The Court held that Manitoba was the forum conveniens with respect to the interpretation of an umbrella insurance policy issued by an American insurance company

20. September 2005 0

Whirlpool Canada Co. v. National Union Fire Insurance Co. of Pittsburgh, PA, [2005] M.J. No. 332, Manitoba Court of Queen’s Bench

The insured manufactured a turbine for Manitoba Hydro which exploded and caused extensive damage. Manitoba Hydro commenced an action in Manitoba against the insured. The insured and its primary insurer brought applications in the Manitoba court seeking a declaration that the umbrella insurer, National Union Fire Assurance Company (“National”), had a duty to defend. National, an American insurance company, brought the subject application challenging the jurisdiction of the Manitoba court to decide the issue.

The Court found that Manitoba had jurisdiction simpliciter as there was a real and substantial connection to Manitoba. The Court noted that it was artificial for National to argue that it did not operate in Canada when the claim in this case was made with respect to a Canadian insured for a Canadian loss that would be adjusted in Canada and, if covered, paid in Canadian dollars. The Court also noted that under s. 22(2)(i) of the Insurance Act, C.C.S.M., c. 140, an insurer is deemed to be carrying on business in Manitoba if it adjusts any losses in Manitoba.

The Court also found that Manitoba was the forum conveniens. The Court assumed for the sake of argument that there was a difference between the Canadian and American law on the issue of the duty to defend, and that that difference motivated National’s motion.

The proper law of the contract was the law with which the contract had the closest and most substantial connection. The policy insured the parent company as well as a number of subsidiaries all over the world. The Court held that the contract was between National and the parent corporation which negotiated the policy. Thus while the policy would cover risks in Canada and a number of other foreign countries, it would be reasonable to assume that the parties expected the policy would be interpreted uniformly under one system of law and that that law would be American. Even if the named insureds could each be considered to have entered into separate contracts with National, it would be reasonable to assume that they expected American law to apply.

The Court found that the proper law was either Michigan or New York. The Court was provided with no evidence as to whether the law of the two states was different on the issue. Also, the Court was provided with no evidence as to why the Michigan court (where the competing application was brought) would be in a better position than Manitoba to apply the law of New York. National failed to show that there was another forum that was clearly better suited to apply the applicable law. The Court dismissed National’s application and held that Manitoba was forum conveniens.

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