Reinsurance negotiations: parties bound as soon as slip policy is approved by email

Allianz Insurance Company Egypt v Aigaion Insurance Company SA [2008] EWCA Civ 1455

In this recent case, the Court of Appeal (the "CA") had to consider whether a contract of reinsurance negotiated by email (the "Reinsurance") had been concluded. At first instance the court had found in favour of the claimant reinsured ("Allianz") on the basis that a payment warranty (the "Payment Warranty"), which was central to the dispute, had not been incorporated into the Reinsurance (see E-alert 16 September 2008).

On appeal, in a further attempt to escape liability, the reinsurer ("Aigaion") argued no contract had ever been entered into between the parties. Aigaion's argumentation centred around the fact that the slip that formed the basis of the Reinsurance did not contain a class warranty that had been agreed between the parties but omitted from the final version of the slip (due to an oversight on the part of the broker).

Aigaion argued this omission meant that their email confirming cover could not form a valid acceptance of the terms set out in the slip, but a counter offer referring to the previously agreed wording that contained the class warranty. Since that counter offer was never formally accepted, there was no Reinsurance.

The CA disagreed, finding Aigaion were bound as soon as they approved the slip, pointing out their email was the equivalent of a signature on the slip.

Whilst turning on its own facts, the case serves as a good illustration of the need for parties to ensure they are clear on the terms they are agreeing to, and to record the agreement carefully.