Cigna Worldwide Insurance Company (by and Through Its Court Appointed Receiver, Josie Senesie, and in Respect of the Assets, Under Takings and Affairs of Its Licensed Liberian Branch and business) Plaintiff v Ace Ltd Defendant
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Sir Peter Cresswell |
| Judgment Date | 27 January 2012 |
| Judgment citation (vLex) | [2012] CIGC J0127-1 |
| Docket Number | CAUSE NO: FSD 96 OF 2011 (PCJ) (ORIGINALLY CAUSE NO: 39 of 2008 |
| Court | Grand Court (Cayman Islands) |
| Date | 27 January 2012 |
The Hon. Sir Peter Cresswell
There are two Summonses issued by the Defendant dated 5 December 2011 before the Court.
(1) that the Plaintiff/the Receiver provide security for the Defendant's costs; and
(2) that this action be stayed pending the final determination of the proceedings, and any appeals therefrom, before the Court of Chancery of the State ofDelaware, U.S.A. entitled CIGNA Worldwide Ins Co. et al v Josie Senesie, Civil Action No. 4171-VCL.
The Defendant has also issued two strike out summonses dated 30 September 2008 and 5 December 2011 (‘the Defendant's two strike out summonses’). The application for security is up until the end of what is anticipated to be a 5 day hearing of these summonses.
I will refer to ‘the Plaintiff” in this judgment to refer to the formulation of the identity of the plaintiff set out above in the heading of this action with Mr Josie Senesie (or Mr Foday Sesay) named as Receiver, without prejudice to any of the issues identified below under 1. LEAVE TO AMEND, as to who is the appropriate plaintiff, with right and title to sue etc.
The following dramatis personae, description of the Cayman Islands proceedings, procedural history and status of proceedings is drawn from the case memorandum prepared by the parties pursuant to GCR Order 72 Rule 4(3) and the Order dated 2 December 2011.
The Plaintiff is represented by Walkers in this matter. The Defendant is represented by Maples and Calder.
The Defendant disputes Mr Sesay's assertion that he is acting on behalf of CIGNA WW in this litigation. The Plaintiff says that the Plaintiff alone is entitled to act on behalf of the Liberian branch or estate of CIGNA WW by virtue of the Liberian Court order to that effect.
The companies and individuals below are material to the proceedings before the Grand Court:
CIGNA Worldwide Insurance Company (‘CIGNA WW’ or ‘CWW’) – an insurance company incorporated in Delaware, U.S.A. In April 2007, the Liberian Court appointed Mr Senesie as Receiver over CIGNA WW's Liberian branch and business (CIGNA WW having been registered to do business in Liberia). The parties disagree on the nature and scope of CIGNA WW's operations in Liberia and in particular on whether CIGNA WW had a Liberian ‘branch. CIGNA WW is not subject to any insolvency, or similar, proceeding in any other jurisdiction.
Josie Senesie— former Commissioner of Insurance for Liberia, appointed by the Liberian Court as receiver over CIGNA WW's Liberian branch and business. Retired October 2009, succeeded as Commissioner of Insurance for Liberia by Foday Sesay.
Foday Sesay— Present incumbent in the offices of Commissioner of Insurance for the Republic of Liberia and of Receiver over CIGNA WW's Liberian branch and business.
Samuel M. Lohman— bom in the United States, licensed to practice law in the State of Oregon, registered with the Geneva Bar Association as a foreign lawyer since 1991, practising in Switzerland for over 20 years. Represented G-22 and AJA prior to 24 April 2007, on which date he began representing Mr Senesie. Together with Mr. Senesie and others, respondent to the contempt proceedings brought by CIGNA WW in the Eastern District of Pennsylvania for alleged violation of an anti-suit injunction by representing the Plaintiff in the Cayman Islands proceedings to enforce the Liberian judgment in favour of AJA (by seeking indemnification from the Defendant for, inter alia, said judgment, as discussed in more detail below).
Abi Jaoudi & Azar Trading Co Ltd. (‘AJA’) — Plaintiff in The Abi Jaoudi And Azar Trading Corp. v. CIGNA Worldwide Ins. Co., Civil Action No. 91–6785 in U.S. District Court, Eastern District of Pennsylvania (‘EDPA’), wherein (i) the jury returned a verdict in favour of the Plaintiff on CIGNA WW's defence relating to a war exclusion clause and was unable to reach a verdict on certain other of CIGNA WW's defences and (ii) judgment, notwithstanding the jury verdict, was entered in 1995 granting CIGNA WW's war risk exclusion defence and denying AJA's claim. Judgment creditor of CIGNA WW pursuant to a contrary judgment by Liberian Court in 2000. Enjoined from seeking to enforce an October 2000 Liberian money judgment by U.S. Federal Court order in 2001, enforcement of which order was subsequently prohibited by a contrary Liberian Court order in 2002.
G-22 (‘G-22’) — A consolidated group of 22 judgment creditors of CIGNA WW pursuant to a judgment awarded by the Liberian Court in 2005. Defendants in U.S. District Court, Delaware action, which issued a declaratory judgment in default of appearance or defence in 2002 that G-22 had no valid policy claims against CIGNA WW. (Jurisdiction was not taken in personam over the G-22 by the Delaware Court. It was based on the theory that the situs of the G-22's right to sue CW was in Delaware and that therefore the Court had quasi-in rem jurisdiction over the subject matter of the dispute (namely the insurance policies issued by CWW). The Plaintiff says that there was no basis for the District of Delaware to take quasi-in rem jurisdiction over their contractual choses-in-action against CWW.)
ACE Limited (‘ACE’) — Defendant. A Swiss incorporated insurance company, originally a Cayman Islands company, which subsequently redomiciled to Switzerland soon after these proceedings were instituted in July 2008. Acquired certain assets and assumed certain liabilities of CIGNA WW's international property and casualty business, including the liabilities pertaining to the Liberian branch and business, by agreements dated 11 January 1999 and 2 July 1999.
In July 2008 Mr. Senesie, then Commissioner for Insurance of Liberia and the predecessor to Mr. Sesay instituted these proceedings against ACE, for indemnification of the estate of the Liberian branch and business of the Debtor against the two judgments issued by the Liberian Court against CWW in October 2000 and August 2005 (the ‘Liberian Debts’). The Liberian Debts were originally comprised of (i) a judgment in favour of AJA in the aggregate amount of US$66,572,000 (the ‘AJA Liberian Judgment’) and a judgment in favour of the G-22 in the aggregate amount of US$32,317,106.00 (the ‘G-22 Judgment’). These proceedings seek recognition of the appointment of the Commissioner of Insurance of Liberia as Receiver of the Liberian branch of CIGNA WW by order of the Liberian Court dated April 24 2007 (‘the Order of Appointment’).
The Defendant claims that the Cayman Islands proceedings are directly related to the judgments of the EDPA and the District of Delaware in which it was declared that CIGNA WW was not liable to AJA or G-22 in respect of their claims under certain policies of insurance. The Plaintiff says that the case before the EDPA is no longer relevant as the Liberian Judgment relating to AJA is no longer within the scope of the Cayman Islands action, and that the declaration in the Delaware action is incapable of statutory or common law recognition in the Cayman Islands.
The Defendant is an insurance holding company that was incorporated in the Cayman Islands in 1985. In July 2008, upon the application by the Defendant, the Cayman Islands Court approved the de-registration of the Defendant as a Cayman Islands company pursuant to section 226 of the Companies Law (2007 Revision) on the undertaking, inter alia, that ACE's Swiss incorporated successor would ‘submit to the jurisdiction of the Grand Court such that the Swiss Successor will become the defendant herein.’ The Defendant has now re-domiciled to Switzerland.
The Defendant says that in the mid-1980s CIGNA WW began writing property and casualty insurance in Liberia through two managing general agents. [The Plaintiff says that CIGNA WW] was registered to do business in Liberia as a foreign corporation and licensed to operate as an alien insurer within the jurisdiction subject to the requirements of, inter alia, the Insurance Law of Liberia. The Defendant says that the insurance was issued by, and underwritten from, a subsidiary of CIGNA WW based in Greece. In or around June 1990, following the outbreak of the first Liberian Civil War, CIGNA WW stopped writing insurance through its agents in Liberia with immediate effect.
It is Mr Sesay's case that CIGNA WW operated a registered ‘branch’ insurance business in Liberia. This is a claim that is denied by the Defendant on the grounds that CIGNA WW's relevant operations were run through managing general agents and the insurance was issued and underwritten by Greek subsidiaries. It is also Mr Sesay's case that the Liberian Court has found that (a) no adequate reserves (including 10% of CWW's gross premium revenue realised in Liberia) were maintained inside Liberia for the payment of its liabilities as required by the Liberian Insurance Law and (b) the manner of its immediate cessation of business was a breach of a number of provisions of Liberian Insurance Law and Associations Law (under which CIGNA WW is said by the Plaintiff to have operated), including,inter alia, the maintenance of adequate reserves with which to meet claims. The Plaintiff also says that the Defendant breached the Insurance Law of Liberia in failing to obtain the consent of the Liberian Commissioner of Insurance to the sale of CIGNA WW's Liberian branch to ACE. Again, these points are denied by the Defendant.
In January...
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