Allied World Assurance Company Ltd v Bloomin' Brands Inc.

• Jurisdiction: Bermuda
• Judgment Date: 03 March 2021
• Docket Number: Commercial Jurisdiction 2021 No 59
• Court: Supreme Court (Bermuda)

[2021] Bda LR 17

In The Supreme Court of Bermuda

Commercial Jurisdiction 2021 No 59

Between:

Allied World Assurance Company Ltd

Plaintiff

and

Bloomin' Brands, Inc (a Delaware Corporation)

Defendant

Mr L Preston for the Plaintiff

The following cases were referred to in the judgment:

Apex Fund Services Ltd and Hughes v Clingerman and Silk Road Funds Ltd [2019] Bda LR 89

Times Trading Corp v National Bank of Jujiairah (Dubai Branch) [2020] EWHC 1078

Donohue v Armco [2002] 1 All ER 749

Catlin Syndicate Ltd v AMEC Foster Wheeler USA Corp [2020] EWHC 2530

The Eleftheria [1969] 1 Lloyd's Rep 237

ACE Bermuda Insurance Ltd v Continental Casualty Co [2007] Bda LR 8

Carnival Corp v Estibeiro [2013] Bda LR 20

The Angelic Grace [1995] 1 Lloyd's Rep 87

Continental Bank v Aekos [1994] 1 WLR 588

Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorstk Hydropower Plant LLP [2013] UKSC 35

ACE Bermuda Insurance Ltd v Continental Casualty Co [2007] Bda LR 38

Insurance policy with Bermuda as forum for arbitration — Interlocutory application — Anti-suit injunction — Full and frank disclosure — Leave to serve out of the jurisdiction

RULING of Mussenden J

Introduction

1. This matter came before me on the Plaintiff's (“Allied World”) ex parte application (a) for an interlocutory injunction to restrain the Defendant from proceeding with an action in Nevada, USA (“the Nevada Proceeding”) and (b) related relief for leave to issue and serve these proceedings including Allied World's Originating Summons out of the jurisdiction. The basis of the application is that the Nevada Proceeding is in breach of the arbitration clause in an insurance policy between them. The applications are supported by the First Affidavit of Scott Coppinger sworn on 23 February 2021 together with its Exhibit SC-1. After hearing full argument from Mr Preston for the Plaintiff, I granted the applications and promised reasons which I now give.

2. The Plaintiff is an exempted company incorporated in Bermuda and registered in Bermuda as a “Class 4” insurer with its registered office in Hamilton, Bermuda.

3. The Defendant is a Delaware company with its headquarters in Tampa, Florida, which according to the Complaint in the Nevada Proceeding, owns and/or operates more than 1,450 restaurants worldwide and has approximately 93,000 employees.

4. In the course of the Plaintiff's business, in an insurance policy effective for the period 31 December 2019 to 31 December 2020, it insured the Defendant for various risks in exchange for the Defendant's obligation to pay a premium (“the Allied World Policy”). That policy was specifically endorsed on 30 December 2019 to include the Bermuda Arbitration Agreement, by virtue of Endorsement 20.

5. The material parts of the Bermuda Arbitration Agreement set out as follows: “(1) Bermuda Arbitration — Any and all disputes arising under or relating to this Policy, including but not limited to, its formation and validity, shall be finally and fully determined in Hamilton, Bermuda under the provisions of the Bermuda International Conciliation and Arbitration Act 1993 (exclusive of the Conciliation Part of such Act), as may be amended and supplemented, by a Board composed of three arbitrators…” and “(2) Choice of Law — This Policy shall be construed in accordance with the laws of England and Wales (with the exception of the procedural law required by paragraph 1. of this Endorsement which shall be construed in accordance with the laws of Bermuda) …”

The Nevada Proceeding

6. On 12 February 2021 the Defendant commenced the Nevada Proceeding by filing a Complaint and Jury Demand in the District Court of Clark County, in Nevada, USA against various insurers including the Plaintiff. The Complaint has not yet been served on the Plaintiff but the Defendant may take steps to effect service by way of service on the Nevada Commissioner of Insurance. The Complaint concerns the Defendant's claims against its insurers in respect of business interruption losses that it alleges it incurred at its restaurants as a result of the Covid-19 pandemic. It seeks declaratory relief and damages based on various causes of action including breach of contract, breach of an alleged covenant of good faith and fair dealing and violations of the Nevada Unfair Claims Practices Act. The relief sought includes, among other relief, declaratory relief, damages, punitive damages, exemplary damages and treble damages with the matter being heard before a jury.

7. The Plaintiff submits that by commencing the Nevada Proceeding against Allied World and indicating the intention to effect service, the Defendant has acted, and continues to act, in breach of the Allied World Policy and the Bermuda Arbitration Agreement on various grounds: (a) The Bermuda Arbitration Agreement constitutes a clear, binding and valid arbitration agreement between Allied World and the defendant; (b) The Defendant has not explained in their Complaint in the Nevada proceeding why they might be entitled to ignore the Bermuda Arbitration Agreement whether as a matter of Bermuda law, English law or any other law which they might suggest applies; (c) The Defendant has not sought to challenge the validity of the Allied World Policy, or any of its endorsements. On the contrary, the Defendant is purporting to enforce the Allied World Policy in the Nevada Proceeding; (d) Any disputes which have arisen between the Defendant and Allied World plainly fall within the scope of the Bermuda Arbitration Agreement in the Allied World Policy; (e) The Defendant has sought to avoid serving the Plaintiff out of the jurisdiction in Bermuda pursuant to the Hague Convention; and (f) The commencement and pursuit of the Nevada Proceeding by the Defendant is in breach of the Bermuda Arbitration Agreement. The Plaintiff submits that there is a good arguable case to this effect.

8. The Plaintiff also submits that the Defendant's commencement of the Nevada Proceeding is unconscionable, oppressive and/or vexatious because of the breach of the Bermuda Arbitration Agreement and because the Defendant appears to be engaged in forum-shopping as the Defendant is headquartered in Florida and incorporated in Delaware with no particular substantial link to Nevada. The Plaintiff submits that as US Courts and English Courts are grappling with the issue of whether Covid-19 constitutes an insurable risk under various business insurance policies, it may be inferred that the Defendant considers the emerging case law of the Nevadan Courts to be favourable to it.

The Legal Principles for an Anti-Suit Injunction

9. The Court has jurisdiction to grant an anti-suit injunction pursuant to its inherent jurisdiction, and/or section 19(c) of the Supreme Court Act 1905, and/or section 35(5)(e) of the Bermuda Conciliation and Arbitration Act 1993, and/or RSC Order 29.

10. The general powers of the Court to grant an interlocutory injunction are stated in section 19(c) of the Supreme Court Act 1905.

“…an injunction may be granted, or a receiver appointed, by an interlocutory order of the court in all cases in which it appears to the Court to be just or convenient that such order should be made; and any such order may be made either unconditionally or upon such terms and conditions as the court thinks just…”

11. Counsel for the Plaintiff cited a list of cases in how the legal principles applicable to anti-suit injunctions had become settled in Bermuda. The cited cases included International Risk Management Group Limited v Elwood Insurance Limited and others[1993] Bda LR 48; Skandia International Insurance Company and others v Al Amana Insurance and Reinsurance Company Limited[1994] Bda LR 30; ACE Bermuda Insurance Ltd. v Continental Casualty Co[2007] Bda LR 8; ACE Bermuda Insurance Ltd. v Continental Casualty Co[2007] Bda LR 38; Starr Excess Liability Insurance Company v General Reinsurance Corp[2007] Bda LR 34; IPOC International Growth Fund Ltd v OAO “CT-Mobile”[2007] Bda LR 43; and Carnival Corporation v Estibeiro[2013] Bda LR 20.

12. In Apex Fund Services Ltd and Peter Hughes v Matthew Clingerman (as Receiver) and Silk Road Funds Limited[2019] Bda LR 89 Subair Williams J relied on extensive passages from some of those cases in setting out the legal principles in respect of applications for anti-suit injunctions. Subair Williams J stated:

“115. Applying the approach of Millett, LJ in The Angelic Grace[1995] 1 Lloyd's Rep 87 at 96, as approved by Stuart-Smith JA of the Bermuda Court of Appeal in IPOC: If the Plaintiffs could establish a contractual right under the Administration Agreement to an anti-suit injunction, then there would be no good reason for diffidence in granting an injunction to restrain the New York proceedings.”

13. In the recent case of Times Trading Corporation v National Bank of Fujairah (Dubai Branch)[2020] EWHC 1078 (Comm), Cockerill J stated:

“38. As to the general principles governing anti-suit relief, the following statements were essentially common ground:

i) The Court has the power to grant an interim injunction “in all cases in which it appears to the court to be just and convenient to do so”...