Even if the war exclusion is widely drafted it is impossible for the insurer to guarantee that a claim that it considers is caused by a war or associated peril is in fact excluded from cover. A factor which is often overlooked in drafting policies is the importance of the jurisdiction and choice of law clause. Frequently, as part of the negotiations to which any insurance policy is subject, the underwriter may either agree to a local jurisdiction and proper law clause or, alternatively, fail to deal with the issue. This may result in any other protection included in the policy being entirely worthless. It must be clear that if a claim is to be litigated possibly in the country where the war or civil war has occurred, it is unlikely that the insurer will obtain a favourable verdict if it attempts to rely upon the war exclusion clause.

The insurer should include an exclusive jurisdiction clause and choice of law clause of its own choice.

Such a provision would not necessarily prevent the local court from ignoring the clause and proceeding to judgment. It may, however, enable the insurer resist the enforcement of any judgment in another territory where it holds assets. Of course, if it holds assets in the country where the hostilities have occurred then no clause, however well drafted, will provide an adequate safeguard.

As previously stated, it is frequently the case that all risks insurers find themselves providing cover as a reinsurer of a fronting company in an area of hostilities. It may even be the case that they are effectively reinsuring the existing government in that the fronting company may be state owned. There are various precautions that the all risks “reinsurer” can take to ensure that it receives a fair hearing and the fronting company does not settle the claim without consulting the reinsurer:

As with direct insurance, the all risks “reinsurer” should include a jurisdiction and choice of law clause to govern the contract of reinsurance. In the absence of such a clause, it is still possible that an English Court would hold that England, for example, was the appropriate jurisdiction. Factors influencing such a decision might be:

– the “reinsurers” were incorporated and carried out business in England;

– the agreement was written in the English language;

– the contract was concluded in England; and

– the contract was placed through a London broker.

However, without a jurisdiction and proper law clause, the reinsurer is at risk.