A Jurisdiction Clause agreed between an Insurer of Civil Liability and a Policy Holder does not bind third parties
The Judgment of the Court of Justice of the European Union in matter C-368/16, dated on the 13th of July of 2017, referred to the court for a preliminary ruling on the following question: can an injured party that has a direct action against the insurer of liability of the party that caused the damage bring an action against the insurer in the place where the harmful event occurred or is the injured party bound by the jurisdiction clause agreed between the insurer and the policy holder?
Facts:
In the course of a maritime transport, a tug caused some damage to the quay installations in the Port of Assens, Denmark.
The company that had chartered the tug had taken out liability insurance with a Protection & Indemnity Club from the UK (P&I Club). The policy contained i.a. a choice of law and jurisdiction clause, by which the parties agreed to submit to the exclusive jurisdiction of the courts of England and Wales.
The insured company went into liquidation. In accordance with Danish law, this fact allowed the damaged party (the port of Assens) to bring an action directly against the insurer of civil liability. Thus, the port filed an action against the P&I Club in Denmark.
Since the policy contained a jurisdiction clause, the Danish court stayed the proceedings and referred a question for a preliminary ruling to the Court of Justice of the European Union. The question presented to the Court was whether an injured party that has a direct action under domestic law against the insurer of the party which caused the damage is bound, under European regulations on jurisdiction, by an agreement on jurisdiction validly concluded between the insurer and the policy holder.
Court’s ruling:
The Court of Justice of the European Union argues that the injured parties are not bound by the jurisdiction clause contained in an insurance contract that has been agreed between the insured and the party that has caused the damage. Therefore, provided that national law permits the direct action against the insurer, the injured party can file the claim before the courts of the place where the harmful event occurred.
The reasonings of the Court of Justice are based on the provisions of Regulation (EC) 44/2001, which applied to the case, but its conclusions are valid and can be extrapolated to a case where the Regulation currently in force (EU) 1215/1012, applies.
It is interesting to point out that the Court of Justice of the European Union does not examine whether the direct action against the insuring P&I Club is possible or not. This is a point that had already been decided by the Danish court in accordance with Danish law and no request for a preliminary ruling was made to the Court of Justice of the European Union in this regard as the issue is related to domestic material Law out of the scope of European regulations on jurisdiction.
