UK: Supreme Court Refuses a Stay of Proceedings, Allowing Insurers to Pursue Damages for Breach of Settlement and Jurisdiction Agreements


    The Alexandros T [2013] UKSC 70 concerned the application of Articles 27 and 28 of EC Regulation 44/2001 (the Brussels Regulation). Where proceedings are issued in more than one Member State and involve the same cause of action, Article 27 requires any court other than the first seised to stay proceedings until jurisdiction is established by the first court seised. Under Article 28, the court first seised has discretion to stay claims if the actions in both courts are related but not the same.

    In 2006, ‘Alexandros T’ sank and became a total loss. Her owner, Starlight Shipping Company (Starlight), claimed against its insurers, but they denied liability. Starlight issued proceedings against the insurers in England (consistent with exclusive jurisdiction clauses in the policies). In 2007, shortly before trial, the parties agreed a full and final settlement and the proceedings were stayed pursuant to a Tomlin order. However, in 2011, Starlight issued proceedings against the insurers in Greece. It claimed compensation for various breaches of Greek law and damages for loss of opportunity. The insurers responded by issuing proceedings in England to enforce the Tomlin order. They asserted that the Greek proceedings were in breach of the settlement agreement and of the jurisdiction agreement in the policies. They claimed damages for those breaches and an indemnity for costs and liability related to the Greek proceedings.

    The case ultimately came before the Supreme Court, which held that the proceedings should not be stayed under Article 27 as they did not involve the same cause of action. The legal basis for the Greek claims was tortious, whereas the English was contractual. It was unclear which court was first seised where the claims brought in England and Greece were different. However, it was held that although the proceedings were related and the Greek court was arguably first seised, it would not exercise its discretion for the English proceedings to be stayed under Article 28 for various reasons. They included that the agreements were governed by English law and that the English courts had exclusive jurisdiction.

    This reflects the forthcoming (January 2015) amendments to the Brussels Regulation, which will give precedence to the court chosen by the parties over all other courts regardless of when proceedings are started.  The recast Regulation will also exclude arbitration from its scope, and introduce a discretion to stay proceedings in favour of non-EU courts. This will mean that the court specified in the clause can determine jurisdiction and proceed with litigation, regardless of whether it was the court first seised.

    Now that the Supreme Court has ruled there is to be no stay in the English proceedings, the case will go back to the Court of Appeal for it to determine the  remaining outstanding issues.

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