Harper Versicherungs AG v Indemnity Marine Assurance Company Ltd & Ors

The court held that an arbitration begun in the name of the original reinsureds was not rendered ineffective by a Part VII insurance business transfer which had vested the reinsureds' rights in a transferee. The decision applies ordinary contractual construction principles to determine whether the appointment of an arbitrator was a mere misnomer or a nullity.

The judge treated Part VII transfers (and section 112 of the Financial Services and Markets Act 2000) as producing a statutory novation in their practical effect and relied on authorities such as the SEB Trygg Holding line of authority to conclude that, objectively viewed, the arbitration had been brought on behalf of the party then entitled to the treaty benefits. The appointment of Mr Berry as sole arbitrator was therefore effective and the tribunal properly constituted.

The court also held that (i) Waltons & Morse had authority, or in the alternative that Ocean Marine ratified their actions, and (ii) the arbitrator correctly allowed substitution of Ocean Marine as claimant. The arbitrator's later ruling permitting amendment of the Points of Claim to include treaty statements arising after his appointment was likewise within the scope of the reference: the reference had been intended to cover balances then due and further balances arising during the currency of the arbitration. Challenges to jurisdiction and to the arbitrator's awards were dismissed.

Background and parties. This is a Commercial Court first instance judgment concerning competing arbitrations between long-standing reinsurers (Harper/Turegum and River Thames) and reinsureds (originally Indemnity Marine and London & Scottish, with Ocean Marine as transferee under a Part VII transfer). The dispute arose from a continuous reinsurance treaty dating from 1965-1968 and concerned whether certain long-tail APH (asbestos, pollution and health hazard) losses were covered.

Nature of the claim and relief sought. The reinsurers commenced these proceedings to challenge the validity of an arbitration begun by the reinsureds and the appointment of a sole arbitrator (Mr Tony Berry). They sought declarations and relief to the effect that the arbitration was ineffective because it had been brought in the wrong name following a Part VII transfer, that the arbitrator lacked jurisdiction, and that subsequent treaty statements submitted after the arbitrator's appointment were not properly included in the first reference.

Issues framed by the court.

• Whether the arbitration commenced in the names of Indemnity Marine and London & Scottish was effective given the Part VII transfer of reinsured rights to Ocean Marine, or whether the proceedings were a nullity.
• Whether the appointment of Mr Berry as sole arbitrator was valid and whether substitution of Ocean Marine as claimant was permissible.
• Whether subsequent treaty statements submitted after the arbitrator's appointment could properly be pursued in the original reference.
• Whether the solicitors who commenced the arbitration had authority to act for Ocean Marine or, alternatively, whether their actions were ratified.

Reasoning and outcome. The judge applied contractual principles and the misnomer analysis developed in SEB Trygg Holding and related authorities to conclude objectively that the arbitration had been intended to protect and pursue the rights of the party or parties entitled under the treaty and that naming Indemnity Marine and London & Scottish was a misdescription rather than a fundamental error as to identity. The court found that either Waltons & Morse had authority to act for Ocean Marine or Ocean Marine subsequently ratified their actions by board resolution. The arbitrator was therefore entitled to substitute Ocean Marine and to admit amendment to include treaty statements arising after his appointment because the reference was reasonably understood to embrace balances then due and balances that should arise during the currency of the arbitration. Accordingly the challenges to the arbitration and the arbitrator's decisions were dismissed.

Procedural posture. First instance determination in the Commercial Court. The judgment also comments on the market context of Part VII schemes and stresses the commercial and market-expert character of the dispute resolution.

This first instance claim was dismissed. The court held that the arbitration commenced in the names of Indemnity Marine and London & Scottish was not a nullity but affected by a mere misnomer; the arbitrator (Mr Berry) was validly appointed and had jurisdiction. Waltons & Morse had authority (or their acts were ratified) to act for Ocean Marine and Ocean Marine could be substituted as claimant. The arbitrator was entitled to permit amendment to include treaty statements submitted after his appointment because the reference was intended to cover balances then due and further balances arising during the arbitration.