UK: Court Of Appeal Reverses Decision In Ace European V Howden On Issue Of Utility

Ace European Group Ltd & Others v Howden North America Inc & Anor¹

UK Court of Appeal, 6 December 2012

We previously commented on the High Court ruling in this case (available here) in which Field J held that there was sufficient "utility" (useful purpose) in the English Court exercising its jurisdiction over a claim seeking a declaration that certain insurance policies were governed by English law, despite ongoing proceedings against London market excess layer insurers in Pennsylvania. The extent of coverage would likely be greater under Pennsylvania law.

The Court of Appeal has now allowed HNA's appeal and reversed the decision of the lower court thereby setting aside the order granting permission to insurers to serve out of the jurisdiction. The Court of Appeal drew several factual distinctions between this case and the Faraday case², where permission to serve out was allowed.  In particular, the Court of Appeal noted that in Faraday insurers commenced proceedings in England several months before they were joined to the US proceedings whereas in this case the action was commenced by insurers two months later.

Aikens LJ further highlighted that: (a) the Court of Appeal was not formally bound to follow the earlier appellate decision in Faraday; and (b) as in Faraday, the lower court's decision here was not an "exercise of discretion" (a judgment based on one of several equally legitimate courses) but in fact an "exercise of judgment" (requiring a reasoned conclusion, the merits of which can be more readily challenged on appeal).  As such, the Court of Appeal in this case found it appropriate to consider the merits of Field J's decision based on the facts of the case.

Firstly, the Court of Appeal disagreed with Field J's view that an English Court ruling would at least be of considerable assistance to the Pennsylvania Court. The English Court of Appeal noted that Judge Conti (in the Pennsylvanian proceedings) had already indicated that she did not believe English law to apply to the policies in question and she was, in any event, capable of applying English law without the assistance of the English courts. Aikens LJ commented that providing such unsolicited judgment as advice to the Pennsylvania Court was "presumptuous and condescending".

Secondly, the Court of Appeal, in acknowledging the Pennsylvania Court's ability to apply conflict of laws rules appropriately, considered that the English Court's exercise of jurisdiction would amount to a pre-emptive strike in England to undermine the legitimacy of any Pennsylvanian judgment. Such a decision from the English Court, obtained with the sole aim of laying the ground for a defence to enforcement, was held by the Court of Appeal to not be a "useful" exercise of the English Court's jurisdiction.

Footnotes

1. 2012] EWCA Civ 1624

2. [2012] EWCA Civ 980

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