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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Airbus S.A.S. v Generali Italia S.P.A. & Ors  EWCA Civ 805 (14 May 2019)
Cite as:  Bus LR 2997,  4 All ER 745,  2 Lloyd's Rep 59,  WLR(D) 275,  EWCA Civ 805
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mrs Justice Moulder
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LEWISON
LORD JUSTICE MALES
| AIRBUS S.A.S.
|- and -
| (1) GENERALI ITALIA S.p.A.
(2) AXA CORPORATE SOLUTIONS ASSURANCE
(3) ALLIANZ GLOBAL CORPORATE & SPECIALITY SE REPRESENTATION FOR ITALY
Akhil Shah QC (instructed by DLA Piper UK LLP) for the Respondent
Hearing date : 16th April 2019
Crown Copyright ©
Lord Justice Males :
The background contracts
The Purchase Agreement
"Any dispute arising out of or in connection with this Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by a panel of three (3) arbitrators appointed and ruling in accordance with such rules.
Arbitration shall be conducted in the English language and shall take place in Geneva, Switzerland."
The Novation Agreement
The Purchase Agreement Assignment
The Sale and Leaseback Agreement
The Warranties Agreement
(1) Mainstream warranted that it was the legal and beneficial owner of the Warranties (clause 3.4.1);
(2) All parties agreed that, unless and until Airbus received a Notice (broadly) to the effect that the Lease or Sub-Lease was terminated, Alitalia would have the exclusive benefit of and would be entitled to exercise all rights in respect of the Warranties (clause 3.4.2);
(3) Alitalia agreed that the terms and conditions of clauses 12 and 13 of the Purchase Agreement (which were set out in full as a Schedule to the Warranties Agreement) would apply to any exercise of its rights in respect of the Warranties and that it would be subject to all obligations, restrictions, limitations and conditions of clauses 12 and 13 of the Purchase Agreement with respect to the exercising of such rights (clause 3.4.3);
(4) Upon service of a Notice, Alitalia's rights in respect of the Warranties would terminate (clause 4.1) and Airbus would grant to any one of the other parties (i.e. Jetstream, Mainstream or Credit Agricole, together referred to as "the Transaction Parties") as specified in the Notice the benefit of such of the warranties as remained available, referred to as the "Remaining Warranties" (clause 2).
(5) All parties agreed that in the event of a grant of the benefit of the warranties to one of the other parties following service of a Notice, nothing in the Warranties Agreement would modify in any way Alitalia's rights under the Purchase Agreement or subject it to any liability, obligations, costs, losses, expenses or damages to which it would not otherwise be subject (clause 8.4) and that the terms and conditions of the Purchase Agreement would apply to all claims made in respect of the Warranties (clause 8.5).
"Warranties means the warranty rights in respect of the Airframe given by the Manufacturer to Aircraft Purchase Fleet Limited pursuant to clauses 12 (Warranties and Service Life Policy) and 13 (Patent Indemnity) of the Purchase Agreement, as set out in Schedule 1, including all post-delivery rights in respect thereof as the same remain available at the Delivery Date".
"Subject to clause 3 (Notice to the Manufacturer and Warranty Confirmation) and clause 4 (Termination of Rights), the Manufacturer agrees to grant by way of the Warranty Confirmation to any one of the Transaction Parties (including, if applicable, the Nominee) as may be specified in any Notice duly served in accordance with clause 3 (Notice to the Manufacturer and Warranty Confirmation) a package of warranties equivalent to such of the Warranties which as at the date of the Notice shall remain available (the Remaining Warranties)."
"3.3 Subject to clause 8 below and upon receipt by the Manufacturer of any of (i) the Lessee's Notice in accordance with clause 3.1 (Lessee's Notice to Manufacturer) or (ii) the Enforcement Notice in accordance with clause 3.2 (Enforcement Notice to Manufacturer), the Manufacturer shall execute and deliver to the Transaction Parties (including the Nominee, if applicable) the Warranty Confirmation and grant the Remaining Warranties to the Transaction Party (including the Nominee, if applicable) specified in the Notice duly delivered in accordance with clauses 3.1 or 3.2."
"2 … Accordingly, the Manufacturer hereby confirms that, from the date hereof, the Remaining Warranties shall be made available to [the Lessor/the Security Trustee/Nominee/the Lessee] subject to the terms and conditions of the Airframe Warranties Agreement.
3. This Warranty Confirmation and any non contractual obligations associated with it shall be governed by and construed in accordance with the laws of England and Wales."
"3.4.1 The Lessee represents and warrants for the benefit of each of the other parties hereto that the Lessee is the legal and beneficial owner of all the rights, title, benefit and interest in and to the Warranties.
3.4.2 Each of the parties hereto hereby agrees in favour of the Sub-Lessee and the Manufacturer that, until receipt by the Manufacturer of a Notice in accordance with clauses 3.1 or 3.2, the Sub-Lessee shall have the exclusive benefit of and shall be entitled to exercise all rights in respect of the Warranties.
3.4.3 The Sub-Lessee agrees that the terms and conditions of clauses 12 and 13 of the Purchase Agreement shall apply to any exercise of the Sub-Lessee's rights in respect of the Warranties and shall be binding on the Sub-Lessee, and the Sub-Lessee shall be subject to all obligations, restrictions, limitations and conditions of clauses 12 and 13 of the Purchase Agreement with respect to the exercising of such rights (including without limitation, the waiver, release and renunciation in clause 12.5 of the Purchase Agreement) to the same extent as if it had originally been a party to the Purchase Agreement until such time as any Notice has been served."
"The parties hereby agree that the Manufacturer will provide the Warranty Confirmation subject to the following conditions:
8.4 nothing herein nor in the Warranty Confirmation shall modify in any way the rights of the Manufacturer under the Purchase Agreement or subject the Manufacturer to any liability, obligations, costs, losses, expenses or damages to which it would not otherwise be subject;
8.5 the Transaction Parties and the Sub-Lessee shall have no obligation or liability under the Purchase Agreement by reason of or arising out of this Agreement, provided that the terms and conditions of the Purchase Agreement shall apply to all claims made in respect of the Warranties and shall be binding upon the Transaction Parties and the Sub-Lessee and the Transaction Parties and the Sub-Lessee shall be subject to all obligations, restrictions, limitations and conditions of the Purchase Agreement with respect to the making of such claim (including, without limitation the Waiver, Release and Renunciation in clause 12 of the Purchase Agreement) to the same extent as if they had been named 'Buyer' thereunder; …"
"Law and Jurisdiction
13.1 This Agreement and any non contractual obligations connected with it shall be governed by and construed in accordance with the laws of England and Wales.
13.2 The parties hereto irrevocably agree that the courts of England shall have exclusive jurisdiction to settle any disputes arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement)."
Delivery of the Aircraft
The claim in the Italian proceedings
"According to art. 2043 of the Italian Civil Code, anyone who causes unjust damages is required to compensate it. In our case, the unjust damages for the insurers is the fact that they have had to pay compensation for an accident which their own insured person suffered, caused by Airbus grossly negligent omission.
The present case for sure results in a breach the right to credit, which is recognised as part of our legal system following the well-known Meroni case.
In other words, this case deals with damage that is unjust because it has an effect – that would never occur without the third-party's misconduct – on a contractual relationship, the 'financial statement' of which is therefore negatively affected to some extent.
Therefore, the insurers specify here that the claim is put forward on a non-contractual basis also on the grounds of a concurrent own right, which is not subject as such to the contractual relationships between their policyholder and Airbus." (Translation provided by Airbus's solicitors: although something may have been lost in translation, the gist is reasonably clear).
"… the intention of the parties (applying the objective test) was that Clause 13.2 should apply to all disputes arising out of or in connection with the Warranties Agreement including substantive claims under the warranties."
"On the evidence before me in my view Airbus has established that it has the better of the argument that the Italian proceedings are non contractual claims that are 'connected with' disputes under the Warranties Agreement namely a warranty claim arising under Schedule 1 and thus within Clause 13.2 of the Warranties Agreement."
The issues on appeal
(1) What is the true construction of the jurisdiction clause in the Warranties Agreement? In particular, does it extend to a substantive claim under the warranties?
(2) Is the commencement and pursuit of the Italian proceedings contrary to the terms of the jurisdiction clause?
(3) If so, can the English court make a declaration to that effect against the appellants in circumstances where as insurers they were not parties to and do not found their claim on the Warranties Agreement or the Purchase Agreement?
Good arguable case or final decision?
"As is clear from Brownlie, the test remains that of a 'good arguable case'. A majority of the Supreme Court deprecated any 'glossing' of that test but said, in terms, that Lord Sumption's 'explication' at  did not constitute any such impermissible gloss. Accordingly, a good arguable case remains something more than a prima facie case and something less than a case satisfying a balance of probabilities test. Where there is a dispute as to the applicability of a gateway, unless prevented by reason of some consideration relating to the interlocutory stage of the proceedings, the Court 'must take a view on the material available if it can reliably do so'. … I would be content to say that in asking himself who had the better of the argument on the material available, the Judge may be seen to give effect to the test as subsequently formulated in Brownlie; but it suffices to conclude, as I do, that if any distinction can be drawn between the Judge's approach and the Brownlie formulation, it is a distinction without any meaningful difference."
"… whatever the niceties of language involved, it is sufficiently clear that the ultimate test is one of good arguable case. For that purpose, however, a court may perfectly properly apply the yardstick of 'having the better of the argument' (the additional word 'much' can now safely be taken as consigned to the outer darkness). That, overall, confers, in my opinion, a desirable degree of flexibility in the evaluation of the court: desirable, just because the standard is, for the purposes of the evidential analysis in each case, between proof on the balance of probabilities (which is not the test) and the mere raising of an issue (which is not the test either)."
"A question of law can arise on an application in connection with service out of the jurisdiction, and, if the question of law goes to the existence of jurisdiction, the court will normally decide it, rather than treating it as a question of whether there is a good arguable case: E F Hutton & Co (London) v Mofarrij  1 WLR 488, 495; Chellaram v Chellaram (No 2)  3 All ER 17, para 136."
Issue (1) – the construction of the jurisdiction clause
The appellants' submissions
(1) The Warranties Agreement was part of an overall scheme and had to be construed in the context of the other agreements entered into at the same time. It was therefore necessary to consider the function of the Warranties Agreement within that scheme, which was to set out the circumstances in which various parties, including Alitalia, would have the benefit of the warranties contained in the Purchase Agreement which had been assigned to Mainstream by the Purchase Agreement Assignment.
(2) If Mainstream had sought to enforce the warranties pursuant to the Purchase Agreement Assignment, it would have had to do so by arbitration, notwithstanding the English jurisdiction clause in that agreement, as an "assignee is bound by an arbitration clause in the sense that he cannot assert the assigned right without also accepting the obligation to arbitrate" (The Jordan Nicolov  2 Lloyd's Rep 11 at 15). This is sometimes referred to as a "benefits and burdens" analysis.
(3) Close analysis of the terms of the Warranties Agreement demonstrated that the assigned rights to which Alitalia became entitled pursuant to clause 3.4.2 of the Warranties Agreement were the same rights as had been assigned to Mainstream, which rights were enforceable by way of arbitration. Thus:a) The definition of the Warranties in clause 1 showed that the rights in question were those given "pursuant to clauses 12 (Warranties and Service Life Policy) and 13 (Patent Indemnity) of the Purchase Agreement".b) The "Warranties" referred to in clause 3.4.1, which were the subject of a representation by Mainstream, could only be the same warranties under the Purchase Agreement as had been assigned to Mainstream by the Purchase Agreement Assignment and not some new warranties created by the Warranties Agreement itself.c) The "Warranties" referred to in clause 3.4.2 of which Alitalia was to have the benefit must therefore be the same warranties under the Purchase Agreement as the term "Warranties" cannot have referred to different warranties in two adjacent paragraphs of the same clause.d) The "obligations, restrictions, limitations and conditions of clauses 12 and 13 of the Purchase Agreement", to which clause 3.4.3 provided that Alitalia's exercise of its warranty right would be subject, included the obligation to arbitrate as the warranties in the Purchase Agreement could only be enforced by arbitration.e) This was reinforced by the concluding words of clause 3.4.3 ("to the same extent as if it had originally been a party to the Purchase Agreement"). If Alitalia had been a party to the Purchase Agreement, it would have been bound by the arbitration clause in that agreement.f) Clause 8.4 provided further confirmation. If enforcement of the warranties was now to be by litigation in England instead of arbitration in Geneva, that would constitute a modification of Airbus's rights under the Purchase Agreement contrary to clause 8.4.g) Further, clause 8.5 provided that "the terms and conditions of the Purchase Agreement shall apply to all claims made in respect of the Warranties", which terms and conditions included the arbitration clause.h) Litigation in England would potentially expose Airbus to "liability, obligations, costs, losses, expenses or damages to which it would not otherwise be subject" in view of procedural differences between litigation in England and ICC arbitration in Geneva, which would be contrary to the terms of clause 8.4.i) Clause 8.5 provided that the terms and conditions of the Purchase Agreement would apply to all claims made in respect of the Warranties and were binding upon both the Transaction Parties and Alitalia as the Sub-Lessee without expressly limiting those terms and conditions to those set out in clauses 12 and 13. Those terms and conditions therefore included the arbitration clause.j) Although clause 8 is introduced by words which suggest that it applies only when a Warranty Confirmation has been given, and therefore when Alitalia no longer has an interest in enforcing the warranties, the repeated references to Alitalia ("the Sub-Lessee") in clause 8.5 show that this cannot be the case.k) Although clauses 12 and 13 of the Purchase Agreement are set out at Schedule 1 to the Warranties Agreement, that cannot be because the Warranties Agreement was intended to be a self-contained and comprehensive code as reference to the Purchase Agreement would still be necessary in order to understand such matters as (for example) the terms of the specification or what components are excluded from the warranties.
(4) There is in principle no objection to a scheme of dispute resolution whereby different clauses in different agreements may involve a degree of fragmentation, as explained in Sebastian Holdings Inc v Deutsche Bank AG  EWCA Civ 998,  1 Lloyd's Rep 106. There were good reasons for such fragmentation in this case. For example, a dispute about which party was entitled to the benefit of the warranties was suitable for determination by a judge in court, but it may be advantageous in a technical claim under the warranties to nominate an arbitrator with technical expertise, as well as being potentially in Airbus's interest for such a claim to be determined in proceedings which would be confidential.
(5) Accordingly substantive disputes about liability in connection with clauses 12 and 13 of the Purchase Agreement are subject to the arbitration clause in that agreement. The jurisdiction clause in the Warranties Agreement covers only disputes about the subject matter of the Warranties Agreement, namely which party has the benefit of the warranties at any particular time, together with related issues such as the validity of the Warranties Agreement itself. Since Airbus's claim for a declaration of non-liability concerns the effect of clause 12 of the Purchase Agreement, that claim falls outside the jurisdiction clause in the Warranties Agreement and the English court therefore has no jurisdiction over it.
(1) The Warranties Agreement created an independent agreement between Airbus and the other parties including Alitalia which granted equivalent warranties to those previously granted under the Purchase Agreement. It was the only agreement between all those parties. Alitalia obtained the benefit of the warranties under this agreement and not merely by way of assignment. Accordingly the Warranties Agreement superseded the warranties previously granted and rendered all claims relating to them subject to the English jurisdiction agreement at clause 13.2.
(2) Clause 13.2 is in all-encompassing terms and applies to non-contractual as well as contractual obligations arising out of or connected with the Warranties Agreement.
(3) There is no good reason why the parties would have wanted some disputes arising out of their relationship to be subject to English jurisdiction, but not others. In particular, there would only be a dispute about which party was entitled to the benefit of the warranties if a warranty claim was going to be made by somebody. On the appellants' construction that would necessitate litigation in England to decide who should bring the claim, followed by an arbitration in Geneva on the substantive claim. That would be highly inconvenient.
(4) Unlike Sebastian Holdings, this is not a case of several agreements with varying dispute resolution clauses between the same parties, but a case where there is only one relevant agreement relating to the warranties between all the parties concerned with them.
(5) Contrary to the appellants' submission, analysis of the text of the Warranties Agreement supports Airbus's position. Thus:a) While the definition of the Warranties in clause 1 described them as being given pursuant to clauses 12 and 13 of the Purchase Agreement, it was of equal or greater significance that they were "as set out in Schedule1".b) Clause 2 referred to a "grant" of "a package of warranties equivalent to" the Remaining Warranties, which suggested a grant of something new, even if the content was the same as the content of the warranties in the Purchase Agreement.c) Clause 3.4.2 was a new agreement between all concerned parties in which Alitalia was given a direct right to the exclusive benefit of the warranties, not a right derived from an assignment or transfer of the Purchase Agreement.d) The opening words of clause 3.4.3 provided that "the terms and conditions of clauses 12 and 13 of the Purchase Agreement" would apply to any exercise of its warranty rights, not that the arbitration clause or even the terms of the Purchase Agreement generally should apply.e) The "obligations, restrictions, limitations and conditions", to which clause 3.4.3 provided that Alitalia's exercise of its warranty right would be subject, were likewise expressly limited to those of clauses 12 and 13 of the Purchase Agreement.f) Clause 8.4 was concerned to ensure that Airbus's substantive rights under the Purchase Agreement should not be modified, but was not concerned with the procedural question whether a warranty claim should be enforced by arbitration or litigation.g) Similarly clause 8.5 was concerned with the substantive obligations of the Purchase Agreement. Although the language did not include an express reference to the terms and conditions in clauses 12 and 13 in the way that clause 3.4.3 did, it was saying the same thing in different language. In particular, the words "all obligations … with respect to the making of such claim" amounted to a reference to clause 12 of the Purchase Agreement as it was there that the obligations, restrictions, limitations and conditions applicable to a warranties claim are to be found.h) In any event the opening words of clause 8 ("the Manufacturer will provide the Warranty Confirmation subject to the following conditions") show that it has no application for so long as it is Alitalia which has the benefit of the warranties.i) The fact that clauses 12 and 13 of the Purchase Agreement are set out at Schedule 1 to the Warranties Agreement shows that the Agreement was intended to be a self-contained and comprehensive code so far as the warranties are concerned. The fact that some cross reference to the Purchase Agreement would still be necessary does not detract from this.
(6) Accordingly the English court has jurisdiction over the claim for a declaration of non-liability.
Principles of construction
"39. It is clear that in construing a jurisdiction clause, a broad and purposive construction must be followed: Donohue v Armco Inc  1 Lloyd's Rep 425; Fiona Trust & Holding Corporation v Privalov  2 Lloyd's Rep 267 affirmed in sub nom Premium Nafta Products v Fili Shipping  1 Lloyd's Rep 254 where Lord Hoffmann observed at para 7:
'If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.'
40. The Supreme Court emphasised in Re Sigma Finance Corporation  UKSC 2 the need, when looking at a complex series of agreements, to construe an agreement which was part of a series of agreements by taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme.
41. It is generally to be assumed on these principles that just as parties to a single agreement do not intend as rational businessmen that disputes under the same agreement be determined by different tribunals, parties to an arrangement between them set out in multiple related agreements do not generally intend a dispute to be litigated in two different tribunals.
42. However, where there are multiple related agreements, the task of the court in determining whether a dispute falls within the jurisdiction clauses of one or more related agreements, depends upon the intention of the parties as revealed by the agreements against these general principles: see Collins LJ in Satyam Computer Services Ltd v Upaid Systems Ltd  EWCA Civ 487 at para 93 and UBS at para 83.
43. The considerations have been examined in particular by Rix J in Credit Suisse v MLC [Credit Suisse First Boston (Europe) Ltd v MLC Bermuda Ltd  1 Lloyd's Rep 767] and by Lord Collins in UBS [UBS AG v HSH NordBank AG  EWCA Civ 585,  2 Lloyd's Rep 272]. It is necessary to refer to these in a little more detail. In the first of these cases, Credit Suisse, … Rix J referred to the dispute being, on the one hand, one single narrative arising out of the purchase, but on the other,
'where different agreements are entered into for different aspects of an overall relationship, and those different agreements contain different terms as to jurisdiction, it would seem to be applying too broad and indiscriminate a brush simply to ignore the parties' careful selection of palette' (page 777)".
"49. The decisions in Credit Suisse and UBS are both examples of the process of construction that has to be undertaken, using the well-recognised general principles and tools of contractual construction in the context of the principles relating to different jurisdiction clauses in related agreements. The overall task of the court is summarised in the 2010 supplement to Dicey, Morris and Collins at para 12-094:
'But the decision in Fiona Trust has limited application to the questions which arise where parties are bound by several contracts which contain jurisdiction agreements for different countries. There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes under contract B; the question is entirely one of construction. ... The same approach to the construction of potentially overlapping agreements on jurisdiction (but there will, in this respect, be no difference between the construction of agreements on jurisdiction, arbitration agreements and service of suit clauses) was taken in [UBS] … In the final analysis, the question simply requires the careful and commercially-minded construction of the various agreements providing for the resolution of disputes, the point of departure being that agreements which appear to have been deliberately and professionally drafted are to be given effect so far as it is possible and commercially rational to do so, even where this may result in a degree of fragmentation in the resolution of disputes. It may be necessary to enquire under which of a number of inter-related contractual agreements a dispute actually arises; this may be answered by seeking to locate its centre of gravity. …'."
"In the light of the guidance provided by these authorities, so far as relevant to the present case I would summarise the approach to be as follows:
(1) Where the parties' overall contractual arrangements contain two competing jurisdiction clauses, the starting point is that a jurisdiction clause in one contract was probably not intended to capture disputes more naturally seen as arising under a related contract: Trust Risk Group at ; Dicey, Morris & Collins at § 12-110.
(2) A broad, purposive and commercially-minded approach is to be followed - Trust Risk Group at ; Sebastian Holdings at  and .
(3) Where the jurisdiction clauses are part of a series of agreements they should be interpreted in the light of the transaction as a whole, taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme: see UBS v Nordbank  at ; Trust Risk Group at ; Sebastian Holdings at .
(4) It is recognised that sensible business people are unlikely to intend that similar claims should be the subject of inconsistent jurisdiction clauses: UBS v Nordbank at , ; Sebastian Holdings at ; Savona at .
(5) The starting presumption will therefore be that competing jurisdiction clauses are to be interpreted on the basis that each deals exclusively with its own subject matter and they are not overlapping, provided the language and surrounding circumstances so allow: Monde Petroleum at -; Savona at .
(6) The language and surrounding circumstances may, however, make it clear that a dispute falls within the ambit of both clauses. In that event the result may be that either clause can apply rather than one clause to the exclusion of the other – Savona at  and ."
"In principle an arbitration clause may be incorporated by a reference to a standard form of contract or the particular terms of another contract in which the clause is set out, even without express reference to the clause. But it must be clear that the parties intended the arbitration clause to apply."
"In English law there is at present some conflicting authority on the question as to what is required for the effective incorporation of an arbitration clause by reference."
Issue 2 – the Italian proceedings
"… the question as to whether a claim falls within the jurisdiction clause is an issue that has to be determined at the time the proceedings are issued."
The appellants' submissions
Issue (3) – a declaration against the insurers
The appellants' submissions
"However, where the action brought by the assignee in another jurisdiction which does not recognise the equitable right of the debtor, the debtor's only remedy is (just as it was in the first half of the last century) to apply for an injunction restraining the assignee from refusing to recognise the equity of the debtor. The present case is such a case. The insurance company is failing to recognise the equitable rights of the time charterers. The equitable remedy for such an infringement is the grant of an injunction." (Emphasis added).
"70. Accordingly, I conclude that, if, as I have held, the ambit of the subject-matter of the transfer by subrogation is to be determined by English law, the insurers were bound to pursue subrogated claims against the owners by arbitration. Their insistence on proceeding in the Italian courts would be inconsistent with the equitable rights of the owners under the arbitration agreement to have a claim against them in tort referred to arbitration. In principle, therefore, the anti-suit injunction would be an appropriate remedy unless strong cause were shown to the contrary.
71. If the ambit of the subject-matter transferred by subrogation is determined by Italian law to be the right to sue in court proceedings subject to the owners' option to insist on the claim being referred to arbitration, the result would be the same. The owners have asserted that they require arbitration and the insurers have refused to accede to that requirement. They have thereby acted and they continue to act inconsistently with the owners' equitable rights and, although that conduct may not amount to an actionable breach of the agreement to arbitrate, it gives rise to a right of protection by way of injunctive relief under English law which governs the agreement to arbitrate."
"Colman J gave a judgment on 21 March 2005. He decided that both in English and Italian law the right to the delictual claim which had been transferred to the insurers by subrogation was subject to the arbitration clause in the charterparty. He therefore made the declarations claimed by Tankers."
(1) Insurers exercising rights of subrogation to make a non-contractual claim are bound by an English arbitration or jurisdiction clause to the same extent as their insured would have been.
(2) Whereas the commencement and pursuit of proceedings contrary to the terms of an arbitration or jurisdiction clause by the insured would constitute a breach of contract, the commencement and pursuit of such proceedings by insurers constitutes a breach, not of the contract but of an equivalent equitable obligation which the English court will protect.
(3) The remedies available in such a case include the grant of a declaration in an appropriate case.
Lord Justice Lewison :
Lord Justice Davis :