Applicable law

Complex issues arise where a contract of insurance and the reinsurance which relates to it are governed by different applicable laws. The view taken by the English courts is that if the parties have intended the insurance and reinsurance to be ‘back to back’, the meaning of the direct policy as derived from its applicable law will be relevant also to the reinsurance despite the fact that the reinsurance’s governing law is different (see Forsakrings Vesta v Butcher [1989] AC 852). In CGU International Insurance plc v AstraZenica Insurance Co Ltd [2005] EWHC 2755 (Comm), forthcoming in [2006] Lloyd’s Rep IR, there were disputes as to applicable law of both the insurance and the reinsurance.