Insurer entitled to pursue Italian broker in English courts despite contradictory agreements

The broker, Trust Risk Group, had appealed an earlier decision of the High Court on the same point, arguing that under the terms of a 'framework agreement' entered into by the two parties in 2011 any disputes between them had to be referred to Italian arbitration. The Court of Appeal upheld the High Court's decision that this agreement did not necessarily supersede a 'terms of business agreement' (ToBA) entered into by the parties in 2010.

"The case is a good illustration of the court's approach to construing the meaning and effect of a suite or 'package' of agreements intended to regulate the parties' business relationship," said commercial dispute resolution expert Richard Dickman of Pinsent Masons, the law firm behind Out-Law.com.

"If the parties intended by entering into the framework agreement that all disputes concerning their relationship were to be subject to arbitration in Milan, then they could have provided for that. Simply appending the ToBA to the framework agreement did not have the effect of overriding the jurisdiction, choice of law or indeed numerous other provisions in the ToBA," he said.

AmTrust Europe, the UK subsidiary of American insurer AmTrust Group, had a business relationship with Milan-based broker Trust Risk Group involving the sale of its medical malpractice insurance to Italian hospitals and other prospective clients in Italy. In 2014, this relationship broke down over around €32 million in client premiums, which were supposedly held in a trust account governed by the ToBA on behalf of AmTrust. AmTrust claimed that Trust Risk had misappropriated almost all of the money in this account, and began proceedings in the English courts for the return of this money.

Trust Risk denied that the money had been misappropriated, and claimed that it was also owed commission by AmTrust. Further, it argued that all disputes between the two parties were governed by the later framework agreement, which contained an Italian law and jurisdiction clause. The ToBA had been appended to the framework agreement, which provided for an exclusive relationship between the parties regarding medical malpractice insurance in Italy.

The broker's position was that the ToBA and the framework agreement now formed a single agreement, while AmTrust maintained that the two agreements were freestanding and that he English jurisdiction clause in the ToBA applied to any disputes arising out of the ToBA. In December 2014, the High Court found that AmTrust had a "good arguable case" that the ToBA had not been superseded by the framework agreement. He also ordered Trust Risk to repay the €32m, but this was not appealed by the broker.

In the Court of Appeal, Trust Risk referred to the 'Fiona Trust' principle, under which an arbitration clause should be interpreted as starting from the assumption that the parties were likely to have intended any dispute arising out of their relationship to be decided by the same tribunal. However, Lord Justice Beatson said that the Fiona Trust case differed from this one as it concerned the scope of a single arbitration clause, rather than "an overall agreement package which contains two express law and jurisdiction clauses" as in this case.

"The matter is not entirely straightforward, but ... I have reached the clear conclusion that [AmTrust] has satisfied the 'good arguable case' requirement, which in this context means 'a much better argument, that the reference in clause 6 of the framework agreement, which deals with applicable law and arbitration, to 'this agreement' refers only to the framework agreement and does not include the scheduled ToBA," the judge said. "Accordingly, this dispute ... is ... subject to English law and the jurisdiction of the English courts."

"The ToBA was a standard London market brokerage agreement dealing with the placement of business by [Trust Risk] with [AmTrust], and for which [AmTrust] was to pay commission to [Trust Risk]. The framework agreement was one in which [AmTrust] gave [Trust Risk] exclusivity in the Italian market, for which [Trust Risk] paid [AmTrust]. It thus dealt with a different aspect of the parties' relationship," he said.