Lexington Insurance Co v AGF Insurance Ltd: HL 30 Jul 2009

The respondent insurers had been held liable in Washington, and had been granted indemnity against the appellants by the Court of Appeal. The insurance contract had been under the law of Pennsylvania, but that of the re-insurance under the law of England and Wales.
Held: The claimant’s appeal succeeded. The re-insurance contract was governed by English law. If it was to be construed according to the law of another jurisdiction, that jurisdiction must have been capable of being identified at the time when the contract was made.

Lord Mance said: ‘a reinsurance is a separate contract, which may contain its own independent terms requiring to be satisfied before insurers can claim indemnity under it. To take an obvious example, the present reinsurance was not a perfectly proportional reinsurance, by virtue of the retention of $1,675,000. More fundamentally, even a perfectly proportional reinsurance is not an insurance against liability, still less against any liability which the reinsured may be held to incur under the insurance. ‘ and ‘ the reinsurance is an independent contract, with its own terms which fall to be construed under English law, and I see no basis for interpreting it as covering any liability which might subsequently be held to arise under the insurance in any State whose law might, after disputes had arisen under it and other separate insurances, be applied by reference to factors extraneous to the particular insurance to which alone the reinsurance related It follows that there is no basis for construing the two contracts as back to back in the present situation.’ and
‘under English law, a contract has a meaning which is to be ascertained at the time when it is concluded, having regard to its background and the surrounding circumstances within the parties’ knowledge at that time. ‘

Lord Phillips of Worth Matravers, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood, Lord Mance and Lord Collins of Mapesbury
[2009] UKHL 40, Times 13-Aug-2009, [2009] Bus LR 1452, [2009] 2 Lloyd’s Rep 508, [2010] 1 AC 180, [2009] 4 All ER 909, [2009] Lloyd’s Rep IR 675, [2009] 3 WLR 575, [2010] Env LR D1
England and Wales
CitedBritish Dominions General Insurance Co Ltd v Duder KBD 1915
The court was asked whether the insurers, having settled the owners’ claim for a constructive total loss at 66 per cent. of the sum insured could recover 100 per cent. from their re-insurers. Bailhache J. held that they could, with the result that . .
CitedForsikringsaktieselskapt Vesta v Butcher HL 1988
A contract of insurance and a facultative reinsurance, under which part of the original risk was reinsured, contained warranties in identical terms.
Held: The warranty in the reinsurance policy, which was governed by English law, should be . .
CitedForsikringsaktieselskabet National (of Copenhagen) v Attorney-General HL 1925
Viscount Cave LC said that ‘by a contract of reinsurance the reinsuring party insures the original insuring party against the original loss.’ . .
CitedGroupama Navigation Et Transports; Continent Sa; Mutuelles Du Mans; Zurich International France SA and Gie Generali Transports (Bodies Corporate) v V Catatumbo Seguros (a Body Corporate) CA 20-Jul-2000
. .
CitedJohn Knight, William Ware And Others Against Faith And Another 23-Sep-1850
A ship, insured in 1000l. for a year ending 23rd September, was stranded, got off, and brought into the harbour of Sta. Cruz, on September 16th. She remained there with her crew on board till the middle of October, and, during that time, was pumped; . .
CitedMunicipal Mutual Insurance Limited v Sea Insurance Company Limited and Others CA 26-Mar-1998
The unifying event in an aggregation clause in an insurance policy was expressed in very general terms: ‘all occurrences of a series consequent on or attributable to one source or original cause.’
Held: As long as one could find any act, event . .
CitedHill and Others v Mercantile and General Reinsurance Co Plc; Berry and Others v Same HL 15-Aug-1996
Liability under reinsurance was not invalidated by a compromise including other claims. The parties to reinsurance contracts could set their own ways of proving the loss within a contract. A Full Reinsurance Clause is not binding in respect of any . .
CitedRe London Marine Insurance Association 1869
. .
CitedJoyce v Realm Marine Insurance Co 1872
The insurance covered (inter alia) cargo from ports in West Africa with outward cargo to be considered homeward interest 24 hours after the ship’s arrival at her first port of discharge. The reinsurance was at and from West African ports ‘to . .
CitedBalfour v Beaumont 1984
. .
CitedYouell and Others v Bland Welch and Co Ltd and Others CA 1992
The court considered whether an underwiter’s slip was admissible when construing the policy which followed.
Held: Staughton LJ said: ‘It is now, in my view, somewhat old-fashioned to approach such a problem armed with the parol evidence rule, . .
CitedBolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd CA 6-Feb-2006
The deceased had come into contact with asbestos when working on building sites for more than one contractor. The claimant here sought contribution from the defendants for the damages it had paid to his estate. The issue was as to liability on . .
CitedWhitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd CA 1969
The parties, one in England and one in Scotland agreed to perform certain actions in Scotland. Any dispute was to be settled by arbitration, but it was not said whether this would be in England or Scotland. The curial law of arbitration would decide . .
CitedCompagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA HL 1970
The court considered what was the proper law of the contract. The inquiry must always be to discover the law with which the contract has the closest and most real connection. The mere fact that arbitration was to be in London did not mean that what . .
CitedWhitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd HL 1970
The parties disagreed as to the curial law of an arbitration agreement. The proper law of the building contract and the arbitration agreement was English but the reference was conducted in Scotland.
Held: Evidence of behaviour after a contract . .
CitedThe Iran Vojdan 1984
Electric cable was carried on an Iranian flagged vessel from Hamburg to Dubai. The plaintiff consignees, alleging that the cargo was damaged, commenced proceedings against the shipowners in the English courts. The defendants sought a stay on saying . .
CitedAmin Rasheed Shipping Corp v Kuwait Insurance Co HL 1983
A claimant must show good reason why service on a foreign defendant should be permitted. This head of jurisdiction was an exorbitant jurisdiction, one which, under general English conflict rules, an English court would not recognise as possessed by . .
CitedCharter Reinsurance Co Ltd v Fagan and Others HL 24-May-1996
The re-insurers appealed against a finding that they were liable to make payment under a contract which required them to pay ‘sums actually paid.’ They said that the company having become insolvent, no payment would in fact be made.
Held: The . .

Lists of cited by and citing cases may be incomplete.

Insurance, International

Updated: 11 November 2021; Ref: scu.368927