The recent case of Tyson International Company Ltd v Partner Reinsurance Europe Se1 provides useful guidance as to when contracts will be deemed superseded by later contracts.
Background
This case concerned a contract of reinsurance between a reinsured ("Tyson") and reinsurer ("Partner Re") containing an English law and exclusive jurisdiction clause (the "Original Contract"). Shortly after execution of the Original Contract, and at Tyson's request, Partner Re produced a further contract in respect of the same insured risks, albeit providing for New York law and arbitration (the "Further Contract"). The key issue on appeal was whether the Further Contract served to supersede the Original Contract, such that its terms (including the New York law and arbitration clause) were valid and binding on the parties.
The judge noted that an objective assessment of the parties' actions and statements was required to determine whether the Original Contract had been superseded by the Further Contract, and that the parties' subjective intentions were irrelevant for the purposes of that determination.
Tyson contended that the Further Contract was not binding on the basis that:
1. It would have been contrary to business common sense for the parties to have agreed a contract providing for English law and exclusive jurisdiction on 30th June 2021, only to replace it eight days later by a different contract providing for New York law and arbitration;
2. The Further Contract was no more than a certificate issued for administrative purposes which comprised a "summary of the cover" contained in the Original Contract;
3. The Original Contract contained bespoke clauses which were not included in the Further Contract which the parties could not have intended to sweep away;
4. The only permissible mechanism for amending the Original Contract was by means of the procedure set out in the London market General Underwriters Agreement which had been incorporated into the Original Contract; and/or
5. Use of the Further Contract format had been an error.
Holding
Lord Justice Males rejected Tyson's submissions, holding that the Further Contract was a valid and binding contract on the basis that, inter alia:
1. The parties were familiar with nature and terms of the Further Contract (which was a widely used standard form of reinsurance contract in the US) such that they would have been aware that (i) it was governed by New York law and subject to New York arbitration; and (ii) it was a misleading document to use if the parties intended their relationship to be governed by English law;
2. There was no indication that the Further Contract was simply an administrative document; it had been sent to Partner Re by Tyson's broker "for agreement";
3. Partner Re signed and stamped the Further Contract on every page and returned it to Tyson's broker, indicating agreement to its terms; and
4. The Further Contract contained an entire agreement clause which indicated that it constituted the entire agreement between the parties and superseded all prior agreements.
As such, Lord Justice Males held that the first instance judge had been correct to stay the proceedings issued by Tyson in the English Commercial Court, and that the New York arbitration proceedings issued by Partner Re should be allowed to proceed.
Relevance
This case is of particular relevance for players in the insurance industry, who should be mindful of the potential risks of using documents containing contractual language for administrative purposes (namely that such documents may serve to override or supersede existing agreed terms).
1 [2024] EWCA Civ 363
