High Court breaks insurance arbitration impasse

Commercial arbitrations can sometimes hit an impasse but the High Court has the power to intervene and put them back on track. A judge did just that in one case in which agreement could not be reached as to who should be appointed to the chair of two three-member arbitration panels.

A medical equipment manufacturer was in dispute with its insurer after incurring substantial liabilities in respect of personal injury litigation in America. Two relevant policies contained identical arbitration clauses, by which each party would choose one arbitrator who would together choose the panel’s chair. It had, however, proved impossible to reach an accord as to who that person should be.

The manufacturer argued that it would save time and costs, and minimise the risk of inconsistent outcomes, if the same chair who had already been appointed to a third arbitration also served on the other two panels. However, the insurer objected on the basis that it was not a party to the third arbitration and would not be privy to evidence adduced and submissions made in those proceedings.

The Court found that there was a legitimate basis for the insurer’s objection in that, if the third arbitration took place first, the chair might form views, without any input from the insurer, which he might afterwards be slow to change. In those circumstances, the Court chose a chair for the two relevant panels from a list of six names proposed by the arbitrators that the insurer had appointed.