Case Alert - [2018] EWCA Civ 434 

Court of Appeal holds that a 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 wished to appoint Mr Alistair Schaff QC, but Teare J said that there was no very powerful reason for him not to follow the decision of Morison J in Company X v Company Y [2000] which held that this phrase meant only those working within the insurance and reinsurance industry could be appointed as an arbitrator (notwithstanding that the clause does not expressly say that).

The Court of Appeal has now unanimously allowed the appeal from that decision. The respondent had not sought to support Morison J's interpretation, given the lack of express wording in the phrase limiting arbitrators to "trade" arbitrators. Instead, it sought to argue that, although Mr Schaff QC had experience of insurance and reinsurance law, no evidence had been adduced to show that he had experience of insurance or reinsurance "itself". The Court of Appeal rejected that distinction, concluding that "first, that there is no such thing as insurance or reinsurance "itself" which is separate and distinct from the law of insurance and reinsurance and, second, that, unless the parties have some special reason for wishing to exclude lawyers from the pool of candidates eligible for appointment, a person who has practised as a barrister specialising in the field of insurance and reinsurance for more than 10 years would naturally be regarded as qualified for appointment as an arbitrator".

Furthermore, although later courts should generally adhere to the interpretation given by an earlier court to the meaning of a clause in a standard form agreement, that argument did not persuade the Court of Appeal that it should follow Morison J's decision: "In any case, while certainty is an important value in commerce, so too is the ability of the legal system to correct error, and contracting parties may be taken to know that a decision of a court of first instance is not immutable and is capable of being overruled. The value of certainty is greatest where the members of a trade can be expected to rely on the determination of a point which is otherwise unclear. ..But if a decision is not one on which significant reliance is likely to be placed or if the consequences of such reliance are unlikely to be significant, the importance of certainty is diminished. And if a decision is untenable, it should not in any case be allowed to stand".

COMMENT: The clause in this case was part of the JELC Clauses dated 1 January 1997. Those clauses have been amended to expressly provide that "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". This decision therefore brings the interpretation of the arbitration clause in the former JELC Clauses in line with the current position.