Haven Insurance Company Ltd v EUI Ltd (t/a Elephant Insurance)

This appeal concerned the correct test and its application for a court to extend time to commence arbitral proceedings under section 12(3) of the Arbitration Act 1996. The Court of Appeal confirmed that the section requires a prospective assessment of what was within the parties' reasonable contemplation when they agreed the arbitration provision and that the court should only intervene where the statutory criteria are satisfied.

The judge below had found (i) Elephant mistakenly but reasonably believed that time ran from publication of the final minutes; (ii) that belief was consistent with a widely accepted interpretation shared by the Motor Insurers Bureau and its secretariat; and (iii) MIB had in practice treated the trigger as the publication of final minutes. Applying the two-limb test in s.12(3)(a) (whether the circumstances were outside the parties' reasonable contemplation when the provision was agreed and whether it would be just to extend time) and s.12(3)(b) where relevant, the Court of Appeal held that Knowles J was entitled to find it was just to make a limited extension of time. The appeal by Haven was dismissed.

This dispute arose from an Article 75 Technical Committee decision within the Motor Insurers' Bureau (MIB) on 13 February 2015. Elephant (a member) gave written notice of appeal on 30 April 2015. Haven contended the appeal was out of time because Article 75 required notice within 30 days of notification of the Technical Committee decision; Elephant argued time ran from publication of final minutes (31 March 2015). The arbitrator (Christopher Hancock QC) held that the appeal had been brought in time. Haven challenged that decision under section 67 of the Arbitration Act 1996. At first instance (Knowles J, [2018] EWHC 143 (QB)) the judge found Elephant’s appeal was out of time but, exercising the court's power under section 12(3) AA 1996, granted an extension of time and remitted the substantive dispute to the arbitrator. Haven appealed to the Court of Appeal.

Nature of relief sought: Elephant sought, and Knowles J granted, an extension of time under s.12(3) of the Arbitration Act 1996 so that its out-of-time appeal could proceed. Haven sought to overturn that extension on appeal.

Issues framed by the court:

• How is the s.12(3) test to be applied: in particular the meaning of "circumstances outside the reasonable contemplation of the parties when they agreed the provision" and the separate question whether it would be "just" to extend time?
• Whether the factual matrix (MIB's practice, communications from MIB staff and Elephant's misunderstanding) met the statutory test so as to justify an extension of time.

Court's reasoning: The Court of Appeal reiterated that s.12 demands a forward‑looking, prospective inquiry into what the parties would reasonably have contemplated at the time they agreed the arbitration clause. The court accepted Knowles J's factual findings that Elephant reasonably thought time ran from publication of final minutes and that MIB's practice and communications reinforced that belief. Those findings were binding and provided a legitimate basis to conclude the circumstances were not within the parties' reasonable contemplation when the Articles were agreed, and that it would be just to allow a short extension (from 26 March 2015 to 30 April 2015). The court rejected submissions that unilateral mistake or negligent omission automatically precluded s.12 relief and found Knowles J had properly applied established authorities (including Harbour and related authorities) in reaching his conclusion. The appeal was dismissed.

The Court of Appeal dismissed Haven’s appeal. The court held that Knowles J was entitled to conclude, on the facts found, that Elephant reasonably but mistakenly believed that the 30-day appeal period ran from publication of the final minutes, a belief reinforced by MIB practice and secretariat communications; on that basis the circumstances fell within s.12(3)(a) AA 1996 and it was just to grant a limited extension of time. The judge’s exercise of discretion was upheld.

Appeal from the High Court (Commercial Court, Knowles J) [2018] EWHC 143 (QB) where Knowles J held Elephant's appeal to arbitration was out of time but granted an extension of time under s.12 Arbitration Act 1996; appeal to the Court of Appeal ([2018] EWCA Civ 2494) which dismissed Haven's challenge to the s.12 decision.