In Sherdley & Anr v Nordea Life and Pension SA the Court of Appeal was asked to examine whether the English Court had jurisdiction to try a claim brought by British nationals who were not, at the time proceedings were commenced, resident in the UK. The judge at first instance, Mr Justice Vos, had held that the English Court did not have jurisdiction to try the claim.

A dispute arose between Mr and Mrs Sherdley (the Appellants) and Nordea Life and Pensions SA (Nordea) relating to investments in two individual unit-linked life insurance contracts.  The Appellants had issued proceedings in England, but Nordea, domiciled in Luxembourg, submitted that the English court had no jurisdiction to hear the claim under the Judgments Regulation (EC No 44/2001) (the Regulation). The question of whether the English Court had jurisdiction was muddied by a number of documents containing conflicting alleged exclusive jurisdiction clauses and due to a lack of clarity as to where the Appellants had been habitually resident at the time the contracts were concluded.

The application forms were signed by the Appellants at their home in Spain during a meeting with representatives from Nordea. The application forms contained an alleged English law and jurisdiction clause.  The Appellants also signed Nordea’s “General Conditions” and these contained the Luxembourg law and jurisdiction clauses. Following the meeting, Nordea wrote to the Appellants enclosing Nordea’s “Proposal” which was later signed by the Appellants. The proposal contained a Spanish law and jurisdiction clause. Eventually, Nordea issued contract documentation (which was not signed by the Appellants) and the contract reproduced the proposal’s Spanish law clause and an altered version of its jurisdiction clause.

At first instance, Vos J held that, at the time the Appellants entered into the two contracts (in 2006 and 2007), the Appellants had been habitually resident in Wales despite them being resident at times at their holiday home in Spain and that there was a consensus between the parties on the contracts being governed by English law and jurisdiction. This was evidenced by, amongst other things, Nordea’s proposal including the addresses of the Appellants as being in Wales. However, Nordea’s General Conditions contained an article which stated that where the country of commitment (defined as the insured’s country of habitual residence) allowed freedom of choice as to law and jurisdiction, then the law of Luxembourg would apply. The judge held that a reasonable consumer, looking at the documents that the Appellants had been asked to sign, would not at the point of contract have been able to say whether English or Spanish law and jurisdiction applied. However, the reasonable consumer would have seen that he had agreed to Luxembourg law and jurisdiction as the default, by virtue of the article contained in Nordea’s General Conditions. The judge concluded that the Appellants had been unable to overcome the hurdle of showing that they had a better case for English jurisdiction and that Luxembourg law and jurisdiction should therefore apply.

On appeal, counsel for the Appellants submitted that the judge had correctly found that the Appellants were habitually resident in Wales at the time the contracts were entered into in 2006 and 2007. However, it was submitted that the judge had erred in his conclusions as to whether the consensus for English law had been “displaced by any further agreement capable of amounting to an agreement in fact, clearly and precisely demonstrated, pursuant to article 32 of the Regulation and the requirements of ECJ jurisprudence, in favour of some other jurisdiction.”

Delivering the leading judgment of the Court of Appeal, Lord Justice Rix upheld the decision of the judge that there was a consensus at the time prior to the submission and acceptance of Nordea’s proposal of English law and jurisdiction. The court also held that the clauses found in the application form (for English law) and in the General Conditions (for Luxembourg law) were not inconsistent and, as a result of English law allowing a freedom of choice as to law and jurisdiction, Luxembourg law and jurisdiction would govern any disputes arising from the investments. The parties were asked to provide written submissions on articles 9 and 13 of the Regulation concerning where an insurer could be sued. The default rule under the Regulation is that a person (or company) must be sued in the courts of its domicile and, therefore, the Appellants would have had to sue Nordea in Luxembourg. Article 9.2 of the Regulation allows an insurer to be sued in the courts of where the plaintiff insured is domiciled. However, as the Appellants had moved their domicile outside of England and Wales prior to commencing proceedings against Nordea, the Court of Appeal held that the Appellants lacked jurisdiction to sue Nordea in England. What remained for the Appellants was to sue Nordea in either Spain or Luxembourg.

To view the judgment in full, please click here.