Jurisdiction

Insurance and reinsurance disputes are often preceded by jurisdictional battles. This is unsurprising, because the place in which a case is heard will be significant for a determination of the law applicable to the contract in question and the application of the rules of construction under that law. In Faraday Reinsurance Co Ltd v Howden North America Inc and Anr [2011] EWHC 2837 (Comm) London market insurers were keen to keep a dispute concerning asbestos coverage out of the US courts, fearing far wider liability under the policy than they would face in England. The issue was whether insurers were entitled bring proceedings in England for a declaration as to the law applicable to the policy.

Faraday: the facts

The defendant assured, HNA, obtained cover for asbestos liabilities under product liability and financial loss policies. Part of HNA’s cover was in the form of three excess layer policies written by General Star International Indemnity Ltd. (‘GSIIL’) The policies ran consecutively for the periods 22 July 1998 to 31 May 1999, 1 June 1999 to 31 May 2000 and 1 June 2000 to 31 May 2001. GSIIL’s business was transferred to the claimant, Faraday, in November 2010. Both Faraday and GSIIL were English companies in the General Reinsurance group. The position of HNA was more complex, but it suffices to say that HNA regarded itself as a US company without manufacturing facilities, offices or other property in the United Kingdom: three of HNA’s directors were based in Scotland but all board meetings were held in the United States.