Private International Law of Reinsurance and Insurance
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INTRODUCTION
B. THE COMMON LAW APPROACH
1.3 The essential characteristics of the common law approach to jurisdictional disputes may be said to be, firstly, that jurisdiction was available on the ground of the presence of the defendant within the jurisdiction and other broad or exorbitant grounds which might be expected to give some sort of connection between the dispute and the jurisdiction; but, secondly, that potential excesses of jurisdiction were tempered by the principle of forum non conveniens under which the court would decline jurisdiction in favour of another clearly more appropriate forum. Choice of law was based on the express, implied or imputed choice of the parties. 1.4 Although (re)insurance disputes involved their own particular “spin” on such questions, the fundamental private international law tests were the same, whether the dispute was a (re)insurance dispute or some other civil or commercial piece of litigation. In other words, private international law questions in (re)insurance disputes tended to involve the application of common and widely understood principles, albeit that the application of such principles involved factors specific to (re)insurance, for instance, the mode of contracting and administering which is often different from that in other areas, and the situs of the risk (re)insured.C. THE EVOLUTION OF EUROPEAN PRIVATE INTERNATIONAL LAW
1.5 Time was when these jurisdiction and choice of law questions were the more-or-less exclusive province of the common law. This is certainly now no longer the case. The past twoPage 4
D. CHARACTERISTICS OF EUROPEAN RULES OF PRIVATE INTERNATIONAL LAW
1.9 European rules of private international law have a number of characteristics which it is important to note at the outset. These relate to:- (1) The essential nature of the rules. As will be seen, the fundamental nature of the European rules is in marked contrast to the common law principles that European law has displaced.
- (2) An overlay of social engineering in the rules. Certain contracts - generally those perceived to involve individuals requiring protection under the law - tend to be singled out for special treatment under European law. Thus, it is no longer the case that one regime fits all, with special factors forming, if anything, a subsidiary matter to be considered under the umbrella of generally formulated principles. Rather, the rules applicable to a given contract tend to vary according to the nature of the contract.
- (3) The need for a common interpretative approach. The fundamental raison d’etre of the European private international law rules is to provide consistent jurisdictional and choice of law rules across the EU. That implies an application of a common European approach to such rules, as opposed to a narrow national approach.
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1. The essential nature of the rules
1.10 In distinct contrast to the rules of common law that they have largely displaced, the European rules seek to minimise the exercise of judicial discretion or judgment and maximise certainty of outcome by creating a whole raft of very specific rules, designed to cater for and to provide an ostensibly clear answer to the wide range of different jurisdictional and choice of law questions which may arise in the course of civil litigation. Such a rule-based approach is, of course, in large part a question of legal policy and/or a reflection of the different legal traditions represented in the European Union. What can be said is that the European rules will seem very alien to anyone brought up on the common law approach to jurisdiction and choice of law. The common law tended to evolve principles capable of extremely brief articulation, but which were deceptive in their brevity and simplicity, because of their broad brush and (particularly as regards jurisdiction) discretionary nature. By discretionary, we do not, of course, seek to suggest that the rules are in any way arbitrary. It was simply that the common law approach involved the weighing of a number of potentially countervailing factors, often requiring evidence, and certainly involving a fundamental exercise of judgement as regards such factors. 1.11 The European rules are by contrast tightly formulated to deal with specific issues or questions. Of critical importance is the characterisation of the relevant question or issue, as this will determine which rules will resolve that issue. Thus, for instance, the determination whether a contract is one of reinsurance or insurance (and, if the latter, whether the insurance relates to risks situated within the EU) is critical as to whether the Rome Convention or the insurance directives apply. Of course, no set of rules is ever likely to be completely comprehensive or completely certain, and it may fairly be said of many European law provisions that the difficult questions that are overtly discussed as “judgemental” questions under the common law regime arise in hidden form when seeking to delimit the scope of application of one or other rule of European law.2. An overlay of social engineering in the rules: consumer protection, etc
1.12 The Brussels Regulation contains a series of provisions dealing specifically with certain types of contract. Examples are consumer contracts and employment contracts and - important for present purposes - contracts of insurance. Similarly, the Rome Convention tends to apply only to reinsurance contracts, with insurance contracts (at least those involving risks situated in the EU) being regulated by the insurance directives. 1.13 This differentiation between different types of contract reflects a public policy agenda on the part of the European law-makers. The respective positions of the participants - or perceived participants - to specific contracts are deemed to require special treatment. This special treatment is not a reflection of the different legal approaches of the Member States of the EU. Its source is very different - public policy - which, of course, also finds expression in UK national legislation. For present purposes, the importance of this public policy overlay is that the rule-based nature of European law is accentuated. It becomes necessary - more-or-less at the outset of any legal inquiry - to distinguish between different types of contract: as a direct result, contracts of insurance are (to an extent) separated from other forms of contract; and contracts of insurance and reinsurance need to be distinguished. Although, of course, it is wrong to say that insurance and reinsurance contracts are governed by whollyPage 6
3. The need for a common interpretative approach
1.14 The fundamental raison d’etre of the European private international law rules is to provide consistent jurisdictional and choice of law rules across the EU. Thus, the aim of the jurisdictional rules is that whichever national court is confronted with a piece of international litigation, that court will apply the same principles in order to determine whether or not it has jurisdiction. Equally, where a national court is seised of dispute, the approach of that court to the choice of law questions before it should be common to the EU. 1.15 Obviously, this implies a common approach to the difficult questions of construction that arise out of the European private international law rules, and to the application of those rules. This is dealt with in two related ways. In the first place, national courts are injuncted to eschew narrow, national approaches to construction; a broad, “Community” approach needs to be adopted. Secondly, and reinforcing this, questions of construction can (to varying degrees) be referred to the European Court of Justice for an authoritative, EU-wide, determination. Questions of interpretation are considered in Chapter 3.E. APPROACH AND STRUCTURE OF THIS BOOK
1.16 The nature of the European private international law rules largely determines the structure of this book. Part I deals with matters of common interest to both the rules on jurisdiction and the rules on choice of law - namely, the history of the development of these rules (Chapter 2) and the manner in which these rules are to be interpreted in order to facilitate a common, EU-wide, approach (Chapter 3). 1.17 The division of the rest of the book into two parts - jurisdiction (Part II) and choice of law (Part III) - reflects the essential division (both in European law, and in the common law) between these two areas. Within each Part, the approach is similar. First, and critically given the regimented European approach, the various different potentially applicable regimes are described and the tests for determining which regime is applicable in any given case stated. This involves differentiating between:- (1) The various different applicable European regimes. In particular, it has been necessary to distinguish between the regimes applicable to contracts of reinsurance and contracts of insurance;
- (2) The extent to which the common law still has a role; and
- (3) Arbitration proceedings.
The different jurisdictional regimes are described in Chapter 4. The different choice of law regimes are described in Chapter 9.