Midnight Marine v Thomas Miller Specialty Underwriting: Judge refuses permission to appeal against award which held insured's claim was time-barred
When insurers refused to accept liability under their policy, the insured commenced litigation in Canada, despite the policy providing for London arbitration. The insurers then commenced arbitration, seeking a declaration that they were not liable under the policy. The parties agreed that no further steps would be taken in the arbitration until an application for a stay was heard by the Canadian courts. The Canadian courts granted the stay but no further step was taken in the arbitration until the assured appointed an arbitrator 7 years later (by which time, insurers had closed their file).
The insurers claimed that the insured's claim was time-barred because it was outside the 6-year statutory period and the arbitrators agreed that it was. They held that the notice of arbitration had not stopped time running because the only matter referred to arbitration was the insurers' claim for a declaration of non-liability and no arbitration had been commenced in respect of the insured's claim. For completeness, they also held that they would have made an award dismissing the claim under section 41(3) of the Arbitration Act 1996 because of the "inordinate and inexcusable delay on the part of the claimant in pursuing his claim". The arbitrators concluded that it would be appropriate to treat the insured as the claimant or counter claimant for the purpose of section 41(3).
The insured challenged the award and lost and then sought to challenge that decision. Males J has now held as follows:
(1) The insured's challenge on the section 41(3) point was hopeless. Section 82(1) of the Act provides the following definition of "claimant": "unless the context otherwise requires, includes a counterclaimant, and related expressions shall be construed accordingly". The insured's claim for an indemnity was either time-barred because it had not been referred to arbitration, or, if it had been referred to arbitration, the arbitrators had been entitled to find that there had been inordinate delay.
(2) In light of that finding, no permission to appeal under section 69 could be given as the determination of the question of law (on the time-bar point) could not affect the rights of the parties. Males J did, however, suggest that, had the issue stood alone, he might have been inclined to give permission to appeal because "I can see an argument that in the circumstances of the Canadian proceedings, one important purpose of the Underwriters' notice of arbitration was to enable it to submit to the Canadian court that the Assured's claim had been referred to arbitration in London. There would have been little benefit to the Underwriters in telling the Canadian court that its claim for a negative declaration had been referred to arbitration but that the Assured's claim for an indemnity had not".
Finally, the judge was critical that the application to set aside the dismissal on paper had been argued as fully as the section 68 application itself would have been: "If that were to become the standard procedure, the availability of a procedure for dismissal on paper would achieve nothing". The costs of the present application amounted to £150,000, when the claim itself was worth only CAD $625,000. The judge commented that "While commercial parties are free to spend their money as they wish, it cannot be in the interests of London arbitration generally for costs on that scale to be incurred for a hearing of this nature. There is after all such a thing as killing the golden goose".
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