Before contract arbitrations even commence it is sadly not uncommon for disputes to arise as to the identity of the arbitrators. In one such case, the High Court ruled that a leading barrister had been unlawfully appointed to a panel charged with resolving a reinsurance dispute arising from the 9/11 terrorist attack.
As a result of the September 2001 attack on the World Trade Centre, the Port of New York incurred liabilities totalling $47.5 million. A Lloyds of London syndicate commenced arbitration proceedings against two insurance companies in respect of how that loss should be divided between them.
Under the arbitration clause in the reinsurance contract, each side was required to appoint one arbitrator who had more than 10 years’ experience of insurance or reinsurance. The companies purported to appoint a QC who it was accepted had considerably more than 10 years’ experience of insurance or reinsurance law. The syndicate, however, argued that that did not qualify him for appointment on a true interpretation of the clause.
The companies argued that that reading of the clause was plainly wrong. Had the intention been to disqualify lawyers from appointment, and to restrict the panel to those involved in the insurance or reinsurance trade, the clause would have said so in terms. In upholding the syndicate’s arguments, however, the Court noted that the exact same issue of interpretation had been decided by a judge in another case some years ago and that it was thus bound by precedent. The companies were given 30 days to appoint another arbitrator.