29 October 2018 - Post by:Becky Valori
In Airbus v Generali Italia, the High Court held that Alitalia’s insurers were bound by an exclusive jurisdiction clause in favour of the English courts in an agreement between Alitalia and Airbus.
The proceedings arose out of an incident in 2013 where an aircraft leased by Alitalia was required to make an emergency landing due to a mechanical problem. The plane sustained considerable damage but there were no fatalities.
In July 2017, Alitalia’s insurers brought a claim against Airbus in Italy to recover USD 11 m. In January 2018, Airbus commenced English court proceedings seeking declarations that the Italian claim fell within an exclusive jurisdiction clause in a warranties agreement between Airbus and Alitalia.
The insurers argued that the clause only covered disputes regarding the warranties agreement itself, i.e. the mechanism by which the benefit of the warranties in a separate purchase agreement (which contained an ICC arbitration provision) was transferred, and did not cover disputes, such as the Italian claim, regarding substantive rights under the warranties.
The High Court rejected this argument as a matter of construction:
- The language of the jurisdiction clause was broad and without limitation.
- The warranties agreement listed the warranties and also included clauses outlining a “complete code” for warranty claims.
- The warranties agreement was narrowly focussed and dealt only with the warranties; it did not incorporate all obligations under the purchase agreement, including the arbitration provision.
- The warranties agreement was between a unique set of parties and was intended to create new rights not to transfer the benefit of existing rights under the purchase agreement.
- There was no clear rationale why the parties would have chosen to split a substantive claim for breach of warranty from a claim regarding a party’s entitlement to bring such a claim.
Update: this decision was upheld on appeal.