Baltic Insurance Group v Jordan Grand Prix Ltd & Ors (1997)
Appeal against a decision of Langley J on four issues arising from Baltic Insurance Group's ('Baltic') counterclaim. Following a commitment by Jordan Grand Prix Ltd ('Jordan') to pay bonuses to its employees if it finished in the top six in the 1994 Formula 1 World Championship, it insured against this contingent liability with the Baltic Insurance Group domiciled in Lithuania. Quay Financial Software ('Quay'), based in Ireland, had sponsored Jordan during the championship the result of which Jordan would be paid #1 million if it finished within the top seven.
When Jordan finished fifth, Baltic refused to pay after it alleged that there was a conspiracy between Jordan, Quay, and others to defraud Baltic. On 26 January 1995, Jordan issued a writ against Baltic in response to which Baltic served a defence and counterclaim on 24 May 1995. The point of contention was the joinder by Baltic of three Irish parties, including Quay, to the counterclaim against Jordan. Quay and its two directors relied, in their defence, on Arts.11, 21 and 22. Art.11 stated that "an insurer may bring proceedings only in the courts of the Contracting State in which the defendant is domiciled, irrespective of whether he is the policy holder, the insured or a beneficiary. The provisions of this section shall not affect the right to bring a counterclaim in the court in which, in accordance with this section, the original claim is pending." After the judge at first instance dismissed the counterclaims of Baltic, Baltic appealed. The issues that arose at appeal were: (1) whether the claims of Baltic that "matters relating to insurance" were within the meaning of s.3 (Arts.7-12a) Brussels Convention on Jurisdiction and Enforcement of Judgements in Civil and commercial Matters. (2) whether Art.11 applied to any insurer or only to an insurer domiciled in a Contracting State. (3) whether Baltic's claim against Quay and its two directors, domiciled in Ireland, was capable of being a counterclaim within the second part of Art.11. (4) whether Quay's directors could rely on Art.11 even though they were not the "policy holder, insured or a beneficiary".
(1) Baltic was seeking to avoid the contract of insurance. It followed that its claim was a "matter relating to insurance" within the meaning of s.3. (2) Art.11 did apply to any insurer wherever domiciled. It was the scheme of the Convention to make crucial the domicile of the defendant for the purposes of the jurisdiction of the court irrespective of the plaintiff's domicile (New Hampshire Insurance Co v Straba Bau (1992) 1 Lloyd's Rep 361). (3) New claims against new parties, ie Quay and its two directors, were not counterclaims in the ordinary sense of the words. Whilst RSC O.15 r.3 was a convenient device for automatic consolidation of claims it was necessary to look at the substance of the claim and not its terminology. Quay and its two directors were new parties who had not done anything to submit themselves to the jurisdiction of the court. (4) Quay's two directors could rely on Art.11 even though they were not a policy holder, the insured or a beneficiary. In contrast to other Articles, Art.11 intended to extend its protection to at least all such categories of persons but the list was not exhaustive.
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24 Oct 1997
Court of Appeal
Staughton LJ, Otton LJ, Robert Walker LJ
LTL 26/10/97 :  1 WLR 1049 :  3 All ER 418 :  Lloyd’s Rep IR 180 : (1997) 94(43) LSG 30 : (1997) 141 SJLB 230 : Times, November 14, 1997
Rebecca Stubbs QC