Lloyd's Maritime and Commercial Law Quarterly

International Private Law

Adam Rushworth * and Andrew Scott


208. Ace Capital Ltd v. CMS Energy Corporation1

Anti-suit injunction—construction of arbitration and service of suit clause—Fiona Trust v. Privalov
As lead underwriter, Ace brought English proceedings in respect of disputes arising from a number of English law policies issued to CMS, a Michigan company. CMS had brought Michigan proceedings in which sums were claimed under the policies. The policies contained a clause for London arbitration drawn in the widest terms which, the parties agreed, in principle caught the Michigan claims. However, the policies also contained a “service of suit clause”, by which the underwriters promised not to object to US jurisdiction if they failed to pay sums claimed by CMS. The parties disagreed as to the significance of the latter clause. CMS contended that it conferred upon it an option to litigate claims on the merits, so far as these concerned payment, in the US. Ace contended that its purpose was merely to ensure, so as to comply with US regulatory legislation, that as insurer it was subject to the personal jurisdiction of US courts, but not so as to abrogate its right to have disputes on the merits, including disputes as to payment, arbitrated. Ace sought a final injunction to restrain CMS’s Michigan proceedings.
Decision: Injunction granted.
Held: Michigan proceedings were brought in breach of the arbitration clause, there being no strong reason for an English court not to restrain the breach by injunction: (a) the English law policies were construed according to rules of English law, which required reference to US case law concerning the relationship between an arbitration clause and a service of suit clause, the latter being inserted to comply with US regulatory law, and US case law concerning their interpretation constituting part of the background and context informing the parties’ reasons for including the clause; (b) US courts strive to interpret arbitration and service of suit clauses to be compatible, the latter merely serving to ensure that a foreign insurer is subject to the personal jurisdiction of a court in a given State, for example for the purposes of enforcing any arbitral award, but not so as to deprive the insurer of its right to have the dispute on the merits arbitrated; (c) an English court would

The present article aims to cover the case law and materials from 1 January 2008 to 18 Feb 2009.

1. [2008] EWHC 1843 (Comm); [2009] Lloyd’s Rep IR 414; [2008] 2 CLC 318 (QB: Christopher Clarke J).



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