Reed Smith represented Tyson International Company Limited in obtaining a permanent anti-suit injunction against London market reinsurer, GIC Re, and successfully resisting the reinsurer’s application for a stay under section 9 of the Arbitration Act 1996. The judgment was handed down on 21 January 2025, and you can read it in full here: Tyson International Company Limited v Gic Re, India, Corporate Member Limited [2025] EWHC 77.
The Commercial Court was asked to consider two potentially competing clauses: (1) an exclusive jurisdiction clause in favour of the English Courts and (2) an arbitration clause in favour of arbitration in New York. To add to the complexity, the clauses were contained in two separate documents, both of which governed the terms of the policyholder’s property reinsurance. The Court’s approach to the construction of competing exclusive jurisdiction and arbitration clauses will be of interest to policyholders, brokers and insurers alike, and also provides helpful guidance on the effect of “hierarchy” (or “confusion”) clauses.
Background
Tyson International Company Limited (the “Captive Insured”) is a Bermuda captive reinsurance company of the global food production group, Tyson Foods. GIC Re (the “Reinsurer”) issued two reinsurance policies to the Claimant, for the period 1 July 2021 – 1 July 2022.
A coverage dispute arose between the Captive Insured and the Reinsurer following a substantial fire at one of Tyson Foods’ properties. A threshold issue arose between the Captive Insured and Reinsurer as to the forum of the dispute.
The “confusion” at the core of the jurisdiction dispute arose because two policy documents had been issued, both purporting to set out the terms of the relevant reinsurance cover, but containing conflicting forum selection provisions:
- Market Reform Contracts (“MRCs”) (i.e., standard form London (re)insurance market contracts), which contained exclusive jurisdiction clauses in favour of the English Courts; and
- Facultative Certificates under a US standard form, known as Market Uniform Reinsurance Agreements (the “MURAs”), which provided for arbitration in New York.
The Captive Insured sought to uphold the exclusive jurisdiction clause in the MRCs. The Reinsurer argued that the arbitration agreement in the MURA governed the coverage dispute.
The applicable principles of contractual construction
The Court applied the principles set out in Surrey County Council v Suez Recycling and Recovery Surrey Ltd [2021] EWHC 2015, to determine the proper construction of the competing jurisdiction and arbitration clauses:
- The Court should strive to give effect to an arbitration clause in the presence of a competing jurisdiction clause, but cannot do so where the clauses are in direct conflict with each other and are wholly irreconcilable;
- Unless the parties expressly and clearly say otherwise, there is a strong presumption that they are assumed to have agreed on a single (court or other) tribunal for the determination of all their disputes, at least when there is only one agreement/contractual document;
- Where there are two agreements, each containing different provisions for dispute resolution, the outcome may depend on the nature of the second agreement and its relationship to the first. A second agreement which varies the first will probably be treated differently to a situation where a second agreement seeks to make a clean break from the first agreement; and
- Where a contract contains a hierarchy or conflict clause, there should be no predisposition towards finding (or not finding) a conflict between two clauses. The ordinary rules of construction should first be deployed and only if those result in a conclusion that the two provisions are irreconcilable is recourse to the conflicts clause required.
Applying these principles, the Court held that, despite the fact that the MURAs were executed after the MRCs, the exclusive jurisdiction clauses contained in the MRCs took precedence, on the basis that the “confusion clause” within the MURAs gave priority to the earlier MRCs where the two clauses were “irreconcilable” and in the event of “confusion” (see [114] of the judgment).
On the facts before the Court, the Judge held that there was “obvious confusion” (see [110]) and that the two clauses were irreconcilable: the terms of the two clauses inevitably conflicted, and it was not possible to read them together either as a Scott v Avery clause, or in a way that gave the English Court supervisory jurisdiction (see [114]).
Conclusions
The principles applied by the Court in this decision apply as much to relationships between commercial parties more generally, as to between policyholder/insurers (or, as here, reinsured and reinsurer).
This decision highlights the importance of drafting clear dispute resolution provisions to reflect the intention of the parties at the time of policy placement or contract formation.
In cases that involve multiple contractual documents (whether insurance/reinsurance documentation, or commercial contracts under a framework agreement), what may be dismissed as typical boilerplate provisions should be considered carefully to ensure that there is consistency across the suite of documents.
The history of this case also demonstrates the willingness of the English Courts to grant quick and effective interim anti-suit (or, as here, anti-arbitration) relief to restrain foreign proceedings. In this instance, obtaining prompt interim relief from the English Court enabled the parties to resolve their jurisdiction battle in the single forum of the English Courts, without incurring the costs of fighting a separate dispute in New York.
We have previously reflected on some of our recommendations to approaching jurisdiction challenges– please see our recent article ‘Navigating Challenges to the Jurisdiction of the English Court’ for further guidance.
A Reed Smith team (comprised of Mark Pring, Catherine Lewis, Thomas Morgan and Daniel Sahraee) acted for the successful Claimant.