UK: (Re)Insurance Weekly Update 22- 2016

Last Updated: 27 June 2016
Article by Nigel Brook

A summary of recent developments in insurance, reinsurance and litigation law.

This week's case law:

Guidant v Swiss Re: Court considers appointment of third arbitrator in an insurance dispute

The insured sought to claim under three insurance policies (one issued by Insurer A, two by Insurer B). The policies were all written on the Bermuda form, which provides for London arbitration and the appointment of three arbitrators. Where the two party appointed arbitrators cannot agree the appointment of the third arbitrator, an application may be made to the English court.

The insured and Insurer A agreed the appointment of the third arbitrator in their arbitration. However, no such agreement was reached in the two further arbitrations between the insured and Insurer B. Accordingly, an application was made to court.

The insured wished to appoint the same third arbitrator as the one appointed in its arbitration with Insurer A. It argued that this would reduce the risk of inconsistent decisions and also reduce costs and delay. Leggatt J agreed that there was bound to be a substantial overlap between the issues in all three arbitrations, given that the policies were written in identical terms and covered the same risks. If this had been litigation, the court would almost certainly have ordered the three claims to be managed and tried together in the interests of efficiency and to avoid the risk of inconsistent results.

However, this was arbitration instead, and the court has no power under the Arbitration Act 1996 to order consolidation or coordination of the arbitration proceedings (and the tribunal can only do so with the consent of the parties). Although the judge found that there would be no inference of apparent bias for the same third arbitrator to hear all three arbitrations, nevertheless Insurer B had a legitimate basis for objecting to his appointment, since that person might be influenced by arguments and evidence in the arbitration between the insured and Insurer A. Furthermore, Insurer B would be unable to made submissions, or be privy to evidence adduced, in the arbitration involving Insurer A.

For that reason, the insured's proposal was rejected. The judge did however agree that the same person should be appointed as the third arbitrator in both arbitrations involving the insured and Insurer B. That was because the parties were identical in both arbitrations and would be represented by the same lawyers, who would therefore know what was happening in both arbitrations.

As to the particular individual to be appointed, he chose the arbitrator who had only recently retired from the bench because: "it therefore seems likely that he may have better availability and less likelihood of any conflict than other individuals who have been acting as arbitrators for longer".

Jones v Longley: Court strikes out counterclaim which did not comply with CPR/court guide

CPR r.16 and PD 16 set out various rules about how to plead particulars of claim eg they should be concise and contain sufficient detail of the claim(s). The Chancery Guide also contains further provisions eg separate, consecutively numbered paragraphs and sub-paragraphs.

The statement of case setting out the defendant's counterclaim in this case did not comply with those requirements. It was too prolix to enable a point by point defence to be pleaded, it mixed together claims against different parties and there were no proper particulars of the claims. Master Matthews noted that "the rules of procedure must equally protect the person responding to a claim as much as they enable the claimant to put forward his or her claim". Furthermore, although "at the margins" the courts will allow a little more leeway to litigants in person, "it is desirable to stress that there are not in our system two sets of rules, one for those who employ lawyers, and one for those who do not".

Here, the claimant could not plead to the counterclaim in practice and hence the Master ordered the counterclaim to be struck out. In so doing, he took into account a Court of Appeal decision (Walsham Chalet v Tallington Lakes (2014)) to the effect that the principles which apply to applications for relief from sanctions are "relevant and important" to applications for an order striking out a statement of case as well.

Heraeus Medical v Biomet: Whether state of mind of person signing form N510 matters

The claimants served their claim form on the Dutch defendant company without the court's permission. CPR r6.33 provides that permission from the court is not required to serve a defendant in a Member State provided that there are no proceedings between the parties concerning the same claim pending in the courts of another Member State. There were proceedings already pending between the parties in Germany (but there was an issue as to whether they involved the same claim).

CPR r6.34 requires the claimant to file with the claim form a notice containing a statement of the grounds on which the claimant is entitled to serve out of the jurisdiction (this is done on Form N510). The claimant's solicitor had signed the statement of truth in the form, verifying that "the claimant believes that the facts stated in this notice are true". The defendant sought to set aside service on the basis that the solicitor had had no reasonable grounds for his belief (relying on a statement by Gloster J in National Navigation v Endesa (see Weekly Update 13/09) that "it is very important in cases said to fall under the Regulation...that solicitors issuing proceedings take particular care to ensure that they have a reasonable basis for their belief").

Mann J rejected the argument that the state of mind of the person signing the notice is relevant. The conditions of CPR r6.33 "are either fulfilled or they are not". Gloster J had been dealing with a different point as she had already found that the English court did not have jurisdiction on the established facts. Her remarks had only been intended to demonstrate that a claimant who signs without a proper evidential basis will engage the court's disapproval when it comes to costs.

The Khan Partnership v Infinity Distribution: Judge refuses to set aside extension of time for service even though extension shouldn't have been granted

The claimant was granted an extension of time for service of its claim form and the defendant appealed against a subsequent refusal to set aside that order. The claimant's solicitors had delayed service within 4 months in order to resolve matters so far as possible in correspondence, without the need for proceedings. Roth J held that this had not amounted to a good reason, in light of the clear authorities on the strict approach to extension of time. Furthermore, although the solicitors had served full particulars of claim on the defendant in draft (and so the defendant was fully informed of the case against it), that alone should not have been sufficient to justify an extension of time because a limitation defence was prejudiced by the extension.

However, this was not an appeal against the order extending time for service. Instead it was an appeal against the order dismissing the defendant's application to set aside the order extending time. Hoddinott v Persimmon (see Weekly Update 45/07) is authority for the position that the fact that the original extension of time should not have been granted does not necessarily mean that a subsequent application to set aside must succeed. Here, there were exceptional circumstances to justify a refusal to set aside the order. The defendant's solicitors had delayed service of the application and as a result the claimant was denied the chance to issue a second claim form before the limitation period expired. For that reason, the refusal to set aside the order extending time was allowed to stand.

Harb v HRH Prince Abdul: Court of Appeal decides whether there is apparent bias if the judge is shown to be biased against a party's legal representatives

The Court of Appeal held that there had been deficiencies in the first instance judgment in this case which justified the remission of the matter to the High Court for a re-trial. Although it was not therefore necessary to decide the issue, the Court of Appeal also considered whether there had been apparent bias on the part of the judge. It had been alleged that there had been apparent bias here because of the judge's hostility towards the barristers' chambers representing one of the parties. On the facts, the Court of Appeal concluded that the argument of apparent bias had not been made out.

The Court of Appeal stressed that the test of the opinion of the notional informed and fair-minded observer is not to be confused with the opinion of the litigant: "We have little doubt that most, if not all, litigants represented by a member of [the relevant] Chambers... would prefer to have their case heard by another judge. We are prepared to accept that some, indeed many, might have very strong feelings on the subject. But the litigant is not the fair-minded observer. He lacks the objectivity which is the hallmark of the fair-minded observer. He is far from dispassionate. Litigation is a stressful and expensive business. Most litigants are likely to oppose anything that they perceive might imperil their prospects of success, even if, when viewed objectively, their perception is not well-founded". Furthermore, even if a judge is irritated by, or shows hostility towards, an advocate, it does not follow that there is a real possibility that it will affect his approach to the parties and jeopardise the fairness of the proceedngs.

(Re)insurance Weekly Update 22- 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Nigel Brook
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