Commercial Court awards damages for breach of jurisdiction agreement

21/12/11

Mr Justice Burton today handed down judgment in Starlight Shipping v Allianz Marine and others, a case which raises a number of interesting issues including the ability of the English Court to award damages for breach of a jurisdiction agreement against a defendant who wrongfully brings proceedings in another EU Member State. Although the ECJ has made clear that anti-suit injunctions are not available within the context of the Judgments Regulation, Mr Justice Burton has held that nothing precludes the recovery of damages.

The background to the case is the loss of a vessel called the Alexandros T in 2006, following which the owner of the vessel commenced proceedings in the Commercial Court seeking an indemnity from its insurers. The insurers denied liability and in their Defence they alleged (amongst other things) that the vessel was not seaworthy. During the course of the proceedings, the insured made allegations that the insurers had bribed key witnesses; they also sought unsuccessfully to amend their claim in order to recover damages for the insurers' late payment of the indemnity. In the event, the proceedings were settled and a Tomlin Order filed.

Three years later, in April 2011, the insured and associated entities commenced proceedings in Greece against the insurers, their officers and employees, and the English solicitors and counsel who had acted for the insurers in the Commercial Court proceedings. In the Greek proceedings, the claimants are seeking compensation for the insurers' late payment of the indemnity and for alleged defamation arising out of the insurers' allegations that the Alexandros T had been unseaworthy.

In July 2011, the insurers issued an application in the Commercial Court seeking (amongst other things) an indemnity on the basis that the insured had acted in breach of the terms of settlement and damages on the basis that the Greek proceedings had been commenced in breach of the exclusive jurisdiction provision in the underlying insurance policy.

Mr Justice Burton acceded to the insurers' application, holding that the settlement had been intended to achieve a clean break between the parties and that the relief sought by the insurers was consistent with both the Judgments Regulation and also the domestic case law regarding the nature and effect of Tomlin Orders.

The judgment is here.