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    UK: The English High Court Finds No Compelling Reason to Displace a UAE Jurisdiction Clause

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    In Aizkir Navigation Inc v Al Wathba National Insurance [2011] EWHC 3940 (Comm), the High Court considered a principle of contractual construction and held that a clause stating that claims “be settled in accordance with English Law and practice shall be so settled in Abu Dhabi (UAE)” amounted to an exclusive jurisdiction clause in favour of the United Arab Emirates (the UAE) and there was no overwhelming reason to displace that jurisdiction clause.

    The Claimant, Aizkir, is an Egyptian company. The Defendant insurer, Al Wathba, is based in the UAE. The dispute concerned a marine insurance claim, made under a Marine, Hull & Machinery Insurance Policy (the Policy), for the total loss of the Claimant’s vessel following an egress of water into the engine room, leading to the vessel being abandoned. The Defendant refused to settle the Claimant’s claim on the basis of the vessel’s inherent unseaworthiness and a breach of warranty on the part of the Claimant. The Claimant issued proceedings in England, and obtained permission to serve out of the jurisdiction. The Defendant applied for an order to set aside permission.

    It was common ground that the Policy was subject to English law and that the customs and practices of Lloyd’s (London) were to be applied to the adjustment and settlement of any claim, but the parties disputed whether the jurisdiction clause, which stated that disputes “shall be so settled in Abu Dhabi (UAE)” amounted to an exclusive jurisdiction clause in favour of the UAE.

    The Claimant contended that the clause was not an exclusive jurisdiction clause and that the appropriate forum for a trial of the issues was England, as relevant documents would otherwise have to be translated into Arabic, the UAE did not have dedicated maritime courts, there would be delay and difficulties with disclosure, and the events were not closely connected with the UAE. The Defendant contended that there was no compelling reason to displace the jurisdiction clause and that, in any event, it was incorrect to assert that the events surrounding the case were more closely connected with England.

    Agreeing with the submissions of the Defendant, His Honour, Judge Mackie QC, held that there was no compelling reason to displace the jurisdiction clause. He found that the provision in the Policy that the settlement of claims would be dealt with under Lloyd’s standards could be read as to include the settlement of the dispute, not just submission of the claim. Further, HHJ Mackie found that there was virtually no factual connection with England, given that the parties, brokers and managers were either in the UAE or Egypt, and that Abu Dhabi was clearly and distinctly the most appropriate forum. Permission to serve out of the jurisdiction was set aside and the proceedings stayed.

    This decision is a useful reminder to insurers for the need to include an unambiguous jurisdiction clause into their policies.

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