[QUEEN'S BENCH DIVISION]

ARKWRIGHT MUTUAL INSURANCE CO. v. BRYANSTAN

INSURANCE CO. LTD. AND OTHERS

Practice - Stay of proceedings - Jurisdiction under European Convention - american insurance taking out reinsurance on English market with English reinsurers - Proceedings commenced in United States for declaration that reinsurers not liable under policy - American insurers commencing proceedings in England - Application to stay English proceedings on grounds of forum non conveniens and lis alibi pendens - Whether discretion to stay on either ground under jurisdiction Convention of European Communities - Civil Jurisdiction and Judgments Act 1982 (c.27), s. 49, Sch, 1, arts. 2, 21¹

The plaintiffs, an American insurance company, met a claim for $2.37m. resulting from damage to a steam turbine at a factory in Michigan owned by the assured. All liabilities under the policy had been reinsured on the London market with the defendants. When the plaintiffs claimed on the reinsurance the defendants refused to pay on the ground that the loss was not covered by the policy. The plaintiffs made it clear that they were considering proceedings in London for the full amount of their claim and the defendants commenced proceedings in New York for a declaration that they were not liable under the policy. The plaintiffs then commenced proceedings in the United Kingdom and brought a motion in New York for those proceedings to be dismissed on the ground, inter alia, that New York was not forum conveniens. The defendants applied by summons to stay the English proceedings on the grounds of summons to stay the English proceedings on the grounds of forum non conveniens and lis alibi pendens. It was common ground that the matter fell within the scope of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial matters 1968, set out in Schedule 1 to the Civil Jurisdiction and Judgments Act 1982.

On the defendants' application: -

Held, dismissing the application, that the retention by the English courts of their former wide discretion to stay proceedings on the grounds of forum non conveniens or lis alibi pendens would be inconsistent with the 1968 Convention, and save to the extent that the Convention provided for such a discretion, had been removed by the act of 1982 in cases falling with the scope of the Convention; that article 21 of the Convention, which only applied where proceedings had been commenced in the courts of another contracting state, was no more than a component of the scheme to simplify enforcement of judgments of courts of contracting states and conferred no discretion to stay proceedings on the grounds of lis alibi pendens, and neither it nor article 27(5) indicated that any discretion had been preserved to grant a stay on that ground when proceedings had been commenced in a non-contracting state; and that since the plaintiffs' claim fell within the scope of the Convention and the defendants were all to be treated as domiciled and served in England the court had no discretion to stay the action upon the

1 Civil Jurisdiction and Judgments Act 1982, Sch. 1, art. 2: see post, p. 654C-D.

grounds of forum non conveniens or lis alibi pendens (post pp. 662H-664E).

S. & W. Berisford Plc. v. New Hampshire Insurance Co. [1990] 2 Q.B. 631; [1990] 3 W.L.R. 688 applied.

The following cases are referred to in the judgment:

Abidin Daver, The [1984] A.C. 398; [1984] 2 W.L.R. 196; [1984] 1 All E.R. 470, H.L.(E.)

Aratra Potato Co. Ltd. v. Egyptian Navigation Co. [1981] 2 Lloyd's Rep. 119, C.A.

Atlantic Star, The [1974] A.C. 436; [1973] 2 W.L.R. 795; [1973] 2 All E.R. 175, H.L.(E.)

Berisford (S. & W.) Plc. v. New Hampshire Insurance Co. [1990] 2 Q.B. 631 [1990] 3 W.L.R. 688; [1990] 2 All E.R. 321

Cantieri Navali Riuniti S.p.A. v. N.V. Omne Justitia [1985] 2 Lloyd's Rep. 428, C.A.

de Dampierre v. de Dampierre [1988] A.C. 92; [1987] 2 W.L.R. 1006; [1987] 2 All E.R. 1, H.L.(E.)

Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251; [1980] 3 W.L.R. 209; [1980] 2 All E.R. 696, H.L.(E.)

Hollandia, The [1983] 1 A.C. 565; [1982] 3 W.L.R. 111; [1982] 3 All E.R. 1141, H.L.(E.)

Insurance Co. of Africa v. Scor (U.K.) Reinsurance Co. Ltd. [1985] 1 Lloyd's Rep. 312, C.A.

MacShannon v. Rockware Glass Ltd. [1978] 2 W.L.R. 362; [1978] 1 All E.R. 625, H.L.(E.)

Reg v. Henn [1981] A.C. 850; [1980] 2 W.L.R. 597; [1980] 2 All E.R. 166, H.L.(E.)

Roneleigh Ltd. v. MII Exports Inc. [1989] 1 W.L.R. 619, C.A.

Saipem S.p.A. v. Dredging CO2 BV [1988] 2 Lloyd's Rep. 361, C.A.

Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460; [1986] 3 W.L.R. 972; [1986] 3 All E.R. 843, H.L.(E.)

SUMMONS

By a writ dated 23 June 1989 the plaintiffs, Arkwright Mutual Insurance Co., commenced proceedings against 16 defendants, Bryanston Insurance Co. Ltd., British National Insurance Co. Ltd., Yasuda Fire and Marine Insurance Co. (U.K.) Ltd., Wealbrook Insurance Co. Ltd., El Paso Insurance Co. Ltd., Kraft Insurance Co. Ltd., Louisville Insurance Co. Ltd., Ludgate Insurance Co. Ltd., Mutual Reinsurance Co. Ltd., Compagnie Europeéne D'Assurances Industrielles S.A., J.M. Polan (sued on his own behalf and on behalf of all other members of syndicate 109 at Lloyd's), Richard Agnew (sued on his own behalf and on behalf of all other members of syndicate 257 at Lloyd's), D.C. Dolling-Baker (sued on his own behalf and on behalf of all other members of syndicate 544 at Lloyd's), D.J. Walker (sued on his own behalf and on behalf of all other members of syndicate 164 at Lloyd's), B.A. Stewart (sued on his own behalf and on behalf of all other members of syndicate 15 at Lloyd's), and J. Brian Hose (sued on his own behalf and on behalf of all other members of syndicate 604 at Lloyd's) for the sum of U.S.$2.37m. said to be due under a policy of

reinsurance dated 4 December 1984 to which the defendants were subscribers.

The defendants applied by summons for a stay of the proceedings on the grounds that London was not the forum conveniens of the dispute, the same being New York or some other state of the United States of America.

The matter was heard in chambers and judgment was given in open court.

The facts are stated in the judgment.

Christopher Hancock for the plaintiffs.

Stephen Ruttle for the defendants.

24 January 1990. The following judgment was handed down.

POTTER J.

Introduction and issues

By writ dated 23 June 1989 the plaintiffs, an insurance company incorporated in the United States of America in Massachusetts, commenced proceedings against 16 defendants, the subscribers to two written policies of reinsurance each dated 4 December 1984, by virtue of which the plaintiffs allege the defendants agreed in their respective proportions to reinsure the plaintiffs' liabilities under a written contract of insurance dated 20 July 1983 (the original insurance). The original insurance was a policy under which the Philadelphia Manufacturers Mutual Insurance Co. (the plaintiffs' predecessors) insured the Scott Paper Co. (the assured) in the United States of America on an "all risks loss or damage" basis. The reinsurance was written on an "excess of loss" basis and each policy was subject to the form of "follow the settlements" clause contained in the first two lines of the third paragraph of the standard J.I. form of Lloyd's reinsurance policy: "Being a reinsurance of and warranted same gross rate, terms and conditions as and to follow the settlements of the company."

The events which gave rise to the action can be shortly stated. On 28 May 1986 a steam turbine in the assured's factory in Michigan was opened up to investigate certain noises which appeared to indicate damage within. An insurance claim was at once notified, a formal quantified claim being made on 4 December 1986, following an investigation by experts for the assured. They concluded that a thrust bearing failure had occurred on or about 12 March 1985 which had not been diagnosed at the time of its occurrence, so that subsequent operation led to the damage discovered in May 1986. The damage was quantified at U.S.$2.87m., to which a deductible of U.S.$500,000 was applicable. The plaintiffs' proportion of the net of U.S.$2.37m. was paid to the assured on 18 May and a claim was made on the reinsurers.

Although the defendants do not seek to avoid the reinsurance, they contend that the plaintiffs are not entitled to recover on the grounds

that: (i) the sum claimed by the plaintiffs arises from two, and not one, losses/occurrences within the meaning of the original policy, in respect of each of which the excess of U.S.$500,00 must be applied, since the reinsurance provided that reinsurers were "only to pay the excess of U.S.$500,000 each occurrence/accident;" (ii) the first occurrence, namely the original turbine failure, gave rise to a claim for less that the deductible of U.S.$500,000; (iii) the second occurrence, namely the continued running of the unit despite the fact that there were indications that following the thrust bearing failure the rotor was rubbing against the stationary part of the turbine, was not covered by the original insurance and does not fall within the reinsurance; (iv) even if the second occurrence does fall within the reinsurance, the plaintiffs overpaid the claim of the assured; (v) the plaintiffs did not take all proper and business-like steps within the principles confirmed by the Court of Appeal in Insurance Co. of Africa v. Scor (U.K.) Reinsurance Co. Ltd. [1985] 1 Lloyd's Rep. 312 in settling the claim of the assured and in quantifying it.

This stance was taken as the result of an investigation by the American legal firm of Mendes and Mount ("M. & M.") who were engaged by the defendants and, between February 1987 and November 1988, reviewed the plaintiffs' claim submission. By letter of 11 November 1988, M. & M. set out their findings and arguments; also the reasoning upon which an open offer by the defendants to settle the plaintiffs' claim in a much reduced sum was made at the end of the letter. In legal discussions which followed, the plaintiffs made clear in May 1989 that they were contemplating proceedings against the defendants in the United Kingdom in respect of the full amount of their claim. However, on 25 May 1989 the defendants commenced proceedings in New York for negative declaratory relief in relation to their liability to the plaintiffs. On 23 June 1989, the plaintiffs commenced these proceedings. On 31 July 1989 they also brought a motion in the New York proceedings to dismiss the defendants' complaint there and/or to stay the New York action on grounds of "forum non conveniens" and "attempt to beat [the plaintiffs] to the courthouse." The decision upon that motion is still awaited. On 22 August 1989 the defendants issued a summons to stay these proceedings "on the grounds that London is not the forum conveniens of this dispute, the same being New York or some other state of the United States of America."

As between the parties, there has been no question before me but that the various defendants have been validly served, as of right. All have been served within the jurisdiction save on, the tenth defendant, which was either served within the jurisdiction pursuant to an agreement to accept service within the jurisdiction or must be deemed to have been served outside the jurisdiction (in Belgium) without leave, pursuant to the Civil Jurisdiction and Judgments Act 1982. It is common ground between the parties that this is a matter which falls within the scope of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 appended to the Act, and it is accepted by the defendants that they should all be treated as domiciled in England and served in England for the purposes of considering the

two issues which arise on this summons. The first issue is whether, this being a case which falls within the scope of the Convention, that fact removes the discretion of the court to stay the action upon the ground of forum non conveniens and/or lis alibi pendens. The second is whether, assuming it is still open to the court to consider questions of forum non conveniens, the defendants have established that New York is clearly a more appropriate forum for the resolution of the dispute between the parties.

The effect of the Convention of 1968

Section 49 of the Act if 1982 provides:

"Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the 1968 Convention."

The section does not in itself assist in any way in deciding whether or not the exercise by the court of its hitherto undoubtedly wide discretion to stay proceedings on the grounds of forum non conveniens is, following incorporation of the Convention into English law, to be regarded as inconsistent with the Convention, either generally or in particular categories of case. For that, it is necessary to turn to the terms of the Convention. Further, when considering those terms, it is necessary to approach them unconstrained by the traditional rules of statutory construction previously applied by English courts, but guided by reference to wider sources that the wording of the Convention itself. In particular, by section 3 of the Act, not only is this court required to determine any question as to the meaning or effect of any provision of the Convention in accordance with the principles laid down by, and any relevant decision of, the European Court of Justice, and to take judicial notice of any decision or expression of opinion by the European Court on any such question, but, by subsection (3)

"(a) The report of Mr. P. Jenard on the 1968 Convention and the 1971 Protocol; and (b) the report by Professor Peter Schlosser on the Accession Convention, may be considered in ascertaining the meaning or effect of any provision of the Convention and shall be given such weight as is appropriate in the circumstances."

The wider ranging nature of the court's task when considering provisions of Community law, and indeed of the purposive approach of the European Court of Justice, has been made clear by the House of Lords in such cases as Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251, The Hollandia [1983] 1 A.C. 565 and Reg. v. Henn [1981] A.C. 850.

For the plaintiffs, Mr. Hancock has submitted that the structure, purpose and detailed provisions of the Convention, as considered and illuminated by Hobhouse J. in the recent decision in S. & W. Berisford Plc. v. New Hampshire Insurance Co. ante, p. 631, are that in a case of this kind, namely one where service has been effected according to the principle of the domicile of the defendant(s), the provisions of the Convention as to jurisdiction and the discretion of the court in which the

proceedings are brought to stay them or otherwise to decline jurisdiction are mandatory and exhaustive, and that, since no power to stay proceedings in favour of the courts of a non-contracting state on the grounds of forum non conveniens or lis alibi pendens is to be found in the Convention, the English court no longer has any discretionary power to refuse to exercise jurisdiction.

The structure and provisions of the Convention against which is purposes fall to be considered may be summarised as follows.

The preamble of the Convention provides, inter alia, that it is to:

"determine the international jurisdiction of their courts [of the contracting states], to facilitate recognition and to introduce an expeditious procedure for securing the enforcement of judgments ... instruments and court settlements."

Under Title I, "Scope," article 1 provides that: "This Convention shall apply in civil and commercial matters whatever the nature of the court or tribunal." It is thus plainly applicable in this case. Under Title II, "Jurisdiction," section 1, "General Provisions," article 2 provides: "subject to the provisions of this Convention, persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state ..." The fact that article 2 is expressed in mandatory terms, but to be subject to the provisions of the Convention, suggests on ordinary principles of construction, that it is only within the Convention that its limitations are to be found.

Articles 3 and 4 confirm the primacy of domicile as the test of jurisdiction by providing, respectively, that persons domiciled in a contracting state may be sued in the courts of other contracting states only by virtue of rules set out in sections 2 to 6 (i.e., articles 5 to 17) of the jurisdiction title, and that, if the defendant is not domiciled in a contracting state, the jurisdiction of the courts of each contracting state shall, subject to the provisions of article 16 (exclusive jurisdiction), be determined by the law of that state.

Under section 2, "Special Jurisdiction," articles 5, 6 and 6A set out further exceptions to the strict domicile rule. Article 5 sets out in permissive language that a person domiciled in a contracting state may be sued in another contracting state in a number of instances where particular features of the case render it suitable, or more suitable, for trial in that other state e.g. (in matters relating to contract) in the courts for that place of performance of the obligation in question; and (in matters relating to tort) in the courts of the place where the harmful event occurred. Article 6 provides that a person domiciled in a contracting state may also be sued, where he is one of a number of defendants, in the courts for the place where any one of them is domiciled; as a third party, in an action in the courts seised of the original proceedings; and, on a counterclaim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending. Article 6A related to jurisdiction in actions relating to liability arising from the use or operation of a ship.

Section 3, "Jurisdiction in matters relating to insurance" (articles 7 to 12A) lays down a special and exceptional regime for the determination

of jurisdiction in relation to matters relating to insurance. It is common ground between the parties in this case that such regime does not apply to contracts of reinsurance: see Schlosser report, Official Journal 1979 No. C.59, p. 116, para. 150

Section 4, "Jurisdiction over consumer contracts" similarly provides, by articles 13 to 15, for an exclusive regime in respect of consumer contracts as defined in article 13, whereby a consumer may bring proceedings against the other party to a consumer contract either in the courts of that party's domicile or the courts of the consumer-plaintiff's domicile, whereas proceeding may only be brought against the consumer in the courts of his own domicile (article 14), subject to certain exceptions provided for in article 15.

In section 5, "Exclusive jurisdiction," by article 16, further exceptions to the domicile rule are provided for in five specific cases where there is a strong and obvious connection between the subject matter of the litigation and a particular jurisdiction which may not be that of the domicile of the defendant i.e., proceedings relating to (1) rights in rem in, or tenancies of, immovable property; (2) the validity or nullity of the constitution or dissolution, of companies or other legal persons, or decisions of their organs; (3) the validity of entries in public registers; (4) the registration or validity of patents, trade marks, designs or other similar rights; (5) the enforcement of judgments.

Section 6, "Prorogation of jurisdiction" deals with jurisdiction by consent. article 17 provides that if parties, one or more of whom is domiciled in a contracting state, have agreed that a court or the courts of a contracting state are to have jurisdiction to settle any disputes in connection with a particular legal relationship that court or courts shall have exclusive jurisdiction. It further provides that where such an agreement is concluded by parties, none of whom is domiciled in a contracting state, the courts of other contracting states shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction. It also makes special provision in relation to trust instruments. Article 18 provides that, apart from jurisdiction derived from other provisions of the Convention, the court of a contracting state before whom a defendant enters an appearance shall have jurisdiction, save where the appearance was entered solely to contest the jurisdiction or where another court has exclusive jurisdiction by virtue of article 16.

Section 8, "Lis pendens - Related actions" deals, by article 21, with the situation where proceedings involving the same cause of action and between the same parties are brought in the court of different contracting states, and, by article 22, where related actions are brought in the courts of different contracting states. In the first case, any court other than the court first seised "shall" of its own motion decline jurisdiction in favour of that court. In the second case, any court other than the court first seised "may" while the actions are pending at first instance, stay its proceedings. For the purposes of article 22, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid risk of irreconcilable judgments resulting from separate proceedings. Article 23 provides that where actions come within the exclusive jurisdiction of

several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.

Title III, "Recognition and Enforcement" provides for a straightforward and summary recognition and enforcement procedure in relation to any judgment given by a court or tribunal of a contracting state. Article 26 provides that a judgment given in a contracting state shall be recognised in other contracting states without any special procedure being required and articles 27 and 28 set out in clear form the limited circumstances in which such judgment shall not be recognised. It is to be noted that article 27(5), in a rare reference to the jurisdiction of non-contracting states, includes as one such circumstance:

"If the judgment is irreconcilable with an earlier judgment given in a non-contracting state involving the same cause of action and between the same parties, provided that this letter judgment fulfils the conditions necessary for its recognition in the state addressed."

Article 29 specifically provides that under no circumstances may a foreign judgment be reviewed as to its substance. Articles 31 to 45 set our detailed provisions for enforcement pursuant to the recognition provisions.

Based on the structure and provisions of the Convention as I have outlined them, Mr. Hancock submits that the Convention provides its terms for the power of the courts of a contracting state to assume or decline jurisdiction in relation to persons domiciled in a contracting state. He submits that the purpose of the Convention fortifies this construction. He relies upon the wording of the preamble which I have quoted and the official reports, especially that of Jenard (Official Journal 1979 No. C59, pp. 7, 13, 14, 42 et seq., in particular at p. 47), and the judgment of Hobhouse J. in S. & W. Berisford Plc. v. New Hampshire Insurance Co., ante, p. 631 as demonstrating that the prime purpose of the Convention was to provide for the "free movement of judgments" within the Community. Such purpose was to be achieved by providing, first, for a simple and summary enforcement and recognition procedure (dealt with in Title III) and, second, by harmonising the criteria according to which jurisdiction in Community courts falls to be exercised (see Title II), so as to allow the court of a contracting state in which enforcement is sought to avoid going into the merits of the original exercise of jurisdiction. In these circumstances, Mr. Hancock submits that anything which detracts from the summary and codified nature of the overall scheme of enforcement is prima facie inconsistent with the Convention. The result of such an approach, submits Mr. Hancock, is that (i) any discretionary power for the courts of a contracting state to refuse to exercise jurisdiction other than in circumstances specifically or implicitly provided for in the 1968 Convention inevitably detracts from the achievement of the purposes mentioned; (ii) any exception which the articles of the Convention provide to its primary or governing provision, under article 2, for jurisdiction based on the defendant's domicile falls to be construed restrictively, as a deviation from the main path or purpose of the

Convention. In this respect he points out that nothing in the 1968 Convention expressly allows for any discretionary power in the courts of contracting states to decline jurisdiction on grounds of forum non conveniens or lis alibi pendens (which latter ground is, in English law, but an aspect or factor of the former: see Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460) save to the limited extent provided for in article 21 (lis pendens) and article 22 (related actions). As to those specific provisions, they are introduced simply as a necessary and integral part of the Convention scheme regulating actions between the courts of different contracting states and not on the basis, or as part, of some wider doctrine of forum non conveniens.

In this respect, it appears that no general discretionary power to stay proceedings was recognised by the domestic courts of contracting states within the community prior to the accession of the United Kingdom. Hence, the question of accommodating or referring to the application or preservation of such a doctrine would not have been apparent to the minds of the draftsmen of the Convention. It further appears that at the time of the accession to the Convention of the United Kingdom and Ireland, their delegations did not press for any adjustment of the 1968 Convention on this point: see generally the Schlosser report, Official Journal 1979 No. C.59 pp. 97-98, paras. 76-78. The only discussion of any such discretionary power in the Schlosser or Jenard reports appears to be that in Schlosser at paragraphs 76-81 and at paragraph 181, in which he sees lis pendens under English Law as an application of the doctrine of forum non conveniens in his discussion of section 8: cf. the Spiliada case. In paragraph 181, Professor Schlosser certainly indicates that after the accession of the United Kingdom it would no longer be possible for the flexible practice in relation to forum non conveniens to be maintained in relation to the other member states of the Community; however, in none of these paragraphs does he advert to the position where a stay is sought in respect of proceedings commenced in a foreign country other than a member state. Nonetheless, it is apparent that there is no support in the text of the Convention or the reports of Schlosser or Jenard for the existence of any discretionary power in a contracting state on the basis of forum non conveniens or lis alibi pendens as previously applied under English law.

Whilst Mr. Hancock acknowledges that the Convention does not expressly advert to the position where a stay is sought in relation to proceedings in a non-contracting state, he submits that there is no real room for the assumption that the United Kingdom, as a contracting state, retains any former discretion in that respect. He points out that article 2, and other articles of the Convention, undoubtedly apply to actions brought by persons who are not domiciled in any of the contracting states (indeed, that is not in issue between the parties), yet no saving provision is made. Accordingly, submits Mr. Hancock, neither principle nor reason dictates a construction of the Convention which would permit the court to exercise a discretion to stay these proceedings on the grounds of forum non conveniens or lis alibi pendens.

That certainly appears to be in accordance with the broad view expressed by Hobhouse J. in S. & W. Berisford Plc. v. New Hampshire

Insurance Co., ante, p. 631. In that case the plaintiffs commenced proceedings against the defendants, and American insurance company, in this court, having served proceedings upon them at an office within the jurisdiction. The defendants applied for the proceedings to be stayed on the ground that they ought to take place in the courts of New York and not in this court. Since no proceedings were then pending in New York, the matter was considered purely on the basis of forum non conveniens. Further, there was an English jurisdiction clause in the relevant contracts of insurance, with which aspect the judgment was largely concerned. However, on the basis that there was no exclusive jurisdiction clause, various issues arose under the Act and Convention, namely: (i) whether, where both the relevant parties to the litigation are domiciled in a country which is not a Convention country, the provisions of the Convention had any application; (ii) if so, whether the exercise of a power to stay the action on the grounds of forum non conveniens would be inconsistent with the provisions of the Convention; (iii) finally, if there was a power to stay on grounds of forum non conveniens, whether it should be exercised in the circumstances of the case

In relation to issue (i) the judge had no hesitation in holding that the provisions of the Convention applied, a decision which the parties in this case already accept. In relation to issue (ii) he held that the exercise of a power to stay for forum non conveniens would indeed be inconsistent with the provisions of the Convention. Finally, he held that, if he was wrong in that respect, it was not an appropriate case to stay on such grounds. In relation to issue (ii), it is plain that the judge held as he did for reasons very much along the lines of the argument of Mr. Hancock in this case. I now turn to the Berisford case in more detail.

The case related to insurance and not reinsurance, and hence was subject to the insurance regime of section 3 of the 1968 Convention (see article 7). Hobhouse J. was thus concerned with construing article 8 as the primary source of his jurisdiction and in particular that part which provides:

"An insurer who is not domiciled in a contracting state but has a branch, agency or other establishment in one of the contracting states shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that state."

Having referred to that proviso, Hobhouse J. held, at p. 634D-E, that "the net result of article 8 and article 2 is that the defendants shall in respect of the present matter be sued in the courts in London." In a further passage he dealt with the impact of articles 12 and 17, which are concerned with agreements on jurisdiction, pointing out that they were of academic relevance in the case before him as the parties' agreement on jurisdiction in London followed, rather than departed from, the effect of articles 2 and 8. However, in that passage he highlighted that (a) article 17, which relates to a variety of situations in which parties (domiciled or non domiciled) have agreed to confer jurisdiction on a particular contracting state, constitutes and exception to the general rule of domicile provided for in article 2, based on the apparent further principle (with specific exceptions) that jurisdiction clauses should be

given effect to, even though they may not be expressed in exclusive terms; (b) Professor Schlosser, at paragraph 176, states that, although the Convention does not contain any rules as to the validity of an agreement by the parties to bring their disputes before the courts of a state which is not a party to the 1968 Convention, the court of a contracting state which is applied to despite such an agreement has a right to decide on its validity (and hence whether to exercise jurisdiction under the Convention) under its own local rules of conflict of laws. Thus the Convention does not preclude the court of a contracting state from applying principles such as those stated in Aratra Potato Co. Ltd. v. Egyptian Navigation Co. [1981] 2 Lloyd's Rep. 119 where its jurisdiction is being sought to be excluded in favour of a non-contracting state. Despite the retention of discretion in such a case, however, Hobhouse J. held, ante, p. 643D-E: "on the correct construction of the Convention as applied to the present case, the provisions of the Convention are in effect mandatory." Having referred to section 49 of the Act of 1982, he went on to consider the question of whether the defendants had satisfied him that to stay the action on the grounds of forum non conveniens would not be inconsistent with the Convention, approaching the matter "broadly as a matter of principle and the overall intention of the Convention." His conclusion, reached on the basis of the language of articles 8 and 2 and of the Convention as a whole, reinforced by consideration of the purpose of the Convention, viewed in the light of the Schlosser report, was that the court had no power to stay on the grounds of forum non conveniens since the Convention did not expressly or implicitly allow for it. While the case before him did not concern the particular aspect of lis alibi pendens (as in this case) his reasoning was expressed in general terms. In a passage in his judgment, which implicitly excluded the position in relation to foreign jurisdiction clauses, he concluded, at p. 645C-D:

"It is clear that the Convention is designed (subject to article 4) to achieve uniformity and to "harmonise" the relevant procedural and jurisdictional rules of the courts of the contracting states. The Convention leaves no room for the application of any discretionary jurisdiction by the courts of this country; the availability of such a discretion would destroy the framework of the Convention and create lack of uniformity in the interpretation and implementation of the Convention." (Emphasis added.)

Mr. Ruttle for the defendants has sought to distinguish S. & W. Berisford Plc. v. New Hampshire Insurance Co., ante, p. 631 and to avoid the apparent effects of the judgment of Hobhouse J. in a variety of ways, each of which was in my view ultimately unsuccessful. First, he said it was a case primarily concerned with the effect of an English jurisdiction clause. I do not think that point assists his case. As already indicated, Hobhouse J. expressly treated the jurisdiction clause as being indicated, Hobhouse J. expressly treated the jurisdiction clause as being "of only academic relevance" and indicated clearly, at p. 643E-F, that it was the mandatory nature of articles 2 and 8 read together (applicable a fortiori to article 2 alone, as in this case) which led to his decision.

Second, Mr. Ruttle argued that the Berisford judgment was concerned only with forum conveniens, no foreign lis having been commenced as in this case. That is indeed a relevant difference, the significance of which I shall deal with at greater length below.

Third, Mr. Ruttle suggests that Hobhouse J. overlooked the illogicality of recognising (as he did) a discretion to stay on the basis of a foreign jurisdiction clause while refusing (as he did) to recognise a general discretion to stay on grounds of forum non conveniens. This criticism does not seem to me to be justified. While the judge did not deal with it in terms, it seems clear that he took the view that, far from being illogical, the distinction is to be found within the Convention itself. The Convention clearly recognises the concept of jurisdiction by consent (see article 17). Further, the report of Professor Schlosser (see Official Journal 1979, No. C.59, pp. 123 and 124, paras. 174 and 176) indicates the logic and propriety of giving effect to pre-dispute agreements of the parties which deprive community courts of jurisdiction (whether stated by the convention to be exclusive or concurrent), according to the lex fori and/or local rules of conflict of laws; however it gives no indication in favour of discretionary stays on other grounds. The only indication which can be gleaned from the Schlosser report seems to me to be unfavourable towards the exercise of such a discretion, albeit it is not specifically dealt with: see paras. 176 et seq. of the Schlosser report, discussed by Hobhouse J. at p. 643.

The steps in Mr. Ruttle's submission that the Berisford decision was wrong and/or that its reasoning was in any event not applicable to a case involving lis alibi pendens were as follows.

(1) The Convention, being concerned, or principally concerned, to govern relations between contracting states, which thereby adopted mutual obligations and accepted regulation of their own potentially competing jurisdictions, should not readily be construed as operating so as to deprive or inhibit non-contracting states in relation to cases where the jurisdiction of such states would otherwise plainly be most appropriate for determination of the dispute to question. The Convention being concerned to decide which of the contracting states should assume jurisdiction in cases of competition inter se, no violence is done or inconsistency effected by one contracting state staying proceedings in its courts in favour of a non-contracting state.

(2) The general rule as to domicile imposed by article 2 is not to be regarded as so overwhelming or all-pervading as to preclude stay in all cases where it is not expressly required or permitted by the Convention. The rule of domicile is the prima facie rule only, within a sophisticated framework of provisions which recognise a number of exceptions in individual situations, the most logical and compelling of which are those dealt with in articles 5 to 6A (special jurisdiction), article 16 (exclusive jurisdiction) and article 17 (foreign jurisdiction clauses).

(3) Any English court should be slow so to construe the Convention as to inhibit the valuable and important jurisdiction of stay on grounds of forum non conveniens, which is designed to promote comity, to encourage efficiency in the resolution of disputes, to prevent duplication

of time and cost in litigation, and to avoid inconsistent judgments in two jurisdictions.

(4) Albeit articles 21 to 23 constitute a more limited and rigid scheme for allotment of jurisdiction that that achieved by application of a general principle of forum non conveniens they are concerned to give effect to the network of provisions in articles 2 to 20 and to avoid the risk of inconsistent judgments in two or more contracting states, by requiring dismissal or stay of actions in favour of the court of the contracting state first seised. If there is no jurisdiction for a contracting state in which a defendant is domiciled or otherwise properly sued to decline jurisdiction, or to stay, in favour of the courts of a non-contracting state, that creates the remarkable situation whereby the Convention determines the appropriate forum (according to its own provisions) for the competing jurisdiction of contracting states, but requires entertainment of suit in the domicile of the defendant (without the application of any test of appropriateness) where a non-contracting state is concerned.

(5) Even if the Berisford case is right in the respect of the broad principle of forum non conveniens, it need and should not be applied in respect of the more limited case of lis alibi pendens, the very ground of stay contemplated by article 21 in respect of contracting states.

(6) Given that the purposes of the Convention are avoidance within the courts of the Community of inconsistent judgments and simplification of enforcement of judgments within those courts neither purpose will be disturbed by the exercise of a jurisdiction to stay on grounds of forum non conveniens and/or lis alibi pendens in favour of the courts of a non-member state.

(7) In respect of lis alibi pendens article 27(5) is a signpost indicating, or at least consistent with, the legitimacy of the court of a contracting state exercising a jurisdiction to stay in favour of the court of a non-contracting state already seised of the action in order to avoid the risk of later inconsistent justices.

(8) Similarly, although Mr. Ruttle recognised that articles 21 to 23 dealt only with proceedings in the courts of contracting states, he said they should be regarded as no more that a route to be followed in furtherance of the overall purpose of avoiding inconsistent judgments within those states. In that respect they were a signpost (and not a "no entry" sign) in the direction of a jurisdiction to stay in favour of a pending lis in non-contracting state.

These are powerful arguments, and it is certainly not clear that one at least of them, namely the reliance placed on article 27(5), was advanced before Hobhouse J. in the Berisford case.

Further, Mr. Ruttle finds support for his arguments in views expressed by certain text book writers. The view of Dr. Kaye as expressed in his Civil Jurisdiction and Enforcement of Foreign Judgments (1987), pp. 1244 - 1245, is that:

"in relation to non-contracting state jurisdiction, national rules on lis alibi pendens and forum non conveniens - to the extent that they are generally admitted - continue to apply, notwithstanding Convention jurisdiction otherwise possessed. The Community does

not exist in a vacuum: it cannot simply ignore the existence of competing claims to jurisdiction of non-contracting states' courts, and conferment of jurisdiction under the Convention upon a contracting state's courts may also therefore be regarded as bestowal of control over the exercise of that jurisdiction upon those courts, including the power of decline in favour of non-contracting state jurisdiction."

See also at pp. 218-219 and 269.

Hartley, Civil Jurisdiction and Judgments (1984) deals separately with the discretion of the court in relation to lis alibi pendens and forum non conveniens. As to the first, he states, at p. 77:

"What is the position where lis alibi pendens applies with reference to a non-contracting state? The Convention does not require English courts to grant a stay in such cases but does it prevent them from doing so? The wider aspects of this question are discussed below, here it need only be said that article 27(5) provides indirect support for the view that the Convention does not preclude the granting of a stay or the dismissal of the action."

Later under the broader heading "Discretion to stay or dismiss proceedings," Hartley expresses views favourable to retention of a discretion for national courts of contracting states to decline jurisdiction in particular in cases of forum non conveniens irrespective of where the parties are domiciled, and criticises the viewpoint of the Schlosser report that the jurisdiction-conferring provisions of the Convention are obligatory. In this respect he appears to go further than any other commentator either official or academic. However he concedes, at p. 80, that "as the European Court consists mainly of continental lawyers, it is by no means certain that the English courts will be allowed to retain their discretion to stay."

Collins, Civil Jurisdiction and Judgments Act 1982 (1983), whilst expressing the view, at p. 45 (unqualified in relation to the courts of a non-contracting state) that "[it is not] likely the United Kingdom courts will be able to stay proceedings merely because some other court is the more appropriate one, on the basis of forum non conveniens," goes on to state, at p. 97: "But article 21 (lis pendens) does not apply if one of the actions is brought in a non-contracting state. In that case the English court would retain its discretion to stay or grant an injunction."

In his role as editor of Dicey & Morris, The Conflict of Laws. 11th es. (1987) Collins appears to express a consistent view: see pp. 398,400.

O,Malley and Layton, European Civil Practice (1989) at pp. 30-31, expresses the view that a court which has jurisdiction under the Convention may decline to exercise that jurisdiction on the ground that a court in a non-contracting state also has jurisdiction in three cases, namely jurisdiction agreements, exclusive jurisdiction and lis alibi pendens.

After careful consideration of the rival arguments, I agree with the decision reached by Hobhouse J. in S. & W. Berisford Plc. v. New Hampshire Insurance Co., ante, p. 631 to the effect that, for the English court to retain its former wide discretion in respect of the doctrine of

forum non conveniens would be inconsistent with the Convention. As already indicated, it does not seem to me that his final conclusion, stated at p. 645C-D was intended to cover the discretion to stay in favour of the courts of a non-contracting state in respect of the categories of case contemplated in article 16 (exclusive jurisdiction) or 17 (propogation of jurisdiction, or "jurisdiction by consent" as the Schlosser report calls it). Nor am I clear how far it was intended to apply to article 21 (lis pendens) referred to at p. 641D-E in the Berisford case, which makes up the trio of instances in which O'Malley and Layton, European Civil Practice and, it seems, Collins, Civil Jurisdiction and Judgments Act 1982and Dicey & Morris, The Conflict of Laws, 11th ed. contemplate that the English court may retain its discretion to stay.

Nonetheless, it is my view that the logic of the Berisford case on the forum non conveniens discretion applies equally to the associated doctrine of lis alibi pendens, that is to say that the Convention removes the jurisdiction of the English court to stay on both grounds, save in accordance with the terms of article 21 which apply only to the courts of contracting states. Unlike the writers I have mentioned, I do not consider that article 21 is to be regarded in a similar light to articles 16 and 17 as "signposts" in favour of a discretion to stay. In the case of articles 16 and 17, the Convention deals with particular features of the action concerned in respect of which it recognises as a matter of principle that (a) the status and/or nature of the subject matter of the action and (b) the free agreement or consent of the parties as to forum, transcend the otherwise mandatory system and structure of the Convention founded on the defendant's domicile and make it appropriate for one particular jurisdiction only to hear the case. In the case of article 21 (lis pendens), the Convention does not identify the peculiar suitability of any particular court to hear the action by reference to its subject matter or the choice of the parties; nor does it identify any discretion based on cost, convenience or "real connection." It simply requires any Community court to decline jurisdiction or stay an action where another Community court is already seised of it. This seems to me no more than a simple order of priority, imposed as necessary aspect of the certain and orderly regime of jurisdiction and enforcement in and between the courts of the community. It does not seem to me a persuasive reason for holding that the Convention contemplates or legitimises an additional and discretionary power, based largely on cost and convenience, to stay in favour of a non-Community court against a plaintiff who has come to a court within the Community to try his dispute in accordance with a right apparently given and a requirement apparently imposed by the Convention on the basis of the defendants' domicile. In this respect I construe the Convention as less concerned with comity than with certainty.

Given the view of the English courts, and of the Schlosser report, that lis alibi pendens is to be regarded as no more than one aspect or feature of the forum non conveniens doctrine, and that it appears that the continental members of the Community did not (in general at least) prior to the Convention, enjoy discretion under their domestic laws to decline jurisdiction, I do not consider that article 21 can be read as more

than a circumscribed and necessary component of the scheme of the Convention to simplify enforcement in relation to judgments of the courts of contracting states, rather that as a signpost to an exception to the provisions of that scheme.

Nor do I consider that, in this respect, article 27(5) constitutes a signpost to the existence of a discretion to stay. It seems to me that that provision is properly read as a recognition of the widely recognised doctrine of res judicata which arises once a cause of action has actually been adjudicated between the same parties in a forum to which they have submitted their dispute. I do not regard it as indication of a wider purpose in the Convention to permit discretionary stays on the grounds of lis alibi pendens or forum non conveniens so that the situation under article 27(5) may be avoided.

Finally on this aspect, in so far as the reasoning in the Berisford case as applied or extended in this case may appear to impinge on wider principles or comity or to restrict the application of a valuable discretion enjoyed by the English courts, I would observe that in practice its effect is likely to be fairly limited for the following reasons: (a) as between the courts of contracting states, many of the situations likely to give rise to former disputes are catered for by the alternatives to the domicile rule set out in sections 2 and 6 of the Convention, in particular in article 16 which itself appears to be founded on the notion of "closest and most real connection;" (b) it appears that the discretion remains in respect of non-contracting states in the various categories of case comprehended by articles 16 and 17; (c) it is clear that discretionary questions of appropriate forum will still fall for consideration in respect of applications for leave to serve out under the provisions of R.S.C., Ord. 11, r. 1 in any case in which the Convention does not apply and on applications for stay by nationals of non-contracting states served with process upon the basis of temporary presence in England.

For the reasons set out above I would hold that this court has no discretion to make the order in the terms sought by the defendants in their summons.

Forum non conveniens

In case I am wrong in my interpretation of the Convention, it is appropriate for me to consider the arguments on forum non conveniens and lis alibi pendens on the basis that the court's discretion to stay on those grounds in a case such as this remains.

Mr. Ruttle accepts that the burden lies upon the defendants, in accordance with the principles of Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460 to demonstrate that the New York court is clearly or distinctly a more appropriate forum than this court. He submits that this action is a case pre-eminently suited for the jurisdiction of a court in the United States and in particular the New York court, which he says is "manifestly" the most appropriate forum. Further, he seeks to take advantage of the remarks of Lord Diplock in The Abidin Daver [1984] A.C. 398, 411G - 412A to the effect that, when proceedings have already begun in a forum which is a natural and appropriate forum, that fact is effectively conclusive in favour of a stay unless there

is cogent evidence that the plaintiff in the English court will be deprived of a personal or juridical advantage of such importance that it would be unjust to deprive him of it. As to that proviso, Mr. Ruttle makes the further point that the readiness of the court to attach importance to the previously assumed benefits of proceeding in England has receded since the decision in The Atlantic Star [1974] A.C. 436 and MacShannan v. Rockware Glass Ltd. [1978] A.C. 795, though, in dealing with the question of the custom of the English courts to award costs to a successful plaintiff (by way of contrast with that of the United States courts) he acknowledges that such a matter may be taken into account in any balancing exercise effected by the court in considering the question of juridical advantage: see Roneleigh Ltd. v. MII Exports Inc. [1989] 1 W.L.R. 619.

I pause only to observe that in my view the law and/or conclusion stated by Lord Diplock in The Atlantic Daver [1984] A.C. 398 as summarised above is not fully reconcilable with the position as expounded by Lord Goff of Chieveley in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460, in the same sense that, in the case of lis alibi penden. Lord Diplock indicates that all the defendant must show (before the question of deprivation of advantage arises, as to which the burden rests on the plaintiff) is that the foreign forum is a natural and appropriate forum, whereas Lord Goff indicated [1987] A.C. 460, 476, 478, that the burden is on the defendant to show that it is a moresuitable forum or the appropriate forum i.e. that with which the action has "the most real substantial connection" before the burden shifts to the plaintiff to justify continuance of the action in this country. To the extent that conflict exists between the two formulations, I shall follow that in the Spiliada case. In Lord Goff's formulation, I apprehend that he regards the question of lis alibi pendens, i.e., the existence of a pre-existing foreign lis, as simply a factor, rather than a decisive factor, in the balancing act to be performed; also that, when taking it into account, it may be relevant to consider for how long and up to what stage if the action the foreign court has been seised of the case: see de Dampierre v. de Dampierre [1988] A.C. 92, 108.

In this case it is relevant that the New York court has not yet proceeded beyond the stage reached in this court, namely the objection taken to the invoking of its jurisdiction, discovery being suspended until that objection has been determined.

Further, though I am not in a position to decide the matter, it might well be that the reason for the defendants' commencing proceedings in New York for a negative declaration was in the nature of a pre-emptive strike in the knowledge that the plaintiffs were contemplating proceedings in England. Claims for such declarations tend to be viewed with caution in relation to conflicts of jurisdiction: cf. the remarks of Kerr L.J. in Saipem S.p.A. v. Dredging CO2 BV [1988] 2 Lloyd's Rep. 361, 371. All in all I do not regard the fact that the defendants have commenced proceedings in New York as alone conclusive, or indeed as of great weight, in reaching my conclusions.

In considering the exercise of the court's discretion in this case, I start by reminding myself that the dispute is one involving the meaning

and effect of a reinsurance contract made in the London market which is, on first impression at least, peculiarly appropriate to trial in this court. It is also a dispute which the Convention plainly regards as appropriate for decision in the courts of the defendant reinsurers' domicile. It is only by reason of the nature of the defendant's plea in avoidance of liability, which may involve considering the terms of the original policy and calling witnesses concerned with the settlement of the original claim, that any substantial argument on forum arises. I shall now turn to the detail of the arguments raised.

The grounds for Mr Ruttle's assertion that New York is manifestly the more appropriate forum are as follows. (1) The existence of the service of suit clause and the fact that the reinsurers' first choice is New York, where the court has already begun to entertain the action. (2) The New York court is well equipped to determine reinsurance disputes. (3) Relatively small sums are involved in the action and it would be wrong to burden the parties with two possible sets of costs in different jurisdictions. (4) It is asserted that 22 potential witnesses of fact identified by M. & M. will need to be proofed in the United States. While Mr. Ruttle recognises that they may not all need to be called, he says that the necessary witnesses may be called in New York at less expense and inconvenience than in London. (5) The subpoena jurisdiction of the New York courts which is available in respect of unwilling witnesses (the effect and extent of which is very much in dispute between the parties). (6) The convenience for the defendants of being represented by the New York lawyers already seised of the dispute. (7) The fact that, on the assumption that the New York court rejects the plaintiffs' application, there may be an unseemly race for judgment if no stay is granted, with the further undesirable risk of conflicting decisions. (8) The aspect of the English court's practice to award costs is not conclusive and should carry little if any weight.

In so far as the matters raised by Mr. Ruttle go to the question "with which forum does the action have most real and substantial connection?." it is appropriate to consider what issues of the law will arise, the nature and extent of the evidence which will be required and the respective places of business of the plaintiffs and defendants.

As to the issues of law it is plain to me, and Mr Ruttle has argued but lightly to the contrary, that the proper law of the reinsurance contracts under which the plaintiffs seek to recover in London and in respect of which the defendants seek their negative declaration in New York is English law. The defendant reinsurers are all (with one exception) resident in England; all the defendants do business in London; the leading underwriter is English; the contract was made in England on the Lloyd's and companies markets; the business was placed through English brokers; and the contractual clauses incorporated into the reinsurance contract, including the "follow the settlements" clause are English standard form clauses drafted for the Lloyd's market. While there is no express choice of English law, there is equally no express choice of any other law. Finally, while the contract contains a United States of America service of suit clause, giving the plaintiffs, as reassured, a right to require the matter to be determined in a United

States court of the reassured's choice, this amounts to an indication that, in the absence of an exercise by them of such choice, English law is the proper law: see Cantieri Navali Reuniti S.p.A. v. N.V. Omne Justitia [1985] 2 Lloyd's Rep. 428, 434. In these circumstances, while I have no doubt that the New York court is well equipped to determine reinsurance disputes, I equally have no doubt that this dispute is peculiarly appropriate to determination in London, leaving aside the question of convenience and expense to which I will shortly turn.

As to the detail of the issues arising in the action, the first issue will involve the question of the terms of the reinsurance contract, and in particular the extent to which the express terms of the original insurance are incorporated into it. This will be a question of English law. The second, and principle question which will arise will be whether under the "follow the settlements" clause (a) the claim fell within the risks covered by the policy of reinsurance as a matter of law, and (b) "in settling the claim the insurers had acted honestly and taken all proper and businesslike steps in making the settlement:" see Insurance Co. of Africa v. Scor (U.K.) Reinsurance Co. Ltd. [1985] 1 Lloyd's Rep. 312, 330. On aspect (a), by reason of the arguments raised by M. & M. it appears that issues arising under the primary policy, namely the number of occurrences and the question of whether there was an "increase in hazard by any means within the control and knowledge of the insured," will require resort for their interpretation to the law of Michigan (not the law of New York). there is evidence before me, as I would expect, that there is no substantial difference between the law of New York and Michigan on the key issues in this case. On the other hand the defendants have provided no evidence that it differs from English law either.

The issues of law under (b) will depend on English law. The question of whether the claim, as made, fell within the scope of the policy must be determined by reference to the evidence which either was, or should as a matter of prudence have been, available to the reassured by reference to the standard of honesty and proof recited in the Scor case. If the reassured took the view honestly and reasonably that the loss claimed fell within the scope of the coverage (whether as a matter of construction of the policy or as a question merely of quantum) he can recover from the reinsurer who is bound by that decision in the absence of a "claims control" or "co-operation" clause. The evidence considered by the reinsurers, and the question of whether sufficient evidence had been obtained and investigation made, will depend on matters investigated in the United States. Prima facie it would involve examination of the files of the plaintiffs and report received by them from assessors, which could be made available to the English court without the need for calling additional oral evidence. However, because of the issues to be raised in the action it seems that the evidence necessary, if it proceeds, will be more wide-ranging.

Moving to the question of the amount of that evidence, its availability, and the cost of obtaining it, the position is as follows. If I am right, or likely to be right, that the matter will principally, if not exclusively, depend upon the application of the principles in the Scor case, then the

evidence which will be necessary will be (i) the insurers' file and the adjustment documents; (ii) on the plaintiffs' side oral evidence from a representative of the plaintiffs' adjusters and/or the plaintiffs' representative responsible for the decision to settle and, possibly, a representative of the engineers employed by the plaintiffs' in their investigation of the claim; on the defendants' side, probably two experts to criticise the advice and/or conclusions of the plaintiffs' representatives in settling the claim; (iii) if it differs from English law, brief expert evidence from both sides as to Michigan law, and, possible and if it exists, (iv) further evidence which, according to the defendants, the plaintiffs should have obtained but by imprudent omission did not. However, this will be limited to evidence which the documents and evidence presented to the plaintiffs by the insurers or the experts employed by them suggested should have been obtained. At present, I have no indication (or indeed any firm reason to suppose) that such evidence exists and/or will assist the defendants. Rather, it appears that M. & M.'s criticisms and the case advanced by the defendants so far depends simply on an examination by M. & M. of the submission of the plaintiffs to the defendants, including the very full reports of their engineers and assessors, but not on any additional investigation of their own. I have no reason to suppose (and the affidavits of the defendants are devoid of any such suggestion) that the criticisms raised will not stand or fall on the material already obtained. Certainly, to judge from the reports of the plaintiffs' investigating engineers, a very searching examination of the original assured's claims and operating records was made.

The plaintiffs are able and content to advance evidence under (i), (ii) and (iii) in London. The evidence of the defendants under (ii) and (iii) will equally be amenable in London. If, as seems doubtful, direct evidence under (iv), as opposed to evidence of what was available to the plaintiffs assessors and engineers, proves necessary or relevant as to what in fact happened to the turbine, what the employees of the assured knew about it from time and why it was not examined or taken out of service earlier, it seems plain that the number of potential witnesses has been hugely overstated. Mr. Ruttle concedes that a far less number than 22 witnesses in all will be necessary. It seems to me that overall a maximum of about seven witnesses of those identified by the defendants may have been relevant evidence. I have not been shown that any issues arise as to which the underwriters, reinsurers or placing brokers referred to by the defendants have relevant evidence.

With regard to availability and procedure, apart from the relative expense of willing witnesses' attendance at trial, which will plainly be somewhat more expensive if they have to come to London, I am not satisfied that there is any advantage between New York and England. Save for the expert evidence, most if not all of the defendants' evidence should be amenable to adduction by way of statements under the Civil Evidence Act 1968. I am not persuaded of the power of subpoena of the New York courts relied on by the defendants in respect of witnesses outside New York. Of the seven witnesses to whom I have referred, three are employed as representatives of the plaintiffs who will be likely to be called by them in any event. Of the other four, the accountant

who checked the quantification of a large portion of the claim and the engineer who investigated the cause of damage on behalf of the plaintiffs will be willing witnesses in any event. It is said there are two representatives of the assured who may, if necessary, be compelled to give evidence on deposition by the New York court or be subject of a procedure by way of letter rogatory if the matter proceeds in England.

As regards costs, it has not been established that proceedings in New York will be less expensive overall. It is a jurisdiction where the costly procedure of witnesses depositions being taken as a matter of course before trial is followed. That is a far more expensive procedure than the relatively informal one of taking statements to be served under cover of a Civil Evidence Act notice and leads to duplication of costs in respect of those witnesses whose evidence is important enough to be called at trial.

To sum up, if I am right that in truth this matter will depend upon reports and documents already in existence and the state of the plaintiffs insurers' file for the purposes of the "follow the settlements clause," and that large numbers of additional statements and/or witnesses from among the employees of the assured will be neither necessary nor relevant, there seems to me no doubt that the more appropriate forum for this litigation is London. Even if I am wrong, and more widespread evidence is necessary, I am far from satisfied that proceedings in New York ultimately prove less expensive than proceedings in London, leaving aside for a moment the question of whether or not they would fall to be paid by the losing party. Nor do I regard this as a case where local expertise and lawyers' convenience have built up such a position in New York (cf. the position in London in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460) that they should be decisive of the forum.

Even if, contrary to the above indications, New York is to be regarded as the more appropriate forum, it seems to me that it may be said that the plaintiffs have some legitimate juridical advantage in proceeding in England, so far as the question of costs is concerned. It has been said that availability of a remedy in costs is an advantage which the court may take into account at least as a contributing, if not a determinative, factor: see Roneleigh Ltd. v. MII Exports Inc. [1989] 1 W.L.R. 619 per Nourse L.J., at p. 623H, and per Butler Sloss L.J., at p. 624G-H. It seems to me a substantial advantage in a case like this, where the sums involved are relatively small and the incidence of costs, in particular the power of the court to award costs against the unsuccessful party, can be a decisive factor in the parties' decision whether or not to proceed to trial. As to two other considerations raised by Mr. Hancock, while I am not satisfied that any judgment of the New York courts would be as readily enforceable against the defendants as a judgment given in the place of their residence and domicile, bearing in mind the nature of the defendants and their business the likelihood that a New York judgment would not be honoured seems to me small enough to be disregarded.

So also, in the light of Lord Diplock's observations in The Abidin Daver [1984] A.C. 398, 414C, I do not think the practical advantage to

the plaintiffs of controlling the action in London, as opposed to being counterclaimants in New York is a substantial juridical advantage to be taken into account in this context. Nonetheless the principle ground of my decision is my positive view that I consider London to be a more appropriate forum than New York for this dispute.

Accordingly, I dismiss the defendants' application.

Solicitors: Kennedys; Clyde & Co.

[Reported by MISS BARBARA SCULLY, Barrister-at-Law]