In Travelers Insurance Company v Countrywide Surveyors Ltd [2010] EWHC 2455 (TCC), the High Court held that it had no jurisdiction to order pre-action disclosure where the potential dispute between the parties was subject to an arbitration agreement.

Countrywide Surveyors Ltd (Countrywide) obtained a professional indemnity policy on which Travelers Insurance Company (Travelers) was the lead underwriter. During the course of the policy, it became apparent that one of Countrywide’s surveyors, Mr Morley, had carried out a large number of potentially fraudulent valuations. Once Travelers became aware of this fact, it began to consider avoiding the policy on the grounds of misrepresentation and/or non-disclosure. In order to determine whether it had such a claim under the specific terms of the policy, Travelers sought documentation from Countrywide which concerned the extent to which Countrywide knew of the fraudulent behaviour of Mr Morley. Having received what it considered to be insufficient information from Countrywide, Travelers issued an application to the High Court for pre-action disclosure of documents under CPR 31.16.

In making his judgment, Mr Justice Coulson first observed that the potential dispute between the parties, relating as it did to the fraudulent intent of possible misrepresentations and non-disclosures, fell within the scope of the “Special Institution Condition” clause of the policy, which provided that any disputes relating to the clause would be referred to arbitration. The question was, therefore, whether the High Court had jurisdiction to order pre-action disclosure in such circumstances.

Coulson J held that the High Court had no power to order pre-action disclosure where the underlying dispute would be heard in arbitration, rather than before the High Court itself. This conclusion was based on the clear wording of s33(2) of the Senior Courts Act 1981 (which forms the statutory basis of CPR 31.16), which makes plain that pre-action disclosure can only be ordered where the person for whom disclosure is sought is “likely to be a party to subsequent proceedings” in the High Court. Coulson J also held that s44(3) of the Arbitration Act 1996 did not provide any justification for ordering pre-action disclosure in the circumstances. Section 44 was, in Coulson J’s view, aimed at those exceptional circumstances where there was a risk that the evidence sought would be destroyed or otherwise interfered with. The section could not be invoked in the context of ordinary pre-action disclosure, particularly where an arbitral panel would almost certainly order disclosure of the documents sought in due course.

This decision makes clear that the High Court will not intervene to order pre-action disclosure where it is clear that the potential dispute will be subject to arbitration. Parties seeking early disclosure where an arbitration agreement is in place will either have to seek the documents on a consensual basis, or else commence arbitration, and seek an order from the arbitral panel for early disclosure.