Justiciability

Where a fraudulent claim is made against the reinsured, and is paid by the reinsured with knowledge of the fraud, plainly the reinsurers cannot be liable to provide any indemnity to the reinsured. The payment is more or less ex gratia. The position in Korea National Insurance Co v Allianz Global Corporate & Specialty AG [2008] EWHC 2829 (Comm) was more complex, because the allegation was that the fraud was the result of complicity between the parties to the underlying contract and also on the part of the North Korean government and courts. Mr Justice Field held that he had no jurisdiction, on the basis of the principle of nonjusticiability, to determine the allegations made against the Korean government itself. The ruling on non-justiciability was, however, overturned on appeal, [2008] EWCA Civ 1355.

Korea: the facts

The claimant, KNIC, an insurance company incorporated in North Korea, was the insurer of Air Koryo, a North Korean airline, for the period 1 November 2004 to 31 October 2005. The insurance provided liability cover to Air Koryo for up to €45m each accident and without any deductible. The cover for crew and non-revenue passengers for bodily injury and death was €20,000 per person. KNIC was reinsured by reinsurers represented by Allianz for the same period, the limit of indemnity being €45m each accident in respect of claims involving Mi-8 helicopters, and €75m for other aircraft. The reinsurance, which contained a claims control provision in favour of the reinsurers, was governed by the law of North Korea.