Sunken vessel's owners commence court proceedings against insurers for indemnity

In an important judgment upholding the integrity and effectiveness of exclusive jurisdiction clauses generally and settlement agreements specifically, the Supreme Court, reversing the decision of the Court of Appeal, has held inter alia that a claim for breach of a settlement agreement and/or an exclusive jurisdiction clause will not attract a mandatory stay under article 27 of the Judgments Regulation.

In May 2006, the Alexandros T sank off the shore of South Africa; her owners, Starlight Shipping Co, commenced proceedings in the Commercial Court against the vessel’s insurers for an indemnity. Starlight’s claims were settled by agreements concluded in December 2007 and January 2008, and the English proceedings were stayed pursuant to consent Tomlin orders. Previously, Starlight had applied for permission to amend its particulars of claim, to plead a claim for damages for late payment of the insurance indemnity; Tomlinson J refused permission on the basis of the rule in Sprung v Royal Insurance [1999] Lloyd’s Rep IR 111 that an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim.

More than three years later, in April 2011, Starlight and various affiliated companies and individuals commenced nine actions, pleaded in materially identical terms, against the insurers and their legal representatives, among others. Starlight’s claims in Greece were for damages for alleged breaches of the Greek civil and criminal codes relating to the insurers’ handling of Starlight’s claim under the insurance policies and to the insurers’ conduct in defending the prior Commercial Court proceedings…

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