A claim arose, and Akai sued the insurers (presumably by serving a writ out of the jurisdiction) in New South Wales, while also issuing a writ in England. People’s Insurance claimed a stay in New South Wales under the law and jurisdiction clause. Akai argued that the clause should be overridden, because if the case was heard in England overriding Australian (Commonwealth) legislation which modified the rights of the insurer by way of protecting the assured, and in doing so made the contract subject to the law of New South Wales, would not be applied; and that the jurisdiction part of the clause was in any case void under a provision in the same legislation to the effect that a clause modifying the provisions of the Act to the prejudice of the assured was void. The jurisdiction clause would require the case to be heard by a tribunal which would not give effect to the legislation and so was to the prejudice of the assured. On both grounds the New South Wales court could and should take jurisdiction.

The question went through two levels of appeal and finally the High Court of Australia by a majority accepted these arguments in a decision dated 23 December 1996.1 There is no doubt that, if the legislation was overriding policy of the forum, it must be applied by an Australian court; and that court was perfectly entitled to conclude that the wording of the legislation made it so—though the words used did not make this a foregone conclusion, and of the judges who heard the case four decided to this effect against five to the contrary. The difficulties of the formula used, of drafting legislation to achieve overriding effect, and of interpreting such clauses when drafted, were discussed in a previous Comment.2