|Israeli Courts Give Effect to a Judgment of The English Court on The Point of Jurisdiction|
On July 4, 2001 the Israeli Supreme Court (Israel`s highest court) in RCA 8946/00 Mamistvalov v. Axa Global Risk et. al. upheld the District Court`s decision refusing an application to serve London insurers outside the jurisdiction. The Supreme Court based its decision on the judgment of an English court which held that English courts have jurisdiction in the matter.
In 1989 Mr Mamistvalov (Mr M.) took out in London a policy of insurance with eleven London market insurance companies (through a London broker) in respect of a collection of antiques and gold & silver artifacts in his house. He alleged that a theft occurred and submitted an insurance claim. Upon investigation the Insurers avoided the policy on the grounds of misrepresentation and nondisclosure of material information.
In 1991 the insurers filed an action in the Queens Bench Division for a declaratory order that the policy was rightly avoided and were granted leave to serve the writ out of jurisdiction to Mr M. in Israel.
He applied to set aside the ex parte order granting leave to serve the writ on him in Israel and to stay all proceeding in England. The policy did not contain a jurisdiction clause or a governing law clause.
The matter came before his honour judge Laurie K.C. sitting as a judge of the High Court. Counsel for Mr M. admitted that the claim concerns a contract made in London and therefore comes within sub para (d) of R.S.C.O.11 r.1 but did not concede that the contract was governed by English law.
Judge Laurie was not unmindful of the fact that this is a defensive action in the nature of preemptive proceedings. He analyzed the facts and the putative witnesses on both sides and held that the insurers had discharged the burden of showing that they have a good arguable case on the merits.
He dealt extensively with the question "whether the insurers have discharged the burden of showing clearly that in all the circumstances" he should not exercise his discretion to stay the proceedings.
He agreed with counsel for the insurance companies that the "heart of the case is manifestly in London since it turns on the facts leading up to the conclusion of the insurance and the information which was passed between the parties" and held that this is a case which should be tried in London and therefore dismissed Mr M`s application.
Laurie J. in delivering judgment stated "the aspect which weighs most heavily with me is that it is a standard form policy issued by the plaintiffs in the London market to which the defendant (Mr M.) chose to apply. It would be inconvenient if different systems of law applies to one particular form of policy depending on the situs of the risk and domicile of the insured. The advantage of the international insurance market to insurers and insured alike must be that people from different countries come to get the same thing interpreted in the same way everywhere. Any other result would lead to mischief and uncertainty. So in my judgment there is a strong probability that English law applies to the contract."
Thereupon Mr M. entered a defense and a counterclaim.
Affidavits were exchanged as well as discovery of documents but Mr M. failed to pursue the case and in 1997 his counterclaim was dismissed by Mr Justice M. Kay for want of prosecution and as a result the action of the plaintiffs was also dismissed. Mr M. filed an appeal which was eventually dismissed.
A few weeks later, Mr M. filed an action in Israel against the insurers and the broker which was practically similar to the counterclaim filed by him in the London Court. His application for leave to serve the statement of claim out of jurisdiction (i.e. on the London parties) was initially granted by the Registrar of the District Court of Tel-Aviv but her order was reversed on appeal by judge H. Gerstel.
A great part of the arguments on behalf of the parties turned on the question what effect is to be given to the English judgments and whether they created re judicata or estoppel.
The court held that even if the conditions of rule 500 of the Israeli Civil Procedure Rules, which are similar to R.S.C. O.11. r. 1, are fulfilled still the court had discretion in a proper case to refuse the application for leave to serve the statement of claim outside the jurisdiction.
Judge Gerstel stresses in her judgment that since judge Laurie in the court of England applied his mind to the question of the forum conveniens and carefully weighed the pro and con arguments this fact is decisive in deciding to refuse leave to serve out of jurisdiction. The judge also stresses the point that Mr M. chose to go to the London market and therefore international insurance companies should not be forced to litigate a dispute each time in a different country.
Finally the judge holds that with the development of modern business life and particularly insurance which become global the court should take a narrow view of the limits of its jurisdiction where foreign courts held they had jurisdiction in the matter.
Mr M. filed an application with the Supreme Court for leave to appeal which was denied. The Supreme Court supported the reasoning of justice Gerstel in her judgment.
The importance of this judgment lies in the fact that the courts in Israel looked to the heart of the dispute and were not persuaded by the formalities of the rules of court. The court correctly analyzed the nature of the relevant evidence to be adduced at the hearing and concluded that the main witnesses reside in London where the business was concluded. The court attached greater importance to these facts than to those of the place of the risk and the circumstances of the alleged loss.