Martin S. Kenney Cc International Ltd Appellants v Ace Ltd Respondent to Appeal

• Jurisdiction: Cayman Islands
• Judge: Sir John Chadwick,Chadwick P,Mottley JA,Campbell JA
• Judgment Date: 06 May 2015
• Court: Court of Appeal (Cayman Islands)
• Docket Number: (FSD No 96 of 2011 — PCJ)
• Date: 06 May 2015

Between

Martin S. Kenney Cc International Limited

Appellants

and

Ace Limited

Respondent to Appeal

[2014] CICA J0411-1

Before

The Rt Hon Sir John Chadwick, President

The Hon Elliott Mottley, Justice of Appeal

The Rt Hon Sir Anthony Campbell, Justice of Appeal

(FSD No 96 of 2011 — PCJ) CICA No 35 of 2013

IN THE COURT OF APPEAL OF THE CAYMAN ISLANDS

Mr Justin Fenwick QC with Mr Nicholas Dunne of Walkers for Martin S. Kenney and CC International Limited, the Appellants,

Lord Goldsmith QC with Mr Adam Huckle of Maples and Calder for Ace Limited, the Respondent to the Appeal

Sir John Chadwick, President:

1 This is an appeal from an order made on 26 April 2013 by Justice Sir Peter Cresswell on a summons dated 5 April 2013 issued by the appellants, Martin Kenney and CC International Limited, in proceedings brought by (or in the name of) CIGNA Worldwide Insurance Company (‘CIGNA WW’) against the respondent to the appeal, ACE Limited (‘ACE’). The issue raised by the appeal is whether the judge was wrong to take the view that the Rules of the Grand Court permitted service out of the jurisdiction of a summons seeking a non-party costs order against the appellants.

2 In order to explain the circumstances in which that issue arises in the present case, it is necessary that I describe the factual background to the proceedings brought by CIGNA WW against ACE and their procedural history. For that purpose I can draw on the much fuller account set out by the judge in an earlier judgment in these proceedings, dated 27 January 2012 (reported at 2012 (1) CILR 56); and on Agreed Case Memoranda filed, respectively, on 4 January 2012 and 10 September 2012.

The background to these proceedings

3 CIGNA WW is incorporated in Delaware. It was formerly registered to carry on insurance business in Liberia as a foreign corporation. It ceased writing policies in Liberia in or about June 1990 following the outbreak of civil war in that country.

4 In 1991, at a time when the Liberian courts were closed by reason of the civil war, Abi Jaoudi & Azar Trading Co Ltd (‘AJA’) commenced proceedings against CIGNA WW (Civil Action No 91–6785) in the United States District Court, Eastern District of Pennsylvania (‘EDPA’), alleging that CIGNA WW was in breach of certain property and casualty insurance policies in denying coverage for damage to property in Liberia sustained during the civil war. The proceedings were defended by CIGNA WW on the grounds (inter alia) of war risk exclusion clauses in the policies. The EPDA upheld that defence; and its decision became final in the United States following dismissal by the U.S. Supreme Court in 1997 of AJA's petition for certiorari.

5 In 1998, following its defeat in the EPDA proceedings and the end of the civil war, AJA commenced proceedings in the Liberian courts, making the same allegations and the same claims as it had made in the EPDA proceedings. CIGNA WW sought dismissal of those proceedings on the grounds of res judicata. The Liberian court rejected that defence — holding that the EPDA judgment was not recognised in Liberia — and, in 2000, entered judgment for AJA in an amount exceeding US$65 million.

6 In 1999 further proceedings against CIGNA WW were commenced in the Liberian courts by others (‘the G-22’) claiming to be policy holders or creditors. The claims in those proceedings, also, were for losses sustained during the civil war. Those further proceedings were consolidated in 2002; and judgment in an amount exceeding US$28 million was entered in favour of the G-22 claimants.

7 ACE is an insurance holding company. It was incorporated in the Cayman Islands in 1985. In January 1999 ACE entered into an acquisition agreement with CIGNA Corporation and CIGNA Holdings (together ‘the CIGNA parent companies’) for the acquisition of certain assets and assumed liabilities of CIGNA WW, including ‘the assets, liabilities and obligations pertaining to [CIGNA WW's] run-off business in Liberia’.

8 In or about April 2003 AJA instructed the appellant Martin Kenney (‘Mr Kenney’), a solicitor advocate admitted in England and Wales and in the British Virgin Islands and the principal of Martin Kenney & Co, a British Virgin Islands firm, and Samuel Lohman (‘Mr Lohman’), a lawyer licensed in Oregon, registered with the Geneva Bar Association and practising law in Switzerland with the Law Firm Lohman, to take steps to enforce the AJA Liberian judgment.

9 In April 2006 CIGNA WW and ACE received a letter from Mr Lohman demanding payment of both the AJA Liberian judgment and the G-22 Liberian judgments. In that letter Mr Lohman asserted that he was counsel to AJA and to two companies incorporated in Nevis, the appellant CCI International Limited (‘CCI’) and St Cleer LLC; to which (he said) the G-22 Liberian judgments had been assigned. The basis of the demand against ACE was that its obligations to indemnify the CIGNA parent companies under the 1999 acquisition agreement had the effect that ACE was directly liable to his clients in respect of their claims against CIGNA WW under the Liberian judgments.

10 In April 2007 the Liberian Civil Court appointed Josie Senesie (‘Mr Senesie’ or, where the context permits, ‘the Receiver’), a former Commissioner of Insurance for Liberia, as receiver over what was described as CIGNA WW's Liberian branch and business. Mr Senesie retired as Insurance Commissioner and was succeeded in that office — and, then (or subsequently, pursuant to an order of the Liberian court made in February 2009) as receiver of CIGNA WW's Liberian branch — by Foday Sesay (‘Mr Sesay’ or, again where the context permits, ‘the Receiver’). In August 2007, on the Receiver's motion, the Liberian court formally recognised the AJA Liberian judgment and the G-22 Liberian judgment as the sole obligations of CIGNA WW's ‘Liberian branch’.

The proceedings in the Cayman Islands

11 These proceedings were commenced in the Grand Court by the issue of a writ on 9 July 2008. The plaintiff named in the writ was ‘CIGNA Worldwide Insurance Company (by and through its Court appointed Receiver Josie Senesie and in respect of the assets, undertakings and affairs of its licensed Liberian branch and business)’. ACE was named as the defendant. The claim in the writ, as issued, was for enforcement of the AJA Liberian judgment and the G-22 Liberian judgment; said to amount, in aggregate, to US$126,139,284.91 with interest thereon from 2 August 2007.

12 Shortly after the commencement of the proceedings, upon the application of ACE, the Grand Court approved the de-registration of ACE as a Cayman Islands company pursuant to section 226 of the Companies Law (2007 Revision); but such approval was on terms which included an undertaking 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.’

13 The proceedings were stayed by an order (made by consent) dated 6 February 2009, pending final determination of an appeal from a decision (as to immunity and discovery) in contempt proceedings before the EPDA. In May 2011 the Receiver (by then, Mr Sesay) informed ACE that, following a ruling by the Court of Appeals for the Third Circuit in November 2010, the stay of these proceedings had been lifted. Shortly thereafter, on 26 May 2011, the Receiver filed (without leave) a re-amended Writ of Summons and an amended Statement of Claim in these proceedings. In the reamended Writ and Amended Statement of Claim, the claim to enforce the AJA Liberian judgment was abandoned; so reducing the claim to the amount said to be due under the G-22 Liberian judgment (said to be in an amount of US$34,027,741.27).

14 The proceedings came before the judge in January 2012 on three summonses, each dated 5 December 2011, which had been issued on behalf of ACE. In a judgment dated 27 January 2012 the judge identified a number of issues which he needed to determine: (i) whether the plaintiff (CIGNA WW, acting by the Receiver in respect of the assets of its Liberian branch) needed leave to amend its writ and statement of claim; (ii) whether the plaintiff had abandoned its claim in respect of the AJA Liberian judgment; (iii) whether the plaintiff should be required to give security for costs; (iv) whether there should be a further stay of the proceedings pending the outcome of the EPDA proceedings; (v) whether the plaintiff should be ordered to identify the persons who were funding the Cayman Islands proceedings; and (vi) what directions should be given for future case management.

15 In the events which have happened it is unnecessary to refer to the judge's decision on any of those issues — other than issue (iii), security of costs — in any detail; but, for completeness, I will mention that the judge held: on issue (i), that the plaintiff did need leave to amend both its writ and its statement of claim; on issue (ii), that he would make an order, by consent, that the plaintiff's claims arising out of or in connection with the AJA Liberian judgment were dismissed ‘with prejudice’; and that he ordered that the plaintiff pay ACE's costs of and occasioned by the plaintiff's AJA claims on the standard basis up to 21 May 2011 and on the indemnity basis thereafter; on issue (iv), that there be an expedited taxation of the order for costs following the abandonment of the AJA claim; that, subject thereto, there be a stay until the plaintiff had complied with the order for security for costs; and that, thereafter, the plaintiff must apply for leave to amend; on issue (v), that ACE would need to make a formal application for an order that the plaintiff identify the persons funding these proceedings; and, on issue (vi), that further case management directions be reserved for further consideration at a case management conference.

16 The judge was satisfied that the plaintiff should...