Briefing

Making sense of the “confusion” between documents

In the recent case of Tyson v GIC Re, the Court considered the effect of conflicting clauses in different standard form contracts between the same parties, the first subject to English law and jurisdiction under a London Market Reform Contract (“MRC”) and the other subject to New York law and jurisdiction under facultative certificates on the Market Uniform Reinsurance Agreement form (the “Certificates”). The Certificates were signed 9 days after the MRC agreements. The judgment addressed the priorities between the forms and the meaning and effect of a so-called “Confusion Clause” contained in the Certificates.

The case concerned a claim between captive insurer Tyson International Company Ltd (“TICL”) and its reinsurer, GIC Re (“the reinsurer”)¹. This case should not be confused with a similar case involving Tyson and Partner Re which reached a different conclusion in the absence of the Confusion Clause.

The underlying insurance policy provided all risks cover for direct physical loss of or damage to property for the period from 1 July 2021 to 1 July 2022 for Tyson Foods, an Arkansas-based food business. TICL entered into several reinsurance contracts with reinsurers, including with GIC. On 30 June 2021, GIC signed two reinsurance agreements relating to separate layers of the reinsurance, under the MRC form. On 9 July 2021, nine days later, the parties subsequently signed agreements for the same reinsurance on the Market Uniform Reinsurance Agreement form (the “Certificates”).

On 30 July 2021, Tyson Foods suffered a loss following a fire at its poultry rendering plant in Alabama. TICL accepted coverage and provided notice of the loss to reinsurers. Reinsurers sought to rescind the reinsurances for alleged misrepresentation, arguing that the plant in Alabama had not been correctly valued.

Issue

The issue in dispute was whether the claim between TICL and the reinsurers should be referred to the English Commercial Court pursuant to the MRC form, or to New York arbitration pursuant to the Certificates.

TICL relied on the wording of the exclusive jurisdiction clause in the MRC to argue that the claim should be heard in the English Commercial Court. The reinsurer, conversely, relied on the wording of the New York Arbitration Clause in the Certificate to argue that the claim should be subject to arbitration proceedings in New York, it being the later agreement and therefore taken to override earlier inconsistent terms.

The Certificates contained an Entire Agreement clause confirming that the Agreement would constitute the entire agreement between the parties and would supersede all prior agreements between them. Importantly, they also contained a clause which provided that the MRC was to “take precedence over the [the Certificates] in case of confusion” (the “Confusion Clause”).

First instance decision

Reinsurers applied to the New York court for a motion preventing the claimant from commencing proceedings in England in respect of any claims that were subject to the arbitration agreement in the Certificates. At the same time, TICL issued proceedings against the reinsurers in the English High Court.

Mr Nigel Cooper KC, at first instance, held that the effect of the Confusion Clause was to give precedence to the terms of the MRC in the event that there was confusion or inconsistency between the MRC and the Certificates. As such, the terms of the MRC prevailed, and the English courts had jurisdiction. A permanent anti‑suit injunction was granted restraining the New York arbitration.

Appeal grounds

Popplewell LJ gave GIC permission to appeal on two grounds:

Firstly, that the Judge was mistaken in his construction of the Confusion Clause.
Secondly, that the Judge erred in failing to conclude that the two clauses could be reconciled by giving priority to the later arbitration agreement and by reading the English jurisdiction clause as giving the English Court supervisory jurisdiction over the New York arbitration.

Judgment

Issue 1

GIC argued that the Confusion Clause was not a hierarchy clause applying in cases of inconsistency between the MRC and the Certificates, but rather that the Confusion Clause only applied where provisions within the Certificate itself were unclear, uncertain, or indistinct. The effect of this argument was that if, for example, the Certificate provided in two places within it for the premium to become due on two different dates, the Confusion Clause would apply, and it would be appropriate to refer back to the MRC, and then to apply the premium due date contained in the MRC.

GIC contended that there was no uncertainty in the Certificates relating to the New York arbitration agreement, and so the Confusion Clause did not apply.

The Court rejected this argument and upheld the decision of the High Court. It held that, as a matter of the natural and ordinary meaning of the language, it seemed far more likely that the “confusion” referred to was between the MRC and the Certificates.

The commercial consequences made this interpretation even more likely: parties generally think their contracts make sense and it was unlikely they would go to the trouble in a widely used form to make provision for an improbable contingency that was contradictory to the wording of the contract.

By contrast, the idea that two different forms, one developed for use in London and the other for the US market, might differ in detail, and that the parties might think it sensible to make provision for that, made sense. It was also unlikely that the parties intended their relationship to be governed entirely by the Certificates, but for the MRC to spring back to life in certain ill-defined circumstances (such as where the inconsistencies in the Certificates could not be reconciled).

The Court accepted that on one view it was odd that the parties had agreed English law and jurisdiction, then agreed New York law and arbitration, then agreed to revert back to the English law and jurisdiction via the Confusion Clause. However, the parties did sign the MRC and the Certificate, each was a complete contract, and the parties must have known they differed in their detail but went ahead (the Court commenting that it would not speculate on why).

Issue 2

On the basis of prior case law, GIC argued that: (1) an arbitration agreement and an exclusive jurisdiction clause in the same agreement can be reconciled; (2) this is the case if they are in different constituent documents; and (3) this is the case even if the seat of the arbitration is in a different jurisdiction from the chosen jurisdiction. The English jurisdiction clause in the MRC could therefore be read as providing for supervisory jurisdiction over the New York arbitration.

The Court held that the previous case law concerned cases with arbitration and exclusive jurisdiction clauses in a single document, and where there are two separate documents with different provisions and a hierarchy clause the position is very different. The Court commented that, where there are inconsistent dispute resolution provisions between two documents, the question is one of construction and it is important to approach the documents “in a cool and objective spirit” to determine whether there is any inconsistency between them. The Court held that the exclusive jurisdiction clauses and the arbitration agreements were “flatly inconsistent” and could not be read consistently together.

Ground 2 was therefore dismissed.

Discussion

This case was one of several claims between TICL and reinsurers under a tower of facultative reinsurance.

The Court of Appeal distinguished its earlier decision in Tyson International v Partner Reinsurance², which related to the same risk and policy year as the GIC litigation, because of the absence of a Confusion Clause in that case, which led it to rule that the later Certificates would take priority over the earlier MRC form.

The Court noted that the Partner Re agreements in respect of the previous year contained an endorsement to the MRC, which confirmed that the Certificate was agreed “subject to the terms and conditions of [the MRC]”. Therefore, on these facts, it was clear that the effect of the endorsement was that the MRC took precedence.

These cases highlight the need to pay careful attention to the forms being used. It is not always the case that the document later in time will prevail.

Footnotes

Tyson International Co Ltd v GIC Re, India, Corporate Member Ltd [2026] EWCA Civ 40
Tyson International Co Ltd v Partner Reinsurance Europe SE [2024] EWCA Civ 363