Effect of service of suit clause
It is very common to find in insurance policies issued by the London market to US policyholders a service of suit clause under which the insurers agree to submit to the jurisdiction of any court of competent jurisdiction in the US. In Ace Capital Ltd v CMS Energy Corporation  EWHC 1843 (Comm) that form of wording was accompanied by an arbitration clause specifying arbitration in London. How are the two provisions to be reconciled? Mr Justice Christopher Clarke chose to give primacy to the latter.
Ace: the facts
Ace was the lead underwriter on a number of primary and excess layer political risks insurance policies issued to CMS, a Michigan
company, and its associates. The policies were placed in the London market in 1999. The policies contained common ‘General
Conditions’, Condition 1 of which was headed ‘Choice of Law and Arbitration’. Condition 1(a) stated that the policy was governed
by English law and that disputes arising out of or in relation to the policy ‘shall be submitted to arbitration at the London
Court of International Arbitration according to its rules at the date of submission. The award rendered by the Arbitrator(s)
shall be final and binding upon all parties and may be enforced by any court having jurisdiction.’ Condition 1(c) was a Service
of Suit clause. The learned judge accepted that the wording used was defective, and that what had been intended to have been
said was that in the event of any failure by the underwriters to pay the amount claimed they would at the request of CMS submit
to a court of competent jurisdiction within the US. Condition 1(b) said that the object of the service of suit clause was
to ‘provide without waiver of any defence an ultimate assurance of the amenability of Underwriters to process of certain courts’.
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