Tyson International Company Ltd v Partner Reinsurance Europe SE

[2024] EWCA Civ 363

On 1 July 2021, the parties entered into a contract of reinsurance (the Market Reform Contract or “MRC”) containing an English law and exclusive jurisdiction clause. Eight days later, on 8 July 2021, at the request of Tyson, the respondent reinsurer (“Partner Re”) issued what looked like another contract of reinsurance (Market Uniform Reinsurance Agreement or “MURA”) covering the same risks, but containing clauses providing for New York law and arbitration. The principal issue in dispute before the CA in London was whether this Partner Re document was intended to replace the previous contract or whether, as Tyson argued, it was merely an administrative document of no contractual effect.

At first instance, the judge held that the Partner Re document was intended to replace the previous contract and that the arbitration clause which it contained was valid and binding. Accordingly, the judge granted a stay of the action begun by Tyson in the Commercial Court pursuant to section 9 of the Arbitration Act 1996. 

The dispute between the parties had arisen as a result of a claim by Tyson following a fire at a facility belonging to Tyson Foods. Tyson had accepted liability under the direct policy. The loss, comprising damage to property and resulting in business interruption, was likely to exhaust the reinsurance tower which provided cover up to US$500 million. Discovering that certain statements of value had been “significantly understated”, Partner Re avoided the contract of reinsurance.

This led to Tyson issuing a claim form in the Commercial Court on 3 May 2023, while Partner Re commenced arbitration in New York the next day. Partner Re issued its application for a stay pursuant to section 9 of the Arbitration Act 1996 on 24 May 2023, but the tribunal in New York rejected a request from Tyson, and it was the application for a stay that came before the judge on 13 December 2023, together with an application by Tyson for an anti-arbitration injunction issued on 3 November 2023. 

The judge, at first instance, recognised that both policies covered precisely the same risk, period and parties, and that each of them could or would be a self-standing and self-sufficient contract if viewed in isolation from the other. The question was whether the later contract varied or superseded the earlier contract. The judge held that it did, saying it was expressly contemplated by the parties through their brokers at the time of execution of the former contract. It was proffered for consideration and agreement, and separately signed and agreed on both sides. It contained all the operative terms to be a contract of reinsurance, albeit one governed by New York law.

There was no doubt in the mind of Males LJ that the MRC was a valid and binding contract of reinsurance, governed by English law and subject to the exclusive jurisdiction of the English court. The issue was whether the parties intended for that contract to be superseded by the MURA. This required an objective assessment of what the parties said and did. The parties’ subjective intentions were irrelevant, though it appeared fairly clear from the evidence before the judge that Tyson intended and understood subjectively that the MRC would continue to govern the parties’ relationship, while Partner Re intended and understood that the MRC would be superseded by the MURA. The question for the CA was whether the MRC was varied or was it superseded by the MURA.

Viewing the matter objectively, several points were clear to the CA. First, from the outset of their negotiations for the 2021 policy, the parties contemplated that what were described as “reinsurance certificates and the updated policy form” would be provided. This was a reference to the MURA.

Second, the parties were, or must be taken to have been, familiar with the nature and terms of the MURA, a widely used form of reinsurance contract in the US market which, on its face, makes it abundantly clear what the document is for. This included that it was governed by New York law and subject to New York arbitration. Therefore, the parties must have understood that the MURA was an inappropriate, indeed misleading, document to use if the parties intended their relationship to be governed by an MRC subject to English law and jurisdiction. 

Third, there was no indication that the issue of the MURA was merely part of some administrative process. It was expressly sent out “for agreement”. That was, according to Males LJ, the language of contract formation. 

The MURA was signed and stamped on every page. The obvious inference was that Partner Re agreed the terms of the document and accepted it for what it said it was, the contract of reinsurance for the 2021 policy year. 

There was also an entire agreement clause in the MURA, which stated expressly that the MURA: “shall supersede all contemporaneous or prior agreements and understandings, both written and oral”. This was “highly relevant”. The entire agreement clause stated in clear terms that all prior agreements were superseded. In the view of Males LJ, this all suggested that the 2021 MURA was intended to be the final contract of reinsurance for the 2021 policy year:

“Certainly, it looks like a contract and contains everything needed to be a valid and binding contract of reinsurance. It resembles the proverbial duck.”

Finally, there was nothing in the MRC to prevent the parties from agreeing, either expressly or by necessary implication, that the MRC should be superseded by a later contract on different terms. That was what they did and did so “expressly”, in view of the terms of the entire agreement clause in the MURA. 

Therefore, although the MRC contract dated 30 June 2021 was a valid contract of reinsurance providing for English law and the exclusive jurisdiction of the English courts, it was superseded by the MURA dated 8 July 2021, which provided for New York law and arbitration. In the words of Lewis LJ, “the parties began by playing cricket but then switched to baseball”.

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