Service of Suit Clause
The service of suit clause requires an insurer domiciled outside the forum to submit to suit by the policyholder before the competent courts and to appoint an attorney authorised to accept service of process.
- Clause type
- Condition
- Origin/Market
- London Market (LMA/NMA/Lloyd’s)
- Favours
- Insured
- Negotiability
- Market standard
Standard wordings
- NMA1998
Purpose
Foreign insurers, particularly Lloyd’s and London market carriers, are not readily suable by policyholders outside the United Kingdom if no address for service is available there. The service of suit clause (traditionally NMA1998) addresses this: the insurer appoints an attorney resident in the relevant forum on whom process can effectively be served, and agrees to submit to the jurisdiction of the named courts.
Effect and limits
The clause makes practical enforcement easier for the policyholder but neither changes the governing substantive law nor displaces a separate jurisdiction or arbitration clause; in many modern wordings it is combined with an arbitration clause, so that submission to state courts only applies to the extent no arbitration is provided for. Historically, the clause was mainly required in the United States to address regulatory concerns about foreign, non-admitted insurers.
Negotiation and practice
When drafting the contract, it must be checked which specific court or state is named as competent and whether the appointed agent for service is actually reachable and up to date. Where combined with an arbitration clause, the relationship between service of suit and arbitration should be clarified to avoid procedural delays.