Is a territorial limit in a policy of insurance a jurisdiction agreement?

In Hutchinson v (1) Mapfre (2) Ice Mountain Ibiza S.L. [2020] EWHC 178 (QB), C suffered serious personal injury while on holiday in Spain.  He visited a club run by D2 which contained bars and a swimming pool.  He was found floating in the pool with a head injury and is now tetraplegic.  He sued D2 and its liability insurers D1 in the High Court, basing the claim against D1 on a direct right of action against insurers under Spanish law.  Both defendants challenged jurisdiction.

As against D1, C asserted jurisdiction based on the special rules for matters relating to insurance in Regulation (EU) 1215/2012 (Brussels I Recast) which, as decided in Odenbreit (C-463/06), permit an injured person to sue the tortfeasor's EU based insurer in the injured person's home courts provided that a direct right of action against the insurer exists.

D1's challenge to jurisdiction was based on a term in the policy to the effect that the "policy will only cover claims submitted within Spanish jurisdiction …"  So it was argued by D1 that the policy did not indemnify against D2's liability if such liability resulted from a claim in the English rather than the Spanish courts, and thus there was no good arguable case that C had a meaningful direct action against D1.

C contended that reliance by D1 on the above term amounted to an impermissible derogation from the special rules of jurisdiction for matters relating to insurance in Section 3 of Brussels I Recast.  Those rules (1) are to protect the weaker party, (2) permit the injured person as weaker party to sue the tortfeasor's insurer in the injured person's home court as long as the insurer is EU based and (3) do not permit any contractual term which derogates from the rights Section 3 gives to the weaker party.  The limitation of cover to claims submitted in Spain had the effect of preventing the injured person exercising the right to sue in his home courts and was therefore impermissible.  The situation was said to be analogous to Société financière et industrielle du Peloux v Axa Belgium (C-112/03) and  Assens Havn v Navigators Management Ltd (C-368/16) in which the Court of Justice held jurisdiction agreements in insurance contracts to be unenforceable against third parties.

D1 pointed out that the term in question was not in fact a jurisdiction agreement at all.  A jurisdiction agreement is one between insurer and insured in which the parties agree that disputes between them will be brought in the courts of one particular country.  This term was not concerned with that question.  It was rather concerned with the scope of the cover provided under the policy, which liabilities the insurer agreed to indemnify against and which it did not.  In that regard, the term is no different from, say, a financial limit of indemnity under the policy.  European law has in some circumstances regulated the substantive terms of insurance contracts (as under the Motor Insurance Directives) but has not done so in the field of public liability insurance.  The Axa Belgium and Assens Havn cases were concerned with what were undoubtedly jurisdiction agreements in insurance contracts not terms defining the scope of cover under the policy and so were not on point.

The judge preferred C's argument, concluding that since the effect of the term was to render nugatory C's right to sue in his home courts, it offended against Section 3 of Brussels I Recast and could not be relied upon.

The decision is only that there is a good arguable case that D1 cannot rely on the term, however.  The English court at the trial of the claim will (if liability is established against D2) have to make the final decision on the question, subject to any reference to the Court of Justice.

C also contended that the term in question was not effective under Spanish domestic law, and the claim was also allowed to proceed on that basis.  Again, that decision was that C had a good arguable case that Spanish law precluded reliance on the term in question and the trial court will make the final determination.

The claim against D2 was pleaded in contract and tort.  D2's challenge to the court's  jurisdiction over the contractual claim failed.  The claim in tort, however, was stayed pending the decision of the Court of Justice in Cole v IVI Madrid SL [2019] 9 WLUK 373.  The issue there is as follows.  The English court would only have jurisdiction over C's claim in tort under Article 13(3) of Brussels I Recast, which provides that if the law governing a direct action against the insurer provides that the policyholder may be joined as a party then the same court will have jurisdiction as has jurisdiction over the direct claim against the insurer.  The jurisdiction over the claim in tort is therefore parasitic on the jurisdiction over the claim against the insurer.  The issue is whether Article 13(3) is limited to claims in which the claim against the policyholder is itself a matter relating to insurance, so a dispute over the policy terms or the like.  The Court of Appeal held that there was no such limit in Hoteles Pineiro Canarias SL v Keefe [2015] EWCA Civ 598.  However, the Advocate General in KABEG v Mutuelles du Mans (C-340/16) doubted that the Court of Appeal was correct, so in Cole the issue was referred to the Court of Justice, whose decision is awaited with interest.