Nico Leslie and Daniel Carall-Green, led by Paul Stanley KC, represented Dassault Aviation SA in a successful challenge before the High Court of the jurisdiction of the tribunal in an arbitration requested against Dassault by Mitsui Sumitomo Insurance Co Ltd (“MSI”).
On 6 March 2015, Mitsui Bussan Aerospace Co Ltd (“MBA”) and Dassault entered into a contract whereby Dassault agreed to manufacture and deliver two aircraft to MBA for onward supply to a Japanese client. The contract contained an arbitration agreement providing for ICC arbitration with a London seat and, importantly, also contained a prohibition on any transfer or assignment of rights by either party.
Some years later, the Japanese client brought a damages claim against MBA, which in turn alleged a corresponding claim against Dassault. However, MBA had insured itself by means of a Japanese law insurance policy with MSI in respect of the claim by the Japanese client; MBA made a claim on that policy and MSI paid out. Further to the default provisions of the Japanese insurance statute, MSI claimed that this caused an automatic statutory transfer of MBA’s corresponding contractual claim against Dassault to MSI.
MSI then made a request for arbitration against Dassault.
The arbitrators were Lord Collins, Joe Smouha KC, and Simon Crookenden KC. Dassault argued before the tribunal that it did not have jurisdiction because the contractual prohibition precluded any transfer of rights to MSI. The tribunal by a majority (Lord Collins and Joe Smouha KC) rejected that argument, and declared that it had jurisdiction (Simon Crookenden KC dissenting). Dassault issued a challenge under section 67 of the Arbitration Act 1996.
On 20 December 2022, Cockerill J handed down judgment in Dassault’s favour, deciding that the transfer in question was caught by the contractual prohibition. The judge considered a series of old cases sometimes thought to stand for the proposition that transfers “by operation of law” are not caught by a contractual prohibition on assignment; she decided that there is no such general proposition. Rather, the question is whether the transfer occurs truly outside the voluntary control of the transferring party. On the facts of this case, she found that the triggering of the transfer to MSI under Japanese law was on multiple levels a consequence of voluntary acts by MBA (e.g., the decision to purchase the policy and the decision to make the claim), and was therefore caught by the prohibition.
The case is significant in that it has clarified an often-misunderstood area of the law of assignment. Specifically, Cockerill J has confirmed that where a transfer takes place under statute in apparent breach of a contractual prohibition on transfer, the focus is not (as has at times been suggested) on the mechanism of the transfer (i.e., whether it is “by operation of law”), but rather whether there is a sufficient “degree” or “taint” of voluntariness in the transfer.
Cockerill J’s decision is the first authority squarely addressing this point for almost a century.