Overseas Union Insurance v Turegum Insurance: Governing Law & Arbitration Clauses in Reinsurance Contracts

In Overseas Union Insurance Ltd v Turegum Insurance Co, the Singapore High Court addressed a dispute over reinsurance contracts. Overseas Union Insurance (OUI) sought declarations that reinsurance contracts with Turegum Insurance did not contain arbitration clauses and that a commutation agreement existed. Turegum counterclaimed, asserting the validity of the contracts, the existence of arbitration clauses, and amounts owed by OUI. The High Court dismissed OUI's claim, declared the reinsurance contracts valid, and confirmed the presence of arbitration clauses within them, favoring Turegum's position.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Claim dismissed; declarations made in favor of Turegum Insurance Co regarding the validity of reinsurance contracts and arbitration clauses.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case regarding the governing law and arbitration clauses in reinsurance contracts between OUI and Turegum.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Overseas Union Insurance LtdPlaintiffCorporationClaim DismissedLost
Turegum Insurance CoDefendantCorporationDeclarations GrantedWon

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Liew Teck HuatNiru & Co
Jeya PutraJoseph Tan Jude Benny Anne Choo
Wendy LeongJoseph Tan Jude Benny Anne Choo

4. Facts

  1. Overseas Union Insurance Ltd (OUI) is incorporated in Singapore and carries on business as general insurers and reinsurers.
  2. Turegum Insurance Co (Turegum) is incorporated in the Canton of Zurich but also has an office in London.
  3. OUI entered the London reinsurance market as a reinsurer sometime in the 1960s.
  4. In 1995, OUI received certain claims relating to the reinsurance contracts which it had written with Turegum.
  5. In March 1999, Turegum made an offer to accept a sum of US$220,000 from OUI to commute OUI’s outstanding liability.
  6. On 21 October 1999, OUI purported to accept this offer.
  7. Turegum denied that the offer was still available for acceptance and insisted that OUI should go to arbitration with it.

5. Formal Citations

  1. Overseas Union Insurance Ltd v Turegum Insurance Co, Suit 1664/1999, [2001] SGHC 147

6. Timeline

DateEvent
Overseas Union Insurance Ltd entered the London reinsurance market.
Overseas Union Insurance Ltd ceased accepting new business.
Overseas Union Insurance Ltd received certain claims relating to reinsurance contracts with Turegum Insurance Co.
Negotiations between Overseas Union Insurance Ltd and Turegum Insurance Co heated up.
Turegum Insurance Co offered to accept US$220,000 from Overseas Union Insurance Ltd to commute its outstanding liability.
Diarmuid Brennan & Co, solicitors for Turegum, sent a letter of demand to Overseas Union Insurance Ltd.
Meeting between Overseas Union Insurance Ltd and Turegum Insurance Co representatives in London.
Diarmuid Brennan & Co sent Overseas Union Insurance Ltd a letter giving notice that Turegum was commencing arbitration proceedings.
Overseas Union Insurance Ltd purported to accept Turegum Insurance Co's offer of US$220,000.
Overseas Union Insurance Ltd commenced action against Turegum Insurance Co.
Turegum Insurance Co filed an application for stay of action.
Applications heard by Judith Prakash J.
Turegum Insurance Co stated that Overseas Union Insurance Ltd owed it US$225,590.61.
Documents relating to contract 3TD69 were produced in court.
Decision date of the judgment.

7. Legal Issues

  1. Governing Law of Contract
    • Outcome: The court held that English law was the governing law of the reinsurance contracts.
    • Category: Substantive
  2. Existence of Arbitration Clause
    • Outcome: The court held that the reinsurance contracts contained valid and binding arbitration clauses for arbitration in London.
    • Category: Substantive
  3. Formation of Contract
    • Outcome: The court held that no commutation agreement was concluded between the parties.
    • Category: Substantive
    • Sub-Issues:
      • Revocation of offer by counter-offer

8. Remedies Sought

  1. Declaration that the reinsurance contracts contained no agreement for parties to refer any disputes to arbitration
  2. Declaration that Overseas Union Insurance Ltd and Turegum Insurance Co entered into a binding and conclusive commutation agreement
  3. Declaration that the full liability of Overseas Union Insurance Ltd to Turegum Insurance Co does not exceed US$220,000
  4. Injunction to restrain Turegum Insurance Co from commencing or continuing with arbitration proceedings under the reinsurance contracts

9. Cause of Actions

  • Breach of Contract
  • Declaration

10. Practice Areas

  • Commercial Litigation
  • Insurance Litigation
  • Reinsurance
  • Arbitration

11. Industries

  • Insurance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Projection Pte Ltd v The Tai Ping Insurance Co LtdUnknownYes[2001] 2 SLR 399SingaporeCited for the principles applicable to protracted negotiations in determining whether parties have reached an agreement.
Stevenson v McLeanQueen's Bench DivisionYes[1880] 5 QBD 346England and WalesCited for the principle that a request for information does not constitute a rejection of an offer.
American Airlines Inc. v HopeUnknownYes[1974] 2 LLR 301England and WalesCited for the description of how insurance contracts are placed in the London market and the role of the leading underwriter.
Insurance Company of the State of Pennsylvania v Grand Union Reinsurance Co.UnknownYes[1990] 1 LLR 208England and WalesCited for the principle that a signed slip constitutes a binding contract and is 'free-standing'.
The ZephyrUnknownYes[1984] 1 LLR 58England and WalesCited for the principle that a signed slip constitutes a binding contract and is 'free-standing'.
Youell v Bland WelchHigh CourtYes[1990] 2 LLR 423England and WalesCited for the principle that once a wording is executed by both parties, it replaces the slip as a contract document.
Youell v Bland WelchCourt of AppealYes[1999] 2 LLR 127England and WalesCited for the principle that once a wording is executed by both parties, it replaces the slip as a contract document.
Las Vegas Hilton Corporation v Khoo Teng Hock SunnyUnknownYes[1997] 1 SLR 341SingaporeCited for the three stages in determining the governing law of a contract.
American Airlines Inc. v HopeCourt of AppealYes[1973] 1 LLR 233England and WalesCited for the effect of the leading underwriter clause.
Roadworks (1952) Ltd v JR Charman & OthersUnknownYes[1994] 2 LLR 99England and WalesCited for the authority conferred on the leading underwriter by the leading underwriter clause.
Excess Insurance v ManderUnknownYes[1995] L.R.L.R. 358England and WalesCited for the authority of the lead underwriter to agree to the inclusion of an arbitration clause in the XOL treaty.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97)Singapore
English Arbitration Act 1996England and Wales

15. Key Terms and Keywords

15.1 Key Terms

  • Reinsurance
  • Commutation
  • Arbitration Clause
  • Governing Law
  • Leading Underwriter Clause
  • Treaty Wording
  • Slip
  • Cover Note

15.2 Keywords

  • Reinsurance contracts
  • Arbitration clauses
  • Governing law
  • London reinsurance market
  • Commutation agreement

17. Areas of Law

Area NameRelevance Score
Insurance95
Contract Law90
Reinsurance Contracts90
Conflict of Laws80
Arbitration75
International Law30

16. Subjects

  • Insurance
  • Reinsurance
  • Contract Law
  • Conflict of Laws
  • Arbitration