Aspen Underwriting Ltd & Ors v Credit Europe Bank NV [2020] UKSC 11

Insurers sought to recover settlement payments made after a vessel was deliberately scuttled. The Bank, as assignee and loss payee under the marine insurance policy, challenged English court jurisdiction. The Supreme Court held the Bank was entitled to protection under EU Regulation section 3 on insurance matters and must be sued in its domicile (Netherlands).

Facts

The vessel ‘Atlantik Confidence’ was insured under a hull and machinery policy by Aspen Underwriting Ltd and others (‘the Insurers’). Credit Europe Bank NV (‘the Bank’), domiciled in The Netherlands, had financed the vessel and held mortgages and assignments of the insurance policy as mortgagee, assignee and loss payee. The policy contained an exclusive English jurisdiction clause.

After the vessel sank off the coast of Oman on 3 April 2013, the Insurers entered into a settlement agreement with the Owners and Managers, paying out $22m under the policy. The Bank issued a Letter of Authority authorising payment to Willis Ltd. Subsequently, the Admiralty Court found that the Owners had procured the scuttling of the vessel. The Insurers then commenced proceedings in England seeking to recover the settlement sums from the Owners, Managers and the Bank on grounds of misrepresentation, mistake and restitution.

Issues

Issue 1: Exclusive Jurisdiction Clause

Whether the Bank was bound by the exclusive English jurisdiction clause in the Policy by virtue of issuing the Letter of Authority as assignee and loss payee.

Issue 2: Matters Relating to Insurance

Whether the Insurers’ claims against the Bank were ‘matters relating to insurance’ within Chapter II, section 3 of the Brussels Regulation Recast (EU Regulation 1215/2012).

Issue 3: Weaker Party Protection

Whether the Bank was entitled to rely on section 3 protections despite not being economically weaker than the Insurers.

Judgment

Issue 1

The Supreme Court held that the Bank was not bound by the exclusive jurisdiction clause. Lord Hodge stated:

“In the present case the Bank did not commence legal proceedings to enforce its claim. Indeed, it did not even assert its claim but left it to the Owners and the Managers to agree with the Insurers the arrangements for the release of the proceeds of the insurance policy by entering into the Settlement Agreement.”

The Bank’s Letter of Authority merely facilitated payment and did not constitute an assertion inconsistent with the jurisdiction clause.

Issue 2

The claims were held to be ‘matters relating to insurance’ within section 3. Lord Hodge noted:

“The Insurers’ claim is that there has been an insurance fraud by the Owners and the Managers for which the Bank is vicariously liable. Such a fraud would inevitably entail a breach of the insurance contract as the obligation of utmost good faith applies not only in the making of the contract but in the course of its performance.”

Issue 3

The Court rejected the argument that the Bank was excluded from section 3 protection due to economic strength. Lord Hodge stated:

“There is no ‘weaker party’ exception which removes a policyholder, an insured or a beneficiary from the protection of article 14.”

The Court emphasised that the CJEU has rejected case-by-case assessment of economic strength as contrary to legal certainty, and that exceptions are limited to those expressly stated in articles 15(5) and 16.

Implications

This judgment clarifies that assignees and loss payees under insurance policies are entitled to the protective jurisdiction rules under section 3 of the Brussels Regulation Recast regardless of their economic power. The protection is categorical rather than dependent on demonstrating weaker party status. The ‘weaker party’ rationale in recital (18) explains the policy behind section 3 but does not create an implicit exception for economically powerful beneficiaries. The decision reinforces the principle that derogations from defendant’s domicile jurisdiction must be interpreted strictly, while rules supporting that principle (like article 14) should not be artificially restricted.

Verdict: The Insurers’ appeal was dismissed and the Bank’s appeal was allowed. The Supreme Court declared that the High Court of England and Wales does not have jurisdiction over the Insurers’ claims against the Bank.

Source: Aspen Underwriting Ltd & Ors v Credit Europe Bank NV [2020] UKSC 11