Hargreaves v Taian Insurance
In this case the Court, on the application of the Defendant, set aside an ex parte order earlier obtained by the Plaintiff for leave to serve proceedings out of the Hong Kong jurisdiction on the Defendant in Taiwan. In setting the order aside, the court held that Hong Kong was not the appropriate forum for hearing the case, principally on the grounds that evidence of Taiwanese insurance law and practice would be required and the proper law of the relevant insurance contract was Taiwanese. In support of its position, the Defendant had argued that the insurance it had placed with the Plaintiffs’ agent in Hong Kong was not retrocession business (the reinsurance of a reinsurer) but – by virtue of the practice of ‘internal co-insurance’ within the Taiwanese insurance market - reinsurance. On that basis, it was within the authority of the agent to accept the business and the Plaintiff would accordingly be bound by it
DMC Category Rating: Confirmed/Developed
This case note is contributed byCrump & Co, the International Contributors to the website for Hong Kong
The Plaintiff obtained from the Hong Kong court an ex parte (the other side not being present) order granting it leave to issue a writ against the Defendant and to serve a copy of it on the Defendant in Taiwan. The Defendant applied to the court to set aside the order.
As part of its argument in support of its application, the Defendant contended that it was indeed a direct insurer or an ‘internal co-insurer’ as it is described under Taiwanese law. Under the insurance law and practice of Taiwan, there existed a doctrine of ‘internal co-insurance’ (which differed from reinsurance), under which a number of different insurers are able to share the risks undertaken by one of them. In this case the Defendant had been sharing the risk with another local Taiwanese insurer (whose name was not stated on the policy), with the effect that the Defendant was actually reinsuring its part of the risk, but not retroceding, or re-re-insuring. On this basis, the Plaintiff would be liable for the claim under the policy.
The Defendant also contested Hong Kong jurisdiction on the ground that the applicable law in this case was Taiwanese law; thus Hong Kong was not an appropriate forum. The Defendant referred to the ‘offer slip’ which was signed by the Plaintiff in which it referred to an ‘original policy’. If that policy was the one between the original insured and the primary underwriter, then it specifically designated Taiwanese law to be its proper law. If the ‘original policy’ were to be construed as the ‘co-insurance’ contract between the Defendant and its Taiwanese counterpart, the applicable law was still Taiwanese law. Furthermore, as the insured amount was denominated in Taiwanese currency and the place of performance (where the payment of the insurance proceeds would be made) was Taiwan, it could be concluded that Taiwanese law was the governing law and Taiwan the appropriate jurisdiction.
The Plaintiff, on the other hand, alleged that as the contract was entered into in Hong Kong, the place of performance was Hong Kong, the contract itself was in English and most importantly, the document regulating the relations between IRS and the Plaintiffs must be construed according to English/Hong Kong law, the proper forum would therefore be Hong Kong.
In this case, expert evidence as to Taiwanese insurance practice was obviously necessary to clarify the concept of ‘co-insurance’. As to the governing law, the judge could see no reason why the Defendant, being a Taiwanese company, had to be concerned with the law governing the relationship between IRS and the Plaintiff, that is, Hong Kong law, when it concluded a contract with IRS as an agent of the Plaintiff. That contract was, he held, governed by Taiwanese law.
In these circumstances, the judge held that the Plaintiff had failed to establish that Hong Kong was the proper forum for the trial of this action and it followed that the ex parte order would be set aside with costs to the Defendant.
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