Amin Rasheed Shipping Corp v Kuwait Insurance Co
In the absence of an express choice, a contract is governed by the system of law with which it has its closest and most real connection, and a marine policy in the form of the English Lloyd's policy was governed by English law.
Facts
Amin Rasheed, a Liberian company based in Dubai, insured its ship with Kuwait Insurance Co, under a policy issued in Kuwait in the form of the standard Lloyd's marine policy, which used English terminology and was based on the Marine Insurance Act 1906. When the ship was detained by the Saudi authorities, the insurers refused to pay. The owners sought permission to serve proceedings on the insurers out of the jurisdiction, on the ground that the contract was governed by English law. Kuwait at the time had no law of marine insurance of its own.
Legal principle
The House of Lords held that the contract was governed by English law, but refused permission to serve out of the jurisdiction, because Kuwait was the appropriate forum. Lord Diplock said that, in the absence of an express choice, the court must determine the proper law of the contract by identifying the system of law by reference to which the parties intended, or must be presumed to have intended, the contract to be construed, which is the system with which the contract has its closest and most real connection. Since the policy could only be interpreted by reference to English law, the parties must have intended English law to govern it. Choice of law in contract is now governed by the Rome I Regulation, as retained in English law.
Related cases on choice of law in contract and tort
- Boys v Chaplin [1971] AC 356
- Cox v Ergo Versicherung AG [2014] UKSC 22, [2014] AC 1379
- Foster v Driscoll [1929] 1 KB 470
- Harding v Wealands [2006] UKHL 32, [2007] 2 AC 1
- Ingmar GB Ltd v Eaton Leonard Technologies Inc Case C-381/98, [2000] ECR I-9305
- Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728
- Ralli Brothers v Compañía Naviera Sota y Aznar [1920] 2 KB 287
- Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190
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