CL-2024-000668 - [2025] EWHC 2788 (Comm)

Fecha: 28-Oct-2025

The Application under s. 69 of the 1996 Act

18.

The Claimant issued the claim form in the current arbitration claim on 11 December 2024. It sought permission to appeal the Appeal Award on two points of law, as follows:

(1)

Where CIF buyers allege that sellers were in breach because they failed to procure a compliant contract of insurance, is it sufficient for buyers to prove that the cargo insurers have rejected the claim, or do they have to prove that the cargo insurers were entitled to reject the claim?

(2)

Does it make any difference that the insurers might have had grounds for rejecting the claim, if there is no finding in the Award that they were in fact entitled to reject?

19.

The essence of the argument put by the Claimant in its Skeleton Argument in support of permission to appeal was that the Appeal Board had held that the mere fact of rejection of the claim by cargo insurers was sufficient to establish the seller’s breach; and that that could not be right as a matter of law.

20.

The Defendant opposed permission to appeal on the basis that:

(1)

The Appeal Board had not been asked to determine whether the mere purported avoidance of a policy by the relevant insurers was sufficient to place the sellers in breach of contract. The Claimant’s position before the Board of Appeal had been simply that the Defendant was premature in bringing a claim against them, given that the insurers had not yet avoided the relevant policy and/or rejected the claim. The Seller had not put forward an alternative case to the effect that, if this was incorrect, and the insurers had avoided the policy/rejected the claim, they were wrong to do so. Thus it was not directly in issue whether the Defendant, in the event that the insurers had avoided the policy/rejected the claim, had to establish that the insurers were right to have done so.

(2)

In any event, the Appeal Board had not held that the Claimant was in breach simply on account of insurers’ purported avoidance of the policy. The Appeal Board had affirmed the findings of the First Tier Tribunal that the insurers had been entitled to avoid the policy; and/or the Appeal Board had concluded that the insurance policy was not effective because the insurers had rejected cover and the Defendant had no ability to seek effective recourse against the insurers in respect of that rejection.

21.

The application for permission to appeal was considered by Dias J, on the papers as is usual.

22.

By order dated 9 April 2025, Dias J granted permission to appeal. The Reasons which she gave for that decision were as follows:

‘(1) As recorded in the Award, a key ground of Sellers’ appeal before the Board of Appeal was that the First Tier Tribunal had been wrong to find that Sellers had failed to provide a valid insurance policy/certificate. The error asserted was that the First Tier Tribunal had elided that obligation with a decision purportedly (but not officially) made by insurers to avoid the policy in circumstances where proceedings to determine the validity of the insurance were ongoing in Belgium but had not yet been determined. This substantially reflects the questions of law in respect of which permission is now sought and which were therefore clearly questions which the Board of Appeal was asked to determine.
(2)
On a fair and generous reading of the Award, the Board of Appeal held that:
(a)
it was irrelevant that the validity of the policy under Belgian law had not yet been determined;
(b)
the contract required “a valid insurance policy which must be effective”;
(c)
“effectiveness would depend on whether the policy was successful in producing a desired or intended result, when a cargo claim is made against it”;
(d)
insurers had rejected Buyers’ claim under the policy and claimed/declared that the policy was null and void (as is accepted to have been common ground);
(e)
Buyers were unable to pursue a claim under the policy;
(f)
the policy was in consequence ineffective and thus invalid.
(3)
The Board of Appeal did not on a fair reading find that insurers were entitled to avoid the policy, whether by affirming the decision of the First Tier Tribunal or otherwise. The First Tier Tribunal had held (at least arguably, and presumably as a matter of English law rather than as a finding of fact as to Belgian law) that insurers were entitled to avoid the policy for material non-disclosure. By contrast, the Board of Appeal upheld the First Tier Tribunal’s decision that the policy was invalid on the entirely different basis that the policy was “ineffective” as defined above. This cannot be regarded as any express or implicit affirmation of the First Tier Tribunal’s reasoning. As Buyers themselves have pointed out, the question of whether insurers’ avoidance was correct was not in issue before the Board of Appeal. Buyers’ short answer to the application for permission to appeal is therefore based on an incorrect premise.
(4)
Buyers’ longer answer is also misconceived. While the Board of Appeal found as a fact that Buyers were unable to pursue an insurance claim, it held that this flowed from the rejection of the claim by insurers and purported avoidance of the policy, and was treated as an inextricable consequence of that rejection and purported avoidance rather than as a separate, freestanding requirement.
(5)
The extent to which rejection of a claim and assertions of invalidity/purported avoidance by insurers mean that a CIF seller is in breach of contract is a question of general public importance in the context of the international sale of goods.
(6)
The decision of Board of Appeal is open to serious doubt. Whereas the law as accepted by both parties is that a policy must be effective in the sense that it is valid and not void or voidable (ie the critical factor is validity), the Board of Appeal appears to have transposed these requirements and regarded the touchstone of “validity” as being “effectiveness” defined as above. It is by no means certain that this is a correct reflection of the law.
(7)
The determination of the questions of law will substantially affect the rights of the parties and I consider that in all the circumstances it is just and proper for the Court to hear this appeal.’