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Choosing an arbitrator with “experience of insurance or reinsurance”: barristers may qualify.

13th Mar 2018

Stephen Hofmeyr QC appeared on behalf of the appellants in this matter on an appeal from a decision of Teare J removing an arbitrator pursuant to section 24 of the Arbitration Act 1996 on the ground that he was not qualified to act.

The dispute concerned the construction of clause 15.5 of the Joint Excess Loss Committee, Excess Loss Clauses (01/1997) which provides:

Unless the parties otherwise agree the arbitration tribunal shall consist of persons with not less than ten years’ experience of insurance or reinsurance

The question for the court was whether the appellant’s appointed arbitrator should be removed on the ground that, as a lawyer, he did not possess the qualifications required by the arbitration agreement.

Teare J felt compelled to follow the unreported decision of Morison J in Company X v Company Y (2000) which required arbitrators to be individuals who had gained their experience working in the insurance or reinsurance industry and not those who had gained their experience working with or on behalf of that industry.  

The Judge decide the issue as a matter of precedent and not as a matter of construction.  He held that, uninhibited by the decision of Morison J, he “might well have decided that the ordinary and natural construction of the phrase in question did not limit the fields in which experience of insurance or reinsurance could be acquired and that the “context” argument was not sufficiently strong to justify implying the suggested limitation that the relevant experience be acquired in the business of insurance or reinsurance.”

The Court of Appeal allowed the appeal. 

They decided the matter as an issue of construction.  They concluded that neither the words of the clause nor their context imposes any restriction on the way in which experience of insurance or reinsurance must have been gained; that none of the matters relied upon by Morison J provides any legitimate basis for inferring that parties who incorporate the 1997 version of the JELC Clauses in their contract intend an arbitration held pursuant to clause 15 to be a “trade arbitration”; that the decision in Company X v Company Y cannot be defended and should be overruled; and that reasonable parties who incorporate the JELC Clauses into their contract of excess of loss reinsurance would understand a barrister with experience of insurance or reinsurance to have the requisite experience of “insurance or reinsurance” within the meaning of the clause.

Stephen Hofmeyr QC was instructed by Ling Ong of Weightmans LLP

To view the judgment please click here.

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