Tonicstar Limited v Allianz Insurance Plc [2017] EWHC 2753 (Comm)

A contract of reinsurance, triggered by the 9/11 attacks, contained provisions requiring the respondent to appoint an arbitrator:

"Unless the parties otherwise agree the arbitration tribunal shall consist of persons with not less than ten years' experience of insurance or reinsurance."

The claimant contested the appointment of the arbitrator chosen by the respondent saying that he (the proposed arbitrator) had plenty more than ten years’ experience in insurance or reinsurance law, but that the contractual provision required experience in the business of insurance or reinsurance itself. The court agreed, and ordered that the respondent should choose a different arbitrator.

Key points

  • Pay extra special care to the criteria that are set out in a lease for the appointment of a rent review expert or arbitrator.
  • If a preferred expert – with extensive experience in the valuation of a particular asset in a particular area – has only nine years’ experience when the lease drafting specifies ten years, the appointment could be contested.
  • Is it necessary for the expert to have experience in both lettings and valuation? Although commonly seen in rent review provisions, such a requirement may well limit the options as to who can be appointed in the first place. Indeed, it may be impossible to find someone with that experience in some markets, which often causes difficulties.