the claim (a tort in English law) fell within Article 5 (3). The issue was over the place where the damage occurred. Christopher Clarke J (as he then was) held that this was in England because the damage was the fact that the English claimant did not receive here, the monies that should have been paid to it here under the contract. This case does not assist on the prior question which arises before me as to whether Article 5 (3) is engaged at all.

That leaves (on this point) the decision of the House of Lords in Kleinwort Benson v Glasgow City Council [1999] 1 AC 153. Having held (by a majority) that a claim for unjust enrichment whereby the claimant sought repayment from the defendant of sums paid to it pursuant to interest rate swap agreements later held to be void and ultra vires did not fall within Article 5(1) their Lordships then considered a much briefer argument that it fell within Article 5 (3). They said that it did not. Lord Goff said that the argument that it did was based on a misreading of Kalfelis because (it would appear) he considered that Kalfelis did in fact still require there to be some sort of tort, delict or quasi-delict, even if autonomously defined, which there was not here, nor was there any harmful event or threatened wrong. Lord Clyde said that the argument was based on an imprecise translation of paragraph 18 of the judgment in Kalfelis. Lord Hutton also said that there was a misreading of Kalfelis but his main point (like Lord Goff) was that it was inappropriate to apply the words “where the harmful event occurred” to an unjust enrichment claim. It may well be open to debate whether unjust enrichment claims fall outside Article 5 (3) (and at paragraph 2.197 Professor Briggs suggests it depends on the particular kind of unjust enrichment claim) but it is not necessary for me to engage in that debate nor the issue whether the House of Lords was taking a too narrow approach to Article 5 (3) which was itself inconsistent with ECJ authority. Where I would, with respect, concur with their Lordships, is in the view that before Article 5 (3) is engaged it is necessary to find some meaningful “harmful event” as described above.

In the light of Kalfelis and the subsequent case-law I conclude thus:

I therefore turn to consider the nature of the claim here. XL’s entitlement to a contribution arises by operation of law and arises once it had “overpaid” the insured. That is therefore the “event” if any. But if so, it is very hard to characterise it as a “harmful event” as described above. It is true that AXA had previously refused to contribute to the Fund, and had it done so, XL would not have needed to overpay. But the right to contribution does not depend on a prior request and refusal. It simply depends on overpayment where there is another co-insurer. If one takes the analogous case of an insured choosing simply to claim against one of two co-insurers which is then obliged to indemnify the insured in full, it is very hard to characterise the resulting right to contribution from the other co-insurer as being founded on its liability for an event causing damage to the claimant.

Equally the fact that the co-insurer has refused to make contribution once the claim for a contribution has been made is irrelevant. The relevant event is that which is the basis for the contribution claim arising not what happens afterwards.

The fact that AXA can now be said to be "liable" to contribute to XL (assuming its underlying defence fails) is not sufficient to engage Article 7 (2).

Of course, one can find prior harmful events being the original torts committed by Metrolink and Connex. But since they were not committed by AXA they are irrelevant.

Accordingly, I do not consider that this claim falls within Article 7 (2) at all.

Since I have found that Article 7 (2) is not engaged, it is not necessary to answer this question. But in deference to the arguments on this point, and lest the matter go further I deal with it briefly on the basis that Article 7 (2) is somehow engaged.

I can well see that if the event is AXA’s refusal to pay XL pursuant to its accrued right to contribute, then the damage has occurred where payment should have been made, ie here. That is consistent with Dolphin. See also the observations of Popplewell J in AMT Futures v Marzillier [2015] 2 WLR 187 at paragraph 34 (6) (not reversed on this point by the Court of Appeal [2015] 3 WLR 282).

But if the event is something else then it is necessary to refer to some of the observations of Christopher Clarke LJ (with whom Tomlinson and Laws LJJ agreed) in the Court of Appeal in AMT Futures:

“32.

Third, where harm might be regarded as happening in two different states the search is not for one or more states in which damage has been suffered but, if possible, for the state in which "the harm" has occurred, sometimes referred to as the jurisdictionally significant harm. As Popplewell J put it…:

"The search will be for the element of damage which is closest in causal proximity to the harmful event. This is because it is this causal connection which justifies attribution of jurisdiction to the courts of the place where damage occurs: see the Bier case [1978] QB 708, paras 16-17 and the Dumez France case [1990] ECRI-49, para 20." …

54.

.. If I ask myself (i) what is "the place where the event giving rise to the damage . . . directly produced its harmful effects upon" AMTF (the Dumez France case); or (ii) where was the "actual damage" which "elsewhere can be felt" or the "initial damage" suffered (the Marinari case); or (iii) what was the place where the damage which can be attributed to the harmful event (commencement of proceedings) by "a direct and causal link" (the Reunion Europeenne case) was sustained, the answer is, in my judgment, Germany.”

If one says that the event is the overpayment by XL to the Fund in California (whether with or without AXA’s refusal also to pay into the Fund) then it seems to me that the “initial damage” occurred in California, the site of the overpayment.

And if one goes back yet further and says that the event is the underlying accident (the approach taken in Hewden), then again, plainly, the damage caused by it occurred in California.

The fact that in either of these two instances, the effect of those events is felt, or suffered, by XL in its bank account here in England, is not sufficient to say that the damage occurred here.

Mr Layton QC at one point argued that all one needs to do is see where the damage occurred since XL does not contend for the place of the event giving rise to it. But unless one knows what the relevant event is, one cannot determine where the damage caused by it occurred.

Accordingly AXA’s application succeeds. This Court has no jurisdiction pursuant to either Article 7 (1) or (2) and these proceedings must be dismissed. I am grateful to Counsel for their most helpful oral and written submissions. I will deal with all consequential matters following the handing-down of this judgment.