Court of Appeal
C v D (London arbitration clause)
Before Sir Anthony Clarke, Master of the Rolls, Lord Justice Longmore and Lord Justice Jacob
Judgment December 5, 2007
Published January 16, 2008

Although the governing law of a liability insurance contract was that of New York, where the contract contained a London arbitration clause, the parties were to be taken to have agreed that the arbitration award could be challenged only in English law proceedings because of the choice of London as the seat of the arbitration.

The Court of Appeal so held, dismissing the appeal, except for the costs order, of the defendant, D, against the order of Mr Justice Cooke on June 28, 2007 granting the claimant, C, a final anti-suit injunction to prevent the defendant from challenging a partial arbitration award in favour of the claimant in the United States courts.

The hearing was held in private and the parties were not identified.

Mr Jonathan Hirst, QC and Mr Robert Howe for the defendant; Mr Bernard Eder, QC and Mr Stephen Houseman for the claimant.

LORD JUSTICE LONGMORE said that the striking feature of the Bermuda Form was its requirement for the parties to arbitrate in London but its provision of the proper law of the insurance contract to be the internal laws of New York.

The defendant insured the claimant for three years under a claims made policy on the Bermuda Form. During the policy period the claimant paid out on claims and made demand for payment which the defendant refused. The claimant initiated arbitration against the defendant in London. The defendant raised four defences to the claim for indemnification. The tribunal heard the first three and deferred the fourth.

The tribunal issued a partial award, ruling that the claimant succeeded in full on its claim and was entitled to recover. The defendant intimated its intention to apply to a United States federal court on the basis that the arbitrators had manifestly disregarded New York law. In consequence the claimant was granted an anti-suit injunction.

The judge held that the choice of England as the seat of the arbitration was determinative in that the parties had expressly or impliedly agreed that any proceedings seeking to attack or set aside the partial award would be only those permitted by English law.

In effect that meant that the award could only be attacked under sections 67 and 68 of the Arbitration Act 1996, on the grounds of lack of jurisdiction and serious irregularity, the parties having agreed to exclude the right of appeal under section 69 on points of law. It was therefore not permissible for the defendant to bring any proceedings in New York or elsewhere.

His Lordship identified the central point at issue as being whether or not, by choosing London as the seat of the arbitration, the parties had to be taken to have agreed that proceedings on the award should be only those permitted by English law. For the reasons given by the judge they had to be taken to have so agreed.

The whole purpose of the balance achieved by the Bermuda Form was that judicial remedies in respect of the award should be permitted by English law and only those so permitted.

Mr Hirst could not say that English judicial remedies under sections 67 and 68 were not permitted; he could only say that New York judicial remedies were also permitted. That would be a recipe for litigation and confusion which could not have been the intention of the parties.

It followed that a choice of seat for the arbitration had to be the choice of forum for remedies seeking to attack the award.

The Master of the Rolls and Lord Justice Jacob agreed.

Solicitors: Robin Simon LLP; Allen & Overy LLP.

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