The Supreme Court is currently considering whether it will, for the third time, grant leave to appeal in respect of a procedural dispute in the wake of the 2015 collision between the vessels the Thorco Cloud and the Stolt Commitment.
The Supreme Court's two previous decisions concerned the interpretation of the Lugano Convention, which is a parallel convention to the EU Brussels I Regulation (44/2001), and the question of whether the Norwegian courts are competent to assume jurisdiction in this matter. This third appeal makes no exception, but whether leave to appeal will be granted remains to be seen.
The December 2015 collision between the Thorco Cloud and the Stolt Commitment in the Singapore Strait resulted in the tragic death of five crew members and the sinking and total loss of the Thorco Cloud.
At first glance, the connection with Norway and the Norwegian courts seems remote: the collision occurred in Indonesian waters, none of the vessels' owners and managers were domiciled in Norway and the two vessels were registered in Antigua and Barbuda and the Cayman Islands, respectively. Nonetheless, jurisdiction in Norway was sought on the basis that one of the vessel's protection and indemnity (P&I) insurers was Norwegian.
In 2016 the owners and managers of the Thorco Cloud (the Thorco interests) commenced proceedings against the P&I insurer (liability insurer) of the Stolt Commitment, Assuranceforeningen Gard (Gard), and subsequently also against the owners and managers of the Stolt Commitment (the Stolt interests), before a Norwegian district court. The defendants argued that the matter should be dismissed as the Norwegian courts were not competent to assume jurisdiction in the matter.
Eventually, in 2018, the matter ended up in the Supreme Court.(1) The questions for determination by the Supreme Court were:
- whether the Norwegian courts were competent to assume jurisdiction in the matter against Gard pursuant to Articles 2(1) and 11(2) of the Lugano Convention; and
- if the first question was answered in the affirmative, whether the claim against the Stolt interests could be included in the matter against Gard pursuant to Article 6(1) of the Lugano Convention.
As for the first question, the Court of Appeal concluded that both Articles 2(1) and 11(2) (with Article 9(1)(a)) of the Lugano Convention permitted the Norwegian courts to assume jurisdiction. However, the Supreme Court disagreed that the general rule on jurisdiction in Article 2(1) operates in parallel with the special rule on jurisdiction for direct action claims in Article 11(2). Consequently, Article 2(1) did not entitle the Thorco interests to commence proceedings against Gard in Norway.
Therefore, the Supreme Court went on to assess whether the Court of Appeal's decision that the Norwegian courts were competent to assume jurisdiction pursuant to Article 11(2) (with Article 9(1)(a)) was correct. Pursuant to Article 11(2), Articles 8 to 10 of the convention apply to direct actions "where such direct actions are permitted". Further, pursuant to Article 9(1)(a), insurers may be sued in the courts of the state in which they are domiciled.
According to the Supreme Court, the application of Article 11(2) is dependent on the choice of law applicable to the direct action because it is impossible to determine whether "such direct actions are permitted" until the applicable law has been determined. As the Supreme Court disagreed with the Court of Appeal that Section 7-6(5) of the Insurance Contract Act could be construed as choice of law regulation, the Supreme Court concluded that the Court of Appeal had erred in law. Therefore, the matter was sent back to the Court of Appeal for a new assessment.
As for the second question, because of the Supreme Court's annulment of the Court of Appeal's decision on jurisdiction, the Court of Appeal's decision to allow the inclusion of the claim against the Stolt interests also had to be annulled. Thus, the majority of the Supreme Court judges did not examine the application of Article 6(1) of the Lugano Convention.
The matter was then sent back to the Court of Appeal, which again decided that the applicable law of the direct action was Norwegian law (although based on a different rule). However, this time the Court of Appeal did not find that the Norwegian courts had jurisdiction pursuant to Article 11(2). The Court of Appeal believed the criterion "where such direct actions are permitted" meant that the direct action must be permitted in that particular matter, not only that direct action against liability insurers is generally accepted in the relevant jurisdiction. As the Thorco interests were unable to convince the Court of Appeal that the conditions for a direct action claim were satisfied in this particular matter, the Court of Appeal dismissed the claim.
The Supreme Court granted leave to appeal to determine the correct construction of Article 11(2) of the Lugano Convention and the phrase "where such direct actions are permitted" and heard the matter in Spring 2020.(2) The Supreme Court held that the decisive point is not whether a direct action is permitted in the particular matter at hand, but whether direct action against liability insurers is generally accepted in the relevant jurisdiction. Consequently, the Court of Appeal's decision was once again annulled and sent back for a third round in the Court of Appeal.
In Autumn 2020 the Court of Appeal once again considered the case between the Thorco interests, the Stolt interests and Gard.
In the procedural dispute between the Thorco interests and Gard, there were no particular legal questions left to discuss following the two Supreme Court decisions. Unsurprisingly, the Court of Appeal concluded that the Norwegian courts are competent to assume jurisdiction in the direct action claim against Gard pursuant to Article 11(2) of the Lugano Convention. This decision has not been appealed to the Supreme Court and is now legally binding.
Further, in December 2020 the Court of Appeal decided that pursuant to Article 6(1) of the Lugano Convention, the claim against the Stolt interests can be included in the matter against Gard. However, the conclusion is again based on several difficult and uncertain legal questions. In general, these questions are:
- whether the Lugano Convention applies to the owners of the Stolt Commitment even though they are not domiciled in a convention state;
- whether the question of joinder is regulated by Articles 6(1) or 11(3) of the Lugano Convention; and
- whether the conditions pursuant to Article 6(1) (or Article 11(3)) are satisfied.
The Stolt interests have appealed the Court of Appeal's decision. Whether the Supreme Court will, for the third time, grant leave to appeal in respect of a procedural dispute in this matter is expected to be determined within the coming months.
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