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The Brussels and Lugano Conventions set out a code dealing with jurisdiction issues between the courts of member states of the European Union and EFTA.
The general rule under these conventions is that a plaintiff must sue a defendant in the defendant's home court. One of the exceptions to this rule is article 8(2), which provides that an insurer may be sued in the courts for the place where the policy holder is domiciled.
However, Dr Peter Schlosser's report on the conventions says article 8 does not apply to reinsurance contracts, so insurers do not have the unqualified right to sue reinsurers in the insurers' home court.
A further exception to the rule is contained in article 5(1). It provides that a person domiciled in a contracting state may, in another contracting state, be sued "in matters relating to a contract, in the courts for the place of performance of the obligation in question..."
In Trade Indemnity v Forsakringsaktiebolaget (1995) 1 ALL ER 796, the plaintiff reinsurers tried to sue the defendant insurers, a Swedish company, in the English courts, claiming they were entitled to repudiate the reinsurance contract for misrepresentation. Mr Justice Rix stayed these proceedings, although he accepted that the claim fell within the words "in matters relating to a contract..." and obligation to make a full disclosure on a proposed insurance could not come within the phrase "obligation in question".
In Agnew v Landforsakringsbolagens AB, 30 July 1996, however, Mr Justice Mance allowed the plaintiffs to sue the Swedish defendants, to whom the plaintiffs had granted reinsurance, in the English courts for declaration of non-liability. He doubted "how far the draughtsmen of the convention contemplated that there would be 'matters relating to a contract' under national law in that regard, where the duties in question might yet be said not to constitute 'obligations' in the sense of article 5(1)."
The most effective way of avoiding problems of this kind is to insist on an appropriate exclusive jurisdiction clause.
Where this has not been done, the insurer may be able to pre-empt such proceedings by issuing his writ first in the court of the reinsurer's domicile, or any other court where proceedings may be issued under articles 5, 6 or 6a, if he considers that those courts will be nothing more than a claim for a declaration of non-liability - Tatry v Maciej Rataj (1995) All ER (EC) 229.
Where the conventions give the parties an option as to where they can sue, whoever gets in first can require the courts of the state where the second writ was issued to stay the proceedings under article 21.