Court of appeal clarifies scope of Lugano convention in direct action cases

In a recent decision the court of appeal decided that the insured owners can be joined into a direct action law suit against the Norwegian underwriters under the terms of the Lugano convention.

Following the collision between the a bulk vessel and a chemical tanker at the end of 2015, the parties have since been fighting over whether the Norwegian courts are competent to hear the collision liability dispute. The bulk vessel sank with the tragic consequence of six fatalities. From the outset, the owners of the bulk vessel have argued that the Norwegian courts are competent, which has been disputed by the owners of the chemical tanker and its Norwegian underwriter. The issue of jurisdiction has been tried first by the county court, three times by the court of appeal and twice by the Supreme Court. The Norwegian nexus is the underwriter’s domicile here; the owners of the bulk vessel have argued that the underwriters can be sued directly in Norway under the Norwegian law provided that the requirements under article 11 (2) of the Lugano convention are fulfilled. After the Supreme Court’s second suspension of the court of appeal’s decision on this matter, the court of appeal recently decided that there is jurisdiction in Norway for the direct action claim against Gard. This decision is based on domicile, and is now final.

Following this decision, the court of appeal has now decided that the direct action case against the underwriter serves as ‘anchor jurisdiction’ that allows the insured to be joined in the case against the underwriter before the Norwegian courts. The court concluded that the requirements of article 6 (1) were fulfilled and that the insured therefore could be joined. The insured argued, without success, that the claim against the insured was a “matter of insurance” and joinder therefore had to be considered on basis of article 11 (3).  The insured’s argument that the requirements of article 6 (1) were not fulfilled, was also discharged by the court of appeal.

The decision is not legally binding as it is still subject to appeal. However, in our view the decision is based on a correct construction of Lugano convention. We believe that the court of appeal correctly applied article 6 (1) as basis for joining the insured to the proceedings; as this claim is not a claim “relating to insurance”.

For more information on the decision and its implications, please feel free to contacting us. Kvale (w/ Lilly Kathrin Relling and Kristian Lindhartsen) acts for the owners of the bulk vessel.