The Supreme Court has ruled that a multi-million dollar insurance dispute arising from damage at Analog Devices’ computer-chip manufacturing plant in Raheen, County Limerick, can proceed in the Irish courts.
The dispute followed an incident at the plant on August 2, 1999. Analog Devices alleged that incorrect filters were fitted to a hydrochloric acid storage system during maintenance. It claimed damaged filter material contaminated semiconductor wafers, making them unsaleable. The claim ran to several million dollars before business-interruption losses were included.
The plant was covered by two policies. Zurich had issued a local policy, while American Guarantee and Liability Insurance Company had issued a worldwide master policy in the United States. Both insurers denied liability, relying on exclusions concerning errors in processing or manufacture.
Analog commenced Irish proceedings against both insurers in January 2000 and obtained permission to serve American Guarantee in Illinois. The US insurer challenged Irish jurisdiction and also relied on separate proceedings it had commenced in Massachusetts seeking a declaration that it was not liable.
Mr Justice Fennelly held that one of the grounds originally relied upon for service abroad — an alleged contractual breach occurring in Ireland — had not been established. However, the Supreme Court upheld jurisdiction on a separate basis.
American Guarantee was a proper party to the Irish action against Zurich because the two policies covered the same incident and raised virtually identical issues. Fennelly J said separate trials would duplicate complex evidence from Raheen and create a risk of inconsistent decisions.
The court also rejected American Guarantee’s argument that Massachusetts was the more appropriate forum. Much of the factual and technical evidence concerned the Limerick plant, while the US policy’s jurisdiction clause merely allowed the insured to choose a US court and was not exclusive.
The Massachusetts proceedings, which sought a negative declaration of non-liability, were given limited weight in deciding the competing forum issue.
The appeal was dismissed, leaving the Irish proceedings against American Guarantee in place.