Case Alert ‐ [2017] EWHC 2753 (Comm)

Whether lawyer can be an arbitrator where requirement is for "not less than 10 years' experience of insurance or reinsurance"

The reinsurance contract entered into by the parties contained an arbitration agreement which provided that "unless the parties otherwise agree, the arbitration tribunal shall consist of persons with not less than ten years' experience of insurance or reinsurance".

Following a dispute, the respondents appointed Mr Alistair Schaff QC. The claimant accepted that Mr Schaff has considerably more than 10 years' experience of insurance or reinsurance law, but said that that was not the same as "experience of insurance or reinsurance", within the meaning of the arbitration clause. It sought to rely on the unreported decision of Morison J in Company X v Company Y [2000] (a case which the judge in this case accepted was fairly well known in the reinsurance market) in which the judge held that the phrase meant only those working within the insurance and reinsurance industry. The respondents countered that that decision was obviously wrong and that the phrase should include those working with, or on behalf of, that industry.

Teare J saw some force in the respondents' argument (and said that if he had been uninhibited by the earlier decision he might well have accepted the argument) but said that "in circumstances where this court has decided this very question some 17 years ago and where the Joint Excess Loss Committee produced a further draft of the Excess Loss clauses in November 2003 and did not alter the drafting of [the relevant clause]… there must, it seems to me, be a very powerful reason for the court not to follow the decision of Morison J".

However, the judge did not consider that Morison J was obviously wrong. Accordingly, Mr Schaff could not be appointed as an arbitrator in this case.

Furthermore, although the other 2 arbitrators appointed by the parties could rule on their own jurisdiction, they had no power to remove the third arbitrator. The respondent could instead apply the original appointment procedure to the re-appointment of the arbitrator, and so had 30 days from the court's decision to appoint a new arbitrator to fill the vacancy.

COMMENT: The judge in this case referred to the JELC Excess Loss Clauses. Following a 3 year project by the Joint Excess Loss Committee, Joint Excess Loss Clauses (JELC) CL432 have now been published and will replace the previous wording (CL400) with effect from 1st January 2018. JELC CL432 now addresses the issue raised by this case with the following wording "The Arbitrators shall be persons (including those who have retired) with not less than 10 years’ experience of insurance or reinsurance within the industry or as lawyers or other professional advisers serving the industry".