UK: Court of Appeal upholds summary judgment order awarding damages for breach of settlement agreements


    In the case of Starlight Shipping v Allianz Marine ([2014] EWCA Civ 1010), the appellant shipowners appealed a decision granting summary judgment to the Respondent Insurers for damages and declaratory relief. The order for summary judgment related to losses suffered by the Respondent Insurers as a result of Starlight bringing further proceedings in Greece when the relevant insurance claims had already been settled in English proceedings. The appeal failed and the order for summary judgment was upheld.

    Background to the Settlement Agreements

    Following the total loss of the vessel “Alexandros T” in May 2006, initial proceedings were issued by Starlight against the Respondent Insurers who had declined to indemnify Starlight – these proceedings were settled in two separate settlement agreements (one for Lloyd’s market insurers; another for company market insurers) (together the Settlement Agreements).

    Greek proceedings in breach of the Settlement Agreements?

    The Court of Appeal held that the Greek proceedings fell within the exclusive jurisdiction provisions of both the Settlement Agreements and the original insurance policies. The Greek proceedings could have been brought in the English courts and therefore fell within the settlement and indemnity provisions of the Settlement Agreements. Accordingly, it was held that the first instance judge was correct to have determined that the Respondent Insurers should be indemnified for the loss they had suffered (and continued to suffer) as a result of Starlight having wrongly brought proceedings against them in Greece in breach of the Settlement Agreements.

    Award of damages and declaratory relief inconsistent with EU law?

    It was argued by Starlight that the order for damages and declaratory relief interfered with the jurisdiction of the Greek court to determine its own jurisdiction and, if applicable, the merits of Starlight’s claims.

    Late last year, the Supreme Court lifted the stay on these proceedings (see our earlier blog on Supreme Court’s judgment or our more in-depth client advisory). The Court of Appeal had stayed the proceedings pursuant to Article 27 of Council Regulation 44/2001 EC (the Brussels Regulation) on the grounds that they were so closely connected to the Greek proceedings that it was expedient to hear and determine them together. However, the stay was lifted by the Supreme Court which held that the Greek proceedings were not the same as the Respondent Insurer’s claims relating to breach of the Settlement Agreement – the former being tortious; the latter being contractual.

    In the present case, the Court of Appeal held that, as the claims had been judged by the Supreme Court to be sufficiently separate so as not to fall within the scope of Article 27 of the Brussels Regulation, there could be no question of any interference with the jurisdiction of the Greek court.

    Link to the Court of Appeal’s judgment

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