International arbitration

In this chapter of our Annual Insurance Review 2019, we look at the main developments in 2018 and expected issues in 2019 with regards to international arbitration.

Key developments in 2018

2018 has been dominated by the slow progress of the Brexit negotiations and the uncertainty as to what any deal would look like in terms of its impact on the UK’s legislative framework. The uncertainty caused by Brexit is undoubtedly threating London’s role as a commercial and financial hub of the global economy, and the question is whether it also threatens London’s position as one of the leading centres for global arbitration.

The UK will continue to be a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, so awards issued in London will retain the same enforceability irrespective of Brexit. London has long been the most popular choice for the jurisdiction and situs of international arbitrations, and with the UK’s long-cultivated reputation of legal independence, its legislative framework and jurisprudence that is supportive of international arbitration, this should not change. Parties may also now favour London-based international arbitration over the English courts while any uncertainty remains over the applicable regime for enforcement of English judgments in EU member states.

Insurers frequently rely on London-based international arbitration to resolve policy coverage disputes, especially for high-value and global risks, and insurers should take comfort from the protection offered by this choice irrespective of Brexit. 

What to look out for in 2019

Appointing arbitrators can often be a source of controversy. Insurance law is undoubtedly a specialised area and, therefore, the pool of arbitrators with relevant legal background is necessarily limited. In such circumstances it is not unsurprising that the issue of multiple and repeat appointments of particular arbitrators, either by insurers or insureds, causes controversy.

In Halliburton v Chubb [2018] EWCA CIV 817, the Court of Appeal considered the extent to which multiple appointments give rise to an appearance of bias and issues relating to the disclosure to be made in such circumstances. Halliburton, an oil-field servicing company, issued arbitral proceedings against Chubb to seek coverage in respect of its liabilities arising out of the Deepwater Horizon incident. The case concerned an application by Halliburton to remove the court-appointed arbitrator because the arbitrator had subsequently accepted two appointments as Chubb’s party-appointed arbitrator in relation to two policy coverage disputes with Transocean, the oil rig owner, also relating to the Deepwater Horizon incident. This was not disclosed to Halliburton.

The court concluded the arbitrator should have made disclosure to Halliburton when he subsequently accepted the two appointments. Nonetheless, the court decided the non-disclosure of these appointments taken together with other relevant factors would not have led a fair-minded and informed observer to conclude that there was a real possibility that the arbitrator in question was biased.

The implications of this decision have caused general consternation in the arbitral community. Leave to appeal to the Supreme Court is being sought and amicus briefs will be submitted by the London Court of International Arbitration and the Chartered Institute of Arbitrators, so parties and arbitrators should watch this space for developments. In the meantime, insurers should be mindful of this decision when nominating arbitrators.

Authored by Geraldine Bourke.

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