On 13 March 2018, the Court of Appeal reversed the Commercial Court decision in Tonicstar Limited v (1) Allianz Insurance PLC; (2) Sirius International Insurance Corporation. Legatt LJ gave the leading judgment in which it was held that a QC with more than ten years’ experience in insurance legal practice is eligible for the appointment as arbitrator for the purposes of a clause requiring arbitrators to have “not less than ten year’s experience of insurance or reinsurance”. Therefore, the term is not restricted only to experience obtained in the insurance or reinsurance industry “itself” which the Commercial Judge considered to be separate and distinct from the experience of insurance or reinsurance law (although it should be noted that the judge at first instance said that, uninhibited by authority, he may well have decided that the QC satisfied the requirements of the clause, but he considered himself bound by the decision of the Commercial Court in Company X v Company Y (17 June 2000)).
The Court of Appeal highlighted that reasonable parties incorporating the clause in question would give the term a wider meaning, i.e. covering both industry and law practice experience, given the close relationship between insurance and reinsurance and the law relating to the same. Further, the Court overruled the decision in Company X v Company Y, by which the Commercial Court felt bound, noting that it doubted most people incorporating the clause were aware of that decision.
The Court of Appeal adopted a more sensible and industry-orientated approach on the interpretation. However, this dispute is a kind reminder for the need of clarity in commercial contracts, absence of which might fuel litigation. Interestingly, the wording of JELC clause, which was in dispute here, has been recently amended as follows:
“The Arbitrators shall be persons…. with not less than ten years’ experience of insurance or reinsurance within the industry or as lawyers or other professional advisors serving the industry” .
You can read our blog on the previous decision here.