English High Court appoints third arbitrator in Bermuda Form insurance disputes

In Guidant LLC v Swiss Re International SE & Anor [2016] EWHC 1201 (Comm) (29 April 2016), the English Commercial Court was asked by an insured policyholder, Guidant LLC, to appoint a third arbitrator in two arbitrations under Bermuda Form insurance policies.

The background was that Guidant had incurred substantial liabilities in litigation in the United States involving claims for personal injury arising from the use of allegedly defective cardiac rhythm management devices, which Guidant manufactured.

Guidant had claimed indemnities against such liabilities under insurance policies which it purchased for the 2004 policy year.

Three policies of insurance were relevant. The first was a policy placed with a Bermuda insurance company. The second policy was placed originally with Zurich but had subsequently been transferred, as part of a larger transfer of business, from Zurich to the UK branch of Swiss Re International SE, which was the defendant to the two arbitration claims. The third relevant policy was placed directly with Swiss Re.  All three insurance policies were written on the Bermuda Form and were in identical terms, save for the limits of cover. Each policy contained an arbitration clause, which provided for the arbitration of disputes in London by a tribunal of three arbitrators. Each party had the right to appoint an arbitrator and the third arbitrator was to be appointed by the two party appointed arbitrators. The clause further provided that: “In the event of a failure of the first two arbitrators to agree on a third arbitrator, either of the parties may apply to a Judge of the High Court for the appointment of a third arbitrator.”

Guidant referred its claims to arbitration and appointed the same arbitrator in each of the three arbitrations. The insurers appointed different arbitrators in each of the three arbitrations. In the arbitration against the Bermuda insurance company, the two party appointed arbitrators appointed as the third arbitrator – who by convention is also the chair of the tribunal – Mr. Michael Collins QC.

In the other two arbitrations against Swiss Re, however, no agreement was reached on the appointment of the third arbitrator. The arbitrator appointed by Guidant sought to insist that Mr. Collins should also be appointed as the third arbitrator in those two arbitrations. The arbitrators appointed by Swiss Re refused to agree to the appointment of Mr. Collins, and instead, in each case, they put forward a list of three names and invited the arbitrator appointed by Guidant to choose one of those names, which he declined to do.

An impasse was therefore reached and Guidant applied to the court seeking an order under s.18(3)(d) of the UK’s Arbitration Act 1996 to appoint Mr. Collins as the third arbitrator in the two arbitrations against Swiss Re. Swiss Re, for its part, opposed the appointment of Mr. Collins and asked the court to appoint a different arbitrator in each of the arbitrations in which Swiss Re is the respondent.

Having considered the parties’ arguments and authorities, Mr. Justice Leggatt declined to appoint Mr. Collins as the third arbitrator and chair in the two arbitrations, although he accepted that Mr. Collins was “a very well qualified and highly experienced international arbitrator“.

In the end, Mr. Justice Leggatt nominated Sir Richard Aikens for the reason that he had only recently retired from the judiciary, and only recently started to accept arbitration appointments: it seemed likely that he may have better availability and less likelihood of any conflict, than other individuals who have been acting as arbitrators for longer.

For the full judgment, see:  URL: http://www.bailii.org/ew/cases/EWHC/Comm/2016/1201.html



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