“16 The issue in the present case is whether New India is bound by the arbitration clause which in turn depends on whether it is seeking to enforce a contractual obligation derived from the contract of insurance or an independent right of recovery arising under the Insurance Contracts Act. If in substance the claim is independent of the contract of insurance and arises under the Finnish legislation simply as a result of its having a right of action against an insolvent insured, the issue would have to be characterised as one of statutory entitlement to which there may be no direct equivalent in English law. In that case the issue would in my view have to be determined in accordance with Finnish law. If, on the other hand, the claim is in substance one to enforce against the insurer the contract made by the insolvent insured, the issue is to be characterised as one of obligation. In that case the court will resolve it by applying English law because the proper law of the contract creating the obligation is English law: see Adams v National Bank of Greece.”
“Article 109 1. Perpetration of an act defined as a felony or misdemeanour by Law shall entail, pursuant to the provisions contained in the laws, repairing the damages and losses caused thereby. 2. In all cases, the party damaged may opt to sue for civil liability before the Civil Jurisdiction. …. Article 116 1. All persons held criminally accountable for a felony or misdemeanour shall also be held liable under Civil Law if the fact gives rise to damages or losses. If two or more persons are responsible for a felony or misdemeanour, the Judges or Courts of Law shall set the proportion for which each one must be held accountable….. Article 117 Insurers that have underwritten the risk of monetary liabilities arising from use or exploitation of any asset, company, industry or activity when as a consequence of a fact foreseen in this code, an event takes place covered by the risk insured, shall have direct civil liability up to the limit of the legally established or contractually agreed compensation, without prejudice to the right to bring an action for recovery against who such may be appropriate. …. Article 120 The following persons shall be held civilly liable, failing those held criminally accountable: 4. Natural or legal persons dedicated to any kind of industry or commerce, for felonies or misdemeanours their employees or assistants, representatives or managers may have committed in the carrying out of their obligations or services…”
“I. Civil liability insurance which is regulated by Insurance Contract Law (LA LEY 1957/1980) within the area of insurance against damage in articles 73 to 76 can be defined as the insurance by which the insurer is obligated to cover the risk of having an encumbrance placed on the assets of the insured party due to the creation of an obligation to indemnify derived from its civil liability. This civil liability could arise from the non-malicious, malicious, or negligent (civil or criminal behaviour of the insured party (or the people for whom it is civilly liable). …the direct action of a wronged third party against the insurer, for it to indemnify the damage caused, within the coverage of an insurance policy, was consistently recognized by case law… The exercise of this action even became allowed to be admitted by the wronged party against the insurer in criminal procedures in which an act is being tried that has the nature of a criminal infraction which the insured party causes and from which civil liability is derived that is covered by the insurance policy…At a legislative level the cited direct action of the wronged third party against the insurer was … generally established in Article 76 of Law 50/1980 dated October 8 (LA LEY 482 regarding insurance policies (B.O.E number 250 dated October 17 1980; “The wronged third party or its inheritors will be able to take direct action against the insurer to demand that they comply with the obligation to indemnify”). It should be emphasised that this direct action of the wronged third party against the insurer can be exercised both within civil and criminal jurisdictions (if the accident covered by the insurance has a criminal nature and the insured party is criminally liable). II. In principle, for the direct action of the wronged third party against the insurer to be successful, it is essential that if it was exercised by the insured party against the insurer, that it was also successful. However this general rule has two clear exceptions in Article 76 of the Insurance Contract Law (LA LEY 1957/1980), in which, despite the fact that the insurer is not obligated to indemnify the insured party for the accident that occurred, nevertheless, it is obligated to indemnify a wronged third party when the direct action is exercised by them. Of course, in these two cases, the insurer is granted the right to a recovery action against the insured party in order to recover the amount of money with which the wronged third party was indemnified. The first of these two exceptions is when the damage caused to the wronged third party is due to the malicious behaviour of the insured party…. The second of these two exceptions is when the insurer is obligated to pay the indemnity to the wronged third party because it is prevented from bringing up to challenge them, in their exercise of this direct action, any exception that it would have otherwise been able to bring up to challenge the insured party… So, when faced with a wronged third party who exercises such direct action, the insurer can oppose all the “defences” that it deems convenient, and specifically, those referring to the lack of facts constituting the third party’s right (which should be operative even when they have not been alleged by the insurer, if the Judge believes that these facts constituting the right of the claimant have not been proven, then the action that is being exercised would not have been brought about, and would be inexistent). These “defences” or exceptions in a broad sense are the following: a) Inexistence of a civil liability insurance policy between the insurer and the insured party or the extinguishing of this contractual legal relationship. b) The absence of the right of the wronged third party to compensation, due to the absence of one or more of the requirements necessary for the civil liability of the insured party to be relevant with respect to the wronged third party. c) The right of the third party is outside the coverage of the insurance policy: the objective limits to the insurance policy’s coverage will determine the substantial contents of the insurer’s obligation, such that the right of the wronged third party will have been produced with respect to the insured party, but this is exclusively covered by the insurer against the creation of the obligation to indemnify for acts established in the policy the results of which are civilly liable; This is deduced from the formation of Article 76 of Law 50/1980, dated October 8, regarding Insurance Contracts (LA LEY 1957/1980) which follows precisely from the precept that said that the wronged party will have the ability to take “direct action against the insurer in order to demand from it compliance with the obligation to indemnify, within the limits established by applicable regulations, in the case of obligatory insurance, or due to the contract, in the case of voluntary insurance” (article 108 of the Draft Bill of 1969), a paragraph that was eliminated in the subsequent Draft Bill (Article 76 of the Draft Bill of 1970) because its contents were considered obvious, and therefore its declaration unnecessary. It is also deduced from the need for it to be related to the first sentence of Article 76, which grants the wronged third party or its inheritors the action to demand from the insurer compliance with its obligation to indemnify, with Article 1, which reduces the obligation to indemnify on the part of the insurer up to the “limits agreed upon”, and which Article 73, which also adheres to this obligation, on the part of the insurer, to indemnify up to the “limits established in the Law and in the policy”
“The law states a general rule. The contents of the direct action of the third party are moulded by the contract. You must go to the contract and examine if the contract cover or not this kind of claim -- damage. But the law makes an exception. You are trying to deduct the nature of the third party victim from the exception, not for the general principle. …. You cannot deduct -- you didn't find the nature of the direct action pointing only to the exception….The principal rule is that the third party is in the same position than the assured. This is the general rule. You must consider that in order to deduct which is the exact nature of the direct action. The third party is put, by article 76 and article 117, in the same position of the assured. If the assured, according to the contract, have not right against the insurer, the third party has not. …”
“…despite the fact that the civil liability insurance contract is a contract of special nature, in favour of a third party, which creates a situation of joint and several liability between the insured and the insurer, to the victim who is then able to bring direct action against the insurance company, it is evident that the entire relation brought about by this situation and this capacity, is both based and limited on and by the same contract, and while the content of which, on the one hand, serves as the basis of the rights of the insured and the third party with respect to the insurer, this also allows this latter to enforce between the two former the restrictions which, in the present case clearly apply …”: Judgment 26.10.1984 Supreme Court 1st Division “account must be taken - with regard to the latter [sc voluntary insurance] and even with full knowledge of the applicability of the method of the injured party’s direct action against the insurer – of the fact that this direct action is based on and limited by the very contract from which this action arises because the content thereof, although it is the source of the right of the insured and of the victim against the insurer, on the other hand allows the latter to assert this restrictive content against both of them and so, since the contract is the law between the contracting parties, … it is clear that the correct interpretation is that the victim cannot be placed in a better position than the contracting party – the insured – to whose legal position he is subrogated, so that he would obtain greater benefits than him…”: Judgment 4.5.1989 Supreme Court 1st Division “it is also true that the doctrine of this Division has established that the direct action derived from Article 76 of the Law of8 October 1980 is based on and limited by the very contract from which this action arises because the content thereof, although it is the source of the right of the insured and of the victim against the insurer, on the other hand, allows the latter to assert this restrictive content against both of them…”
“(1) Nothing in this Part shall be construed as excluding the operation of any rule of law consistent with the provisions of this Part, in particular, any rule of law as to – (a) matters which are not capable of settlement by arbitration …”
“English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not. The general principle is, we submit, that any dispute or claim concerning legal rights which can be the subject of an enforceable award, is capable of being settled by arbitration. This principle must be understood, however, subject to certain reservations. First, certain types of dispute are resolved by methods which are not properly called arbitration. These are discussed in Chapter 2, ante. Second, the types of remedies which the arbitrator can award are limited by considerations of public policy and by the fact that he is appointed by the parties and not by the state. For example, he cannot impose a fine or a term of imprisonment, commit a person for contempt or issue a writ of subpoena; nor can he make an award which is binding on third parties or affects the public at large, such as a judgment in rem against a ship, an assessment of the rateable value of land, a divorce decree, a winding up order or a decision that an agreement is exempt from the competition rules of the EEC under article 85(3) of the Treaty of Rome . It would be wrong, however, to draw from this any general rule that criminal, admiralty, family or company matters cannot be referred to arbitration: indeed, examples of each of these types of dispute being referred to arbitration are to be found in the reported cases.”
“Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration.” 127. The Defendants submitted that even if they were bound by the arbitration clause by reason of the Through Transport analysis they were not party to any agreement to arbitrate, as the Court of Appeal decision makes clear. Even if they were, that was not sufficient for the purposes of s.9(1) which requires some written manifestation of express consent on the part of the State. Tacit consent does not suffice. 128. The Court of Appeal in Through Transport held that New India was bound by the arbitration clause (and granted a declaration to that effect). However, it also held that in commencing proceedings in Finland New India was not in breach of contract and could not have been sued in damages for so doing, and it set aside both the declaration that there had been a breach of contract and the anti-suit injunction which had been granted. The relevant passages from Clarke LJ’s judgment are as follows: “52 Some of the argument in this appeal proceeded on the footing that the question is whether New India became a party to the agreement to arbitrate contained in clause D2 of the General Provisions in the Club Rules. However, we do not think that that is quite the right question and, as we read his judgment, the judge did not go so far. We accept Mr Smith's submission that New India did not become a party to an arbitration agreement. We agree that self-evidently New India was not an original party and there is no basis upon which it could be held that there was any novation or transfer to New India of the rights and obligations of the insured under the Club Rules. This is in our view important on the question whether it was appropriate to grant an anti-suit injunction discussed below. ….. 64 It seems to us to follow from the conclusions which we have reached so far that the Club is entitled to the first of those declarations. For the reasons given above under the heading ‘the arbitration clause’, an application of English conflict of laws principles leads to the conclusion that, if New India wishes to pursue a claim under the section 67 of the Finnish Act, it must do so in arbitration in London because the Club is entitled to rely upon the arbitration clause in the Club Rules, which are the very rules which New India relies upon in order to make a claim under the Act: see, in the context of theThird Parties (Rights Against Insurers) Act 1930 , The Padre Island (No. 1). 65 It is less clear that the Club is entitled to the second declaration. In our view the Club is not entitled to such a declaration if it means, on its true construction, that New India was in breach of contract in commencing the Kotka proceedings. As indicated in para 52 above, we do not think that New India was in breach of contract. So, for example, the Club could not in our view sue New India for damages for commencing the proceedings in Finland. It seems to us that the declaration could be so construed and for that reason we think it right to set aside that declaration…. 129. The Defendants also relied on Waller LJ’s summary of the Through Transport decision in The “Wadi Sudr”[2010] 1 Lloyd’s Rep 193 at [50]: “50 What the Finnish court had decided was that the Finnish statute provided the basis for the claim in Finland and thus the arbitration clause had no application. So far as the English court was concerned, the issue was whether that was a correct characterisation of New India's claim. The Court of Appeal (in agreement with Moore-Bick J (as he then was)) confirmed that, under English conflict of laws, issues of characterisation are to be resolved by applying principles of English law (see paragraph 55) and that Moore-Bick J had been correct in his characterisation and in holding New India bound by the arbitration clause but only in the sense of the club being entitled to raise the same as a defence. The court found that New India was not a party to the contract containing the arbitration clause and was thus not in breach of contract in commencing proceedings in Finland (see paragraph 65). It thus held that since New India were pursuing a claim which, under Finnish statute, it was entitled to do, it was not a case where an injunction should be granted (see paragraph 96).” 130. The most detailed consideration of the nature of the right/obligation arising under the Through Transport analysis is to be found in Moore-Bick J’s judgment in Through Transport No 2[2005] 2 Lloyd’s Rep 378 . Following the Court of Appeal decision the P&I Club involved in that case applied to the Court for an appointment of an arbitrator pursuant tos.18 of the Act . New India argued that the Court had no jurisdiction to do so as the Court of Appeal had held that it was not party to an agreement to arbitrate. Moore-Bick J rejected New India’s argument and granted the application. 131. Moore-Bick J considered paragraph 52 of the Court of Appeal’s judgment and explained it as follows: “15 In my view the debate in the present case has suffered to some extent from a misunderstanding of the significance of what the Court of Appeal said in paragraph 52 of its judgment. As I read it, all that the court was seeking to do in that paragraph was to dispose of the suggestion that New India had become a party to a contract with the Club as a result of the transfer to it of the rights and obligations of the insured under the Club's Rules. The court clearly thought that it had not, but it is equally clear that it did not think that that was the right question. Having disposed of that point, it went on to consider the nature of the claim being made by New India and whether it was one that had to be pursued in arbitration. It is quite clear from paragraph 60 of the judgment and from the declaration contained in the order drawn up to give effect to its decision that the court considered that New India was bound to pursue its claim in arbitration in England and was not entitled to act in disregard of the arbitration clause. 16 Similarly, the fact that the Court of Appeal reached the conclusion that it was inappropriate in this case to grant an anti-suit injunction against New India provides only limited support for the conclusion that there is nothing that can be regarded as amounting to an arbitration agreement between the Club and New India for any purposes. When discussing the nature of the relationship between New India and the Club the court pointed out that New India was not acting in breach of contract in commencing proceedings in Finland, despite the fact that it was under an obligation to pursue its claim in arbitration, but that does not of itself make it inappropriate to grant relief of this kind…” 132. Moore-Bick J then considered the analysis of the Court of Appeal in The “Jay Bola”[1997] 2 Lloyd’s Rep 279 as to why and how an assignee of a contract is bound by an arbitration clause contained therein, as set out in particular in the judgment of Hobhouse LJ. Moore-Bick J concluded that the case was authority for the following: “22….In my view the decision in this case is authority for the proposition that a person who obtains by an assignment or transfer of some other kind the right to pursue a claim under a contract can only enforce that right in accordance with the terms of the contract and subject to any restrictions or limitations which those terms may impose. In other words, what he obtains is a chose in action whose precise scope is determined by the contract under which it arises and which is inherently subject to certain incidents, in this case a requirement that it be enforced by arbitration.” 133. Moore-Bick J then addressed the application of that principle to the Through Transport case and stated as follows: “24 Although this distinction can be drawn between the position of New India in this case and the position of the insurer in The Jay Bola , it is not in my view one that is ultimately of any substance. In the present case the Court of Appeal has held, applying English rules of characterisation, that section 67 of the Finnish Insurance Contracts Act gives a person in the position of New India the right to enforce the obligations of the Club under the contract of insurance. Whether one describes New India as a statutory transferee or simply as the beneficiary of a statutory provision, therefore, the right it enjoys is a right to enforce a chose in action which is itself subject to certain inherent limitations. One of those is the pay to be paid clause; another is the obligation to enforce any claim by arbitration in London. In Finland those limitations may be disregarded if mandatory provisions of the relevant legislation so require, but in English law, as the Court of Appeal has held, that legislation is not recognised as capable of affecting the parties’ rights and obligations. 25 For these reasons I am satisfied that, however one describes its position, New India is seeking to enforce a chose in action which is subject to certain inherent limitations, including the obligation to enforce it by arbitration in London.Section 82(2) of the Arbitration Act 1996 provides that references in Part I of the Act to a party to an arbitration agreement include any person claiming under or through a party to the agreement. An assignee seeking to enforce the contract clearly falls within that provision because he claims under or through the assignor, as the Court of Appeal recognised in The Jay Bola . Accordingly, if New India were to commence arbitration against the Club, I have no doubt that it could apply to the court for relief under section 18…” 134. Moore-Bick J went on to consider whether it made any difference that it was the P&I Club who was making the s.18 application and that New India did not wish to arbitrate and concluded that it did not. In this connection he referred to and relied upons.82(2) of the Act which provides that: “(2) References in this Part to a party to an arbitration agreement include any person claiming under or through a party to the agreement” 135. Moore-Bick J concluded as follows: “28 For the reasons given earlier I accept that New India's position is not quite the same as that of a simple assignee and I also accept that it has a right to choose whether to seek to enforce the rights of the insured against the Club. However, as soon as a third party in the position of New India makes a demand on the insurer there is the potential for a dispute to arise, as indeed happened in this case, and once a dispute has arisen in relation to the third party's right to recover from the insurer it is one which must be determined by arbitration in accordance with the contract. Clearly the third party can invoke the contractual arbitration machinery and as soon as he does so he becomes a person who claims under or through a party to the agreement within the meaning ofsection 82(2) of the Arbitration Act . However, I am unable to accept that once a dispute has arisen the insurer is powerless to act until the claimant chooses to take a formal step of that kind. The arbitration clause in the present case contemplates that either party may refer disputes to arbitration and that necessarily allows for the possibility that the Club itself may commence proceedings. In my view it was not necessary for New India to commence proceedings in order to bring itself within the scope of section 82(2) ; it became a person claiming under or through a party to the arbitration agreement within the meaning of that subsection as soon as it sought an indemnity from the Club in the right of Borneo Maritime Oy. Having rejected the claim, the Club was entitled to refer the resulting dispute to arbitration and to invokesection 18 of the Act against New India as a party to the arbitration agreement contained in the Club's Rules.” 136. I accept and adopt Moore-Bick J’s helpful analysis of the legal position arising under the Through Transport analysis. When the third party makes a claim under an insurance policy containing an arbitration clause he becomes a person claiming under or through a party to the arbitration agreement and thereby a party to the arbitration agreement for the purposes of the Act. When that claim is disputed he becomes bound to refer the dispute to arbitration in accordance with that arbitration agreement. He is not an original party to the arbitration agreement, nor does he become a party to that agreement by reason of a novation or other legal transfer of the rights and obligations of the agreement. He is not therefore a party to the agreement “in the full sense”
“(1) A State is not immune as respects proceedings relating to— … (b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom.”
“(1) A State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom. … (3) A State is deemed to have submitted— (a) if it has instituted the proceedings; or (b) subject to subsections (4) and (5) below, if it has intervened or taken any step in the proceedings. (4) Subsection (3)(b) above does not apply to intervention or any step taken for the purpose only of— (a) claiming immunity; or (b) asserting an interest in property in circumstances such that the State would have been entitled to immunity if the proceedings had been brought against it.”
“11.1 (1) A defendant who wishes to – (a) dispute the court’s jurisdiction to try the claim; or (b) argue that the court should not exercise its jurisdiction may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have. (2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10. (3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court’s jurisdiction. (4)An application under this rule must – (a) be made within 14 days after filing an acknowledgment of service; and (b) be supported by evidence. (5) If the defendant – (a) files an acknowledgment of service; and (b) does not make such an application within the period specified in paragraph (4), he is to be treated as having accepted that the court has jurisdiction to try the claim.” may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have. (2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10. (3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court’s jurisdiction. (4)An application under this rule must – (a) be made within 14 days after filing an acknowledgment of service; and (b) does not make such an application within the period specified in paragraph (4), he is to be treated as having accepted that the court has jurisdiction to try the claim.”
“(1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect. (2) Where leave is so given, judgment may be entered in terms of the award. (3) Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the tribunal lacked substantive jurisdiction to make the award. The right to raise such an objection may have been lost (see section 73). (4) Nothing in this section affects the recognition or enforcement of an award under any other enactment or rule of law, in particular underPart II of the Arbitration Act 1950 (enforcement of awards under the Geneva convention) or the provisions of Part III of this Act relating to the recognition and enforcement of awards under the New York Convention or by an action on the award.”
“37. … I cannot see why in an appropriate case the court may not give leave for an arbitral award to be enforced in the same manner as might be achieved by an action on the award and so give leave for judgment to be entered in the terms of the award. 38. I use the words “in an appropriate case” because the language of the section is permissive. It does not involve an administrative rubber stamping exercise. The court has to make a judicial determination whether it is appropriate to enter a judgment in the terms of the award. There might be some serious question raised as to the validity of the award or for some other reason the court might not be persuaded that the interests of justice favoured the order being made, for example because it thought it unnecessary…”
“28. The purpose of s66(1) and (2) is to provide a means by which the victorious party in an arbitration can obtain the material benefit of the award in his favour other than by suing on it. Where the award is in the nature of a declaration and there is no appreciable risk of the losing party obtaining an inconsistent judgment in a member state which he might try to enforce within the jurisdiction, leave will not generally stand to be granted because the victorious party will not thereby obtain any benefit which he does not already have by virtue of the award per se. In short, in such a case, the grant of leave will not facilitate the realisation of the benefit of the award. Where, however, as here, the victorious party’s objective in obtaining an order under s66(1) and (2) is to establish the primacy of a declaratory award over an inconsistent judgment, the court will have jurisdiction to make a s66 order because to do so will be to make a positive contribution to the securing of the material benefit of the award. …. 30 On an application under s. 66 or to set aside a s. 66 order, it is enough, in my view, in a case such as this, for the party seeking to enforce the award to show that he has a real prospect of establishing the primacy of the award over an inconsistent judgment. It is not necessary, nor is it appropriate, for the court finally to decide this hypothetical question–hypothetical because the unsuccessful party to the arbitration will not have obtained an inconsistent judgment in a member state at the time the court is dealing with the s. 66 application.”
“(b) Mr Happé’s submissions on this issue are inconsistent with the obiter statement of Waller LJ in National Navigation Co v Endesa Generacion SA (The Wadi Sudr) [2009] 2 CLC 1004 at [63]. Waller LJ stated that, where the English court had granted a declaration that an arbitration clause was incorporated into a contract (in that case a bill of lading) and a court in another member state subsequently refused to stay proceedings in that state, ‘… the claimant in England could proceed with the arbitration in England; if that were inconsistent with the judgment obtained in the member state then that would provide an answer on its own [see article 34(3) ]’.”