Harbour Assurance Company (U.K.) Ltd v Kansa General International Insurance Company Ltd
Jurisdiction | England & Wales |
Judgment Date | 28 January 1993 |
Date | 28 January 1993 |
Court | Court of Appeal (Civil Division) |
Arbitration - Arbitrator - Jurisdiction - Dispute under reinsurance contracts - Allegation of illegality - Whether illegality dispute covered by arbitration clause - Whether arbitration clause severable - Whether defendants entitled to stay of action
The plaintiffs agreed to reinsure the defendants in respect of risks for the years 1980, 1981 and 1982. The agreement contained an arbitration clause which provided that all disputes arising thereunder should be submitted to arbitration. The plaintiffs claimed that the defendants were not registered or approved to effect or carry on insurance or reinsurance business in Great Britain under the
On appeal by the defendants: —
Held, allowing the appeal, that an arbitration clause contained in a written contract was a collateral agreement which fell to be construed according to its terms and the wishes of the parties; that the question of initial illegality of a contract, not directly impeaching the arbitration clause, was capable of being within the jurisdiction of an arbitrator; that whether a particular form of illegality rendered void both the arbitration clause and the contract depended upon the nature of the illegality; that the illegality pleaded had not affected the validity of the arbitration clause which, as a matter of construction, was wide enough to cover the issue, and the question of initial illegality was, therefore, a dispute arising out of the agreement; and that, accordingly, a stay of the action would be granted (post, pp. 47E–F, 49C–D, 50C, 51B–C, 52A–F, 53A–D, 56D–G, 57B, 62E–63C).
The following cases are referred to in the judgments:
Ashville Investments Ltd. v. Elmer Contractors Ltd. [
Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [
Dalmia Dairy Industries Ltd. v. National Bank of Pakistan [
Decision of 27 February 1970 (
Fillite (Runcorn) Ltd. v. Aqua-Lift (a firm) (
Heyman v. Darwins Ltd. [
Hirji Mulji v. Cheong Yue Steamship Co. Ltd. [
Langton v. Hughes (
Lee (Joe) Ltd. v. Lord Dalmeny [
Mackender v. Feldia A.G. [
Mahmoud and Ispahani, In re [
Paal Wilson & Co. A/S v. Partenreederei Hannah Blumenthal [
Phoenix General Insurance Co. of Greece S.A. v. Halvanon Insurance Co. Ltd. [
Prenn v. Simmonds [
Prima Paint Corporation v. Flood & Conklin Manufacturing Co. (
Prodexport State Co. for Foreign Trade v. E. D. & F. Man Ltd. [
Smith, Coney & Barrett v. Becker, Gray & Co. [
Sojuznefteexport v. Joc Oil Ltd. (unreported), 7 July 1989; (
Taylor (David) & Son Ltd. v. Barnett Trading Co. [
Union of India v. E. B. Aaby's Rederi A/S [
The following additional cases were cited in argument:
Antonio P. Lemos, The [
Craig v. National Indemnity Co. (unreported), 25 July 1980, Lloyd J.
Deutsche Schachtbau-und Tiefbohrgesellschaft m.b.H. v. R'As al-Khaimah National Oil Co. [
Empresa Exportadora de Azucar v. Industria Azucarera Nacional S.A. [
Gibraltar (Government of) v. Kenney [
Kruse v. Questier & Co. Ltd. [
Sykes v. Fine Fare Ltd. [
Willcock v. Pickfords Removals Ltd. [
INTERLOCUTORY APPEAL from Steyn J.
The plaintiffs, Harbour Assurance Co. (U.K.) Ltd., claimed, inter alia, a declaration that certain insurance policies made by way of obligatory quota share retrocession, taking effect for the years 1980 to 1984, entered into with the six defendants, Kansa General International Insurance Co. Ltd., Tapiola International Insurance Co. Ltd., Keskinainen Vakuutusyhtio Autoilijat (a body corporate), Tyovaen Keskinainen Vakuutusyhtio Turva (a body corporate), Keskinainen Vakuutusyhtio Varma (a body corporate) and Finnish Industrial and General Insurance Co. Ltd., were void for illegality on the grounds, inter alia, that the defendants were not registered or approved to effect or carry on insurance or reinsurance business in Great Britain under the Insurance Companies Act of 1974 and 1981. The agreements contained an arbitration clause and the defendants applied for the action to be stayed under section 1 of the
By a notice of appeal dated 18 November 1991 the first, third, fourth and fifth defendants appealed on the grounds, inter alia, that (1) the judge had erred in holding that it was part of the ratio decidendi of Smith, Coney & Barrett v. Becker, Gray & Co. [
By a respondents' notice dated 6 December 1991 the plaintiffs contended that the judge's order should be affirmed on the additional grounds, inter alia, that (1) the judge, while correctly holding that arbitrators had no jurisdiction to determine disputes as to the illegality of a contract, had failed further to hold that the non-arbitrability of such disputes accorded with the decision and the reasoning of the majority of the House of Lords in Heyman v. Darwins Ltd. [
The facts are stated in the judgment of Ralph Gibson L.J.
Sydney Kentridge Q.C. and Stephen Ruttle for the first, third, fourth and fifth defendants.
Andrew Longmore Q.C. and Timothy Saloman for the plaintiffs.
28 January. The following judgments were handed down.
RALPH GIBSON L.J. This is an appeal, brought with the leave of Steyn J., by the first, third, fourth and fifth defendants against his order of 31 July 1991 in an action brought by Harbour Assurance Co. (U.K.) Ltd. By that order Steyn J. [
This case raises the question whether in English law, under the principle of the separability or autonomy of the agreement expressed in an arbitration clause, which clause is contained in a written contract, the clause can give jurisdiction to the arbitrators under that clause to determine a dispute over the initial validity or invalidity of the written contract, upon the assumptions that upon its true construction the arbitration clause covers such a dispute and that the nature of the...
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