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

These arbitration clauses in property insurance policies are familiar territory for the English Court.

For example, in New Hampshire Insurance Company v Strabag Bau AG [1990] 2 Lloyd’s Rep 61 (Com Ct), Potter J held that the dispute did not fall within the arbitration agreement by reason of the word “otherwise” in the arbitration agreement (p.64 lhc):

“It seems to me that the word ‘otherwise’ is apt to emphasize the fact that it is ‘mere’ disputes as to quantum which are to be arbitrated, thus excluding disputes as to amount which, despite prima facie acceptance of liability, depend upon the application of particular provisos or exemptions in the policy which place limitations on categories of loss, or otherwise apply to limit the amount recoverable. Such cases would raise a question of liability in the sense and to the extent that they involve a point of law or construction rather than a mere dispute on quantum.”

More recently (in a COVID-19 BI claim context), in DC Bars Ltd v QIC Europe Ltd [2023] EWHC 245 (Comm), Sir Nigel Teare was asked to stay proceedings in favour of arbitration on the basis of a similar clause. He declined to do so, because the issues in the proceedings included points about limits, such as the proper approach to applying maximum indemnity periods. He said (at [30]):

“The aim of the clause, as is apparent from its wording, is to refer to arbitration disputes as to quantum or assessment of loss but where there is, or is also, a dispute as to the liability of the insurer based upon the terms of the policy there is no agreement to arbitrate.”

As such, his conclusion (at [32]) was as follows:

“For the reasons I have endeavoured to express the parties are not obliged by contract to refer to arbitration the differences between them”.

Two points emerge from these two cases. First, a dispute about the application of limits is, for this purpose, a dispute about the liability of the insurer, such that it cannot be said that liability is otherwise admitted. Second, there is no suggestion in any authority that this arbitration clause might suddenly “kick in” at a later stage in the litigation process. Sir Nigel Teare said that “the parties are not obliged by contract to refer to arbitration the differences between them”. He did not say that the parties were not currently obliged to arbitrate, but would become obliged to do so once those liability issues had been resolved.

I was also referred to some familiar authorities about interpreting arbitration clauses and the “one stop shop” presumption. In BNP Paribas SA v Trattamento Rifiuti Metropolitani [2019] EWCA Civ 768, the Court of Appeal was faced with apparently competing jurisdiction clauses. Hamblen LJ held that there was a starting presumption that “competing jurisdiction clauses are to be interpreted on the basis that each deals exclusively with its own subject matter and they are not overlapping, provided the language and surrounding circumstances so allow” (see [68(5)]).

An interesting recent decision confirming the point in time at which the English Court needs to have (or not have) jurisdiction is Hipgnosis SFH 1 Limited v Manilow [2025] EWCA Civ 486. Flaux C made clear (at [57]) that:

“…the concept that the English court had jurisdiction when the proceedings were issued, but that was only “floating” and was lost in favour of California when the option was exercised, is heretical and contrary to authority. As Phillips LJ pointed out several times in argument, the jurisdiction of the English court is determined at the date of issue of proceedings: see Phillips LJ’s own judgment in CA Indosuez (Switzerland) SA v Afriquia Gaz SA [2023] EWCA Civ 1072; [2024] KB 243 at [83]-[84] which in turn referred to the decision of the House of Lords in Canada Trust v Stolzenberg (No. 2) [2002] 1 AC 1.”