In Turville Heath Inc v Chartis Insurance UK Limited [2012] EWHC 3019 (TCC), Mr Justice Edwards-Stuart in the High Court refused the defendant’s application for a stay of proceedings under s. 9 of the Arbitration Act 1996 (Arbitration Act) but granted a stay using the court’s inherent jurisdiction under s. 49 of the Senior Courts Act 1981 (SCA).
The parties had agreed that any disputes about the amount to be paid under the policy for agreed claims would be settled according to the following clause, headed ‘Arbitration’:
“If you and we fail to agree on the amount of loss, either party may make a written demand that each selects an independent appraiser….[who] will select an arbitrator…The independent appraisers will then appraise the loss and submit any differences to the arbitrator. A decision in writing agreed to by the two appraisers or either appraiser and the arbitrator will be binding. Each appraiser will be paid by the party that has selected the appraiser. Expenses will be allocated at the discretion of the arbitrator.”
Edwards-Stuart J rejected the Claimant’s assertion that there were more issues in dispute than merely the amount to be paid out, reminding the parties that “English law does not give an insured a separate and discrete entitlement to damages for an insurer’s failure to pay, or to pay the correct amount, under a policy“. The issue therefore was whether the clause above was a ‘”true arbitration clause within the meaning of the Act“, and if it was found not to be a true arbitration clause, whether the court should grant a stay of proceedings pursuant to its inherent jurisdiction under s. 49 SCA.
Edwards-Stuart J said that the optional nature of the ‘arbitration’ process described in the above clause did not prevent it being an arbitration clause, as suggested by the Claimants. However, the fact that any decision made by the arbitrator must be agreed by one or other of the independent assessors did hinder it, as he said “a sole arbitrator must be able and competent to make his own independent decision on all the matters put before him.” He concluded that the clause was not an arbitration clause within the meaning of the Arbitration Act 1996, and the application under s. 9 of the Arbitration Act 1996 therefore failed.
A stay under the inherent jurisdiction of the court was granted. Edwards-Stuart J said that the parties had already entered into and invested considerable sums of money in the process without protest and that there were therefore broad case management considerations pointing in favour of allowing it to continue. Noting that the Claimant had unilaterally dispensed with the process and started the present proceedings, the judge pointed out the difference between a situation where the contractual mechanism for dispute resolution had broken down and one where a party simply refused to operate it.
