CL-2023-000064 - [2025] EWHC 1870 (Comm)

It seems to me clear that the arbitration agreement only operates if, at the point at which the claim would be brought, the precondition to the operation of the arbitration agreement has been fulfilled. If that precondition has been fulfilled, it follows that the parties have agreed that the claim must be brought by way of arbitration. If not, then there is no operative agreement to arbitrate, and it is open to either party to commence proceedings before the English Court.

I did not understand any of that to be seriously disputed by the U/Ws. Nor, in the light of the cases described above, did they try to argue that, as of today, the precondition has actually been fulfilled. Accordingly, they accept that the present proceedings were properly commenced.

That seems to me to be an end to the point. To my mind, the operation of the arbitration clause is binary. If it bites, it operates as an exclusive jurisdiction clause. It is a one stop shop, but only for claims which are otherwise admitted. For any other type of claim, another venue (here the English Court) must be used.

The point at which compliance with that pre-condition falls to be tested is the date at which the particular proceedings are brought. I should add that I agree with Mr Walsh that it would not matter if the insurers had, in the initial correspondence, taken “liability” points, if, by the time formal proceedings were being commenced, all of those “liability” points had been conceded. But, as I keep saying, when tested at the point at which proceedings are commenced, the arbitration agreement either bites or it does not. If it does not, the obligation to arbitrate will not spring into life at some later stage just because the insurer makes a further admission, or an issue is resolved by the Court. That would be a recipe for mischief and mayhem. I cannot think of any example of a jurisdiction clause which works in that way. In Hipgnosis, the Court of Appeal described the idea that the English Court might have jurisdiction when a claim is commenced, and then subsequently lose it in favour of another venue, as “heretical”.

Mr Walsh accepted that, as a general proposition, if insureds properly commence court proceedings against their insurers, they are entitled to pursue those proceedings all the way to judgment, even if the policy contains an arbitration clause of this kind. He acknowledged that it would be highly unsatisfactory if it was not possible to hear a claim pursuant to an insurance policy containing such an arbitration clause at a single trial; i.e. if it was always necessary to have a split trial, and to refer all issues of “pure” quantum to an arbitration tribunal. Those seemed to me sensible and realistic concessions for Mr Walsh to make. But it was not easy to see what was left of his argument once he had made them.

All that appeared to remain was an interesting question as to whether, if a coverage dispute had been resolved solely on the basis of declarations, and then fresh proceedings needed to be commenced in order to determine pure issues of quantum arising out of those declarations, that further “claim” would fall within the arbitration agreement. But I do not need to answer that question, because it is entirely hypothetical. It is not going to happen here.

With due respect to Mr Walsh’s skilful submissions, he is simply incorrect to suggest that the current proceedings will come to an end when the various issues of construction concerning limits have been resolved, leaving the Cs to commence further proceedings (and hope that there is no problem with res judicata) in order to obtain any money. That would be a very peculiar way to litigate a claim under an insurance policy. For all of the U/Ws’ complaints about the way in which the action has been pursued, the Cs have sought an order for payment of an agreed sum, alternatively damages, reflecting what is due under the Policy (see the prayer in the Amended Particulars of Claim). Moreover, the parties have agreed that the following quantum issues arise in these proceedings (even if they have also agreed that those quantum issues are not to be determined at the present trial):

“12.

Have the Claimants suffered Reduction in Gross Turnover and, if so, in what amounts?

PoC paras 36-37; ADef para 25.1

13.

Have the Claimants suffered ICW and/or AICW and, if so, in what amounts?

PoC para 8; ADef paras 25.1-25.2

14.

Have the Claimants incurred CPC and, if so, in what amounts?

PoC para 39”

In those circumstances, it is unrealistic to imagine that the current proceedings will terminate without either a final determination of the Cs’ entitlement under the Policy, or an agreement of some kind between the parties. I do not rule out the possibility that the parties will agree that issues be resolved by arbitration, or by some other alternative method of dispute resolution. But that is a different matter. If the Cs wish, and are otherwise able, to pursue their claims to a final resolution in the English Court, it does not seem to me that the conditional arbitration clause in the Policy can now prevent them from doing so.

I answer issue 11: no.