Through Transport Mutual Insurance Association (Eurasia) Ltd. v New India Assurance Co Ltd.

A person entitled to enforce rights arising under an insurance contract takes those rights subject to the contract’s arbitration clause, whatever the mechanism by which the entitlement was acquired. A third party claiming against an insurer under statutory provisions may therefore be treated as claiming under or through a party to the arbitration agreement. Once the third party has made a demand and a dispute has arisen, either party may invoke the arbitration machinery. The court may appoint an arbitrator under section 18 of the Arbitration Act 1996, even if the claimant has not commenced arbitration. The court should ordinarily constitute the agreed tribunal where a genuine dispute exists.

The claimant, a mutual insurance association, applied under section 18 of the Arbitration Act 1996 to appoint an arbitrator in a dispute with the defendant insurer. The defendant had paid a claim for goods lost during carriage and sought recovery from the claimant as liability insurer of the insolvent road haulier.

The defendant had brought proceedings in Finland under section 67 of the Finnish Insurance Contracts Act 1994. Earlier English proceedings established that the defendant’s claim was subject to the claimant’s London arbitration clause, although the Court of Appeal discharged an anti-suit injunction. The issue was whether the claimant could invoke section 18 when the defendant had not commenced arbitration and disputed that it was a party to an arbitration agreement.

1. Application granted. The court exercised its discretion under section 18 of the Arbitration Act 1996 and appointed an arbitrator.
2. The Court of Appeal’s statement that the defendant had not become a party to the arbitration agreement in the full contractual sense did not mean that its claim fell outside the arbitration clause. The earlier judgment held that the claim was to be pursued in arbitration because the claimant could rely on the clause.
3. Following Schiffahrtsgesellschaft Detlev von Appen G.m.b.H. v Voest Alpine Intertrading G.m.b.H. (The ‘Jay Bola’) [1997] 2 Lloyd’s Rep. 279, a person who obtains by assignment or another transfer the right to pursue a contractual claim can enforce it only in accordance with the contract, including its arbitration requirement and other limitations.
4. The defendant’s statutory entitlement was not conventionally an assignment. However, it was a right to enforce contractual obligations. It was therefore subject to the contract’s inherent limitations, including arbitration and the pay-to-be-paid clause.
5. Section 82(2) included a person claiming under or through a party to the arbitration agreement. The defendant became such a person when it sought an indemnity in the right of the insolvent insured. It did not need first to commence arbitration. Once it had made its demand and the claim had been rejected, a dispute existed which either party could refer to arbitration.
6. The dispute was genuine and fundamental. The pending Finnish proceedings, their possible costs, and the possible effect of an arbitral award on enforcement did not justify refusing appointment. Appointment would not interfere with the Finnish courts’ jurisdiction.

• High Court (Commercial Court): Earlier proceedings resulted in a declaration that the defendant’s claim was subject to arbitration: [2003] EWHC 3158 (Comm) .
• Court of Appeal: The declaration was upheld, but the anti-suit injunction was set aside.
• High Court (Commercial Court): The present application was granted and an arbitrator appointed.