Civil Law

In the international insurance market, a syndicate is Lloyd’s operational unit for conducting insurance business. It is financially supported by one or more Lloyd’s members and routinely managed by a specialist Managing Agent. These Lloyd’s members are the actual insurers of the relevant insurance policies.

Section 8(1) of the English Lloyd’s Act 1982 provides that:

“An underwriting member shall be a party to a contract of insurance underwritten at Lloyd’s only if it is underwritten with several liability, each underwriting member for his own part and not one for another, and if the liability of each underwriting member is accepted solely for his own account.”

According to the above provision, for any risk underwritten by a syndicate, each underwriting member bears individual liability according to their respective share. Under traditional English law, syndicates themselves are not legal persons and cannot, in principle, be parties to litigation. Consequently, different jurisdictions have developed different approaches to resolving the issue of their litigation standing in disputes arising from policies issued by Lloyd’s syndicates. This article provides a preliminary overview of these approaches.

Ⅰ. Legal Practice in jurisdictions of the United Kingdom and the United States

Under English law, where a dispute arises from an insurance contract underwritten by a syndicate, the syndicate members, rather than the syndicate itself, should in principle be the parties to the litigation. In practice, one member would typically participate in proceedings representing both itself and the other members.

This approach was illustrated in Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co [1989] 1 Lloyd’s Rep 568. In this case, the plaintiff insurer brought proceedings on behalf of itself and other syndicate members. The defendant contended that the plaintiff had no standing to bring proceedings in such representative capacity, but this contention was rejected by the English Court of Appeal.

In Lloyd v Google LLC [2022] 2 All ER 209, Lord Leggatt of the UK Supreme Court cited the Pan Atlantic case and summarized that “[I]n the case of insurance underwritten by Lloyd’s syndicates, which are not separate legal entities, it is standard practice for a single member of the syndicate (usually the leading underwriter) to be named as a representative claimant or defendant suing, or being sued, for themselves and all the other members. There is no difficulty in awarding damages for or against the representative in such proceedings, as the calculation of any damages which the members of the syndicate are collectively entitled to recover or liable to pay does not depend on how the risk is divided among the members of the syndicate.”

This position has also been adopted in other common law jurisdictions, including the United States.

For example, in Roby v Corp. of Lloyd’s 796 F. Supp. 103, Fed. Sec. L. Rep. (CCH) P96,825, 1992 U.S. Dist. Decision, heard by the United States District Court for the Southern District of New York, investors in an investment dispute brought proceedings against multiple defendants including the Lloyd’s itself. These defendants included certain Lloyd’s syndicates.

The syndicate defendants raised a defense claiming they were not suable legal entities and accordingly sought dismissal of the claims against the syndicates. After hearing the issue, the court found that under both English law and New York law, the syndicates had no legal existence, and on this basis dismissed the claims against the syndicates.

That said, there are small number of English cases permitting syndicates to participate directly in litigation in their own name, such as Engelhart CTP (US) LLC v Lloyd’s Syndicate 1221 for the 2014 Year of Account and others [2018] EWHC 900 (Comm).

Ⅱ. The Issue of Syndicates’ Litigation Participation Before PRC Courts

Chinese law does not recognize the “syndicate” as a distinct legal entity.. Therefore, under PRC law, there is currently no clear legal provision regarding whether a syndicate could be a eligible defendant and how parties should be identified in disputes concerning insurance policies underwritten by syndicates. PRC courts have yet to develop a consistent judicial practice on this issue.

Based on the our preliminary research, syndicates may participate in litigation before PRC courts in three different approaches:

1. Individual syndicate members directly participate in proceedings, as in case (2015) Da Hai Shang Chu Zi No. 376 （（2015）大海商初字第376号）;
2. The syndicate itself participates in proceedings as a party, as in cases (2017) Hu 72 Min Chu No. 3448 and (2020) Hu 0115 Min Chu No. 4842（（2017）沪72民初3448号、（2020）沪0115民初4842号）; and
3. The syndicate’s managing agent represents the syndicate in defending proceedings, as in case (2017) Liao 72 Min Chu No. 585（（2017）辽72民初585号）.

Therefore, in any litigation involving a Lloyd’s syndicate in China, the appropriate party or parties to the proceedings should be determined on a case-by-case basis.

With respect to the first approach, Lloyd’s does not generally disclose the specific member list of syndicates. Accordingly, if one wishes to sue syndicate members directly, it may first request the syndicate’s managing agent for disclosure, and then, having obtained the member list, bring proceedings before the People’s Courts against these members.

With respect to the second approach, although Lloyd’s syndicates lack standing as parties to litigation in common law jurisdictions, there is nonetheless a plausible legal basis under Chinese law for recognizing the syndicate as a direct party to court proceedings

Article 51 of the PRC Civil Procedure Law provides that parties to civil proceedings in China should be “citizens, legal persons, or other organizations”. Article 52 of the Interpretation of the Supreme People’s Court on the Application of the PRC Civil Procedure Law (the “Interpretation”) provides that “the ‘other organizations’ referred to in Article 51 of the Civil Procedure Law means organizations that are lawfully established and have certain organizational structures and property, but do not possess legal person status, including: (1) sole proprietorships that have been registered and obtained business licenses in accordance with the law; (2) partnerships that have been registered and obtained business licenses in accordance with the law; (3) Chinese-foreign contractual joint ventures and foreign-funded enterprises that have been registered and obtained Chinese business licenses in accordance with the law; (4) branches and representative offices that are established by social organizations in accordance with the law; (5) branches that are established by legal persons and have obtained business licenses in accordance with the law; (6) branches of commercial banks, policy-based banks and non-banking financial institutions that are established and have obtained business licenses in accordance with the law; (7) enterprises run by towns and sub-districts that have been registered and have obtained business licenses in accordance with the law; (8) other organizations meeting the requirements set out in the present article.”

Although a Lloyd’s syndicate does not possess legal personality, it operates as a legitimate underwriting unit within Lloyd’s and maintains a defined organizational structure and identifiable assets. As such, it arguably satisfies the substantive criteria for an “other organization” under Article 52 of the Interpretation and may fall within the scope of paragraph (8) thereof, namely, “other organizations meeting the conditions stipulated in this provision.”

Moreover, in the event of a dispute with a syndicate that necessitates litigation within China, a plaintiff may also consider naming the syndicate itself and/or its managing agent as co-defendants. However, this approach currently lacks judicial precedent, and it remains uncertain whether Chinese courts would accept such a pleading.

As Chinese insurers continue to expand their cross-border operations, disputes involving Lloyd’s entities are expected to arise with increasing frequency. Such cases often raise complex legal issues concerning, among others, the recognition of foreign litigating capacity, enforcement of judgments, and cross-border procedural coordination. We look forward to closely monitoring, analyzing, and actively contributing to the evolving jurisprudence and practical developments in this emerging area of law.

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