IRB Brasil Resseguros SA v CX Reinsurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Burton |
| Judgment Date | 07 May 2010 |
| Neutral Citation | [2010] EWHC 974 (Comm) |
| Docket Number | Case No: 2010 Folio 12 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 07 May 2010 |
In an Arbitration Claim and
In the Matter of an Arbitration
[2010] EWHC 974 (Comm)
Mr Justice Burton
Case No: 2010 Folio 12
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Sara Cockerill (instructed by Elborne Mitchell) for the Claimant
Harry Matovu QC (instructed by Barlow, Lyde & Gilbert LLP) for the Respondent
Hearing date: 22 April 2010
Mr Justice Burton:
I gave permission to appeal on 3 March in this case with some expressed reluctance on the basis that I was concerned (i) that this is one of those cases where, albeit that the Arbitrators might have expressed themselves erroneously on occasion in the Award (e.g. those passages pointed out and relied upon in the Grounds of Appeal attached to the Claim Form), nevertheless where, as here, they had, at least on the main ground relied upon by the Claimant, referred to, and quoted, the correct authorities, their Award might be unimpeachable: and (ii) that delay would be caused by an appeal, the significance of which was pointed out by the Respondent in its response to the application for permission to appeal.
So far as the latter concern is concerned, not of course a reason for refusing permission if it were otherwise appropriate, it has been allayed by the speed with which this appeal has come on for hearing. The former aspect has occupied the bulk of the argument before me, and I shall be addressing it from the outset of my judgment.
Miss Sara Cockerill, who appeared before the Arbitrators and has appeared before me, has argued the matter forcefully on behalf of the Appellant: she submits that, on an analysis not only of the general approach adopted by the Arbitrators, but in particular of each of the six different individual cases which they considered, the subject of this Appeal (two others are not appealed), the Arbitrators' erroneous approach in law is exemplified by the conclusions which they reached.
Mr Harry Matovu QC, who also appeared below and has argued the matter equally ably on behalf of the Respondent, submits however that, on analysis of the whole of the Award and of each of the six specific cases, there has been no error of approach in law by the Arbitrators. He submits that, in reality, this is an appeal as to fact, by way of challenge of the Arbitrators' conclusions on those facts, which (in the absence of perversity, which Miss Cockerill abjures) cannot constitute a ground of appeal. He refers in this regard to TAG Wealth Management v West [2008] 2 Lloyd's Rep 699 at 706 (para 49) per Aikens J, and to the reference by Akenhead J in Trustees of Edmond Stern Settlement v Levy (No 2) [2009] 1 Lloyd's Rep 345 at 349 (para 20) to a “complaint about the Arbitrators' findings of fact masquerading as a point of law”.
He points out not only that this panel of Arbitrators contains, within its membership, a very significant amount of experience of the insurance and reinsurance market, but that they are careful to set out in their Award four important findings as to the factual matrix in paragraph 10 of the Award (stating that the Reinsurance Contract cannot properly be interpreted “without an appreciation of the market in which they were executed and deployed”), which have not been challenged by the Claimant on this appeal. As to the exercise which, at the instance of the Claimant, the Court has carried out, of analysing the Award to assess whether the Tribunal can be shown, notwithstanding its correct citations, to have erred in law, Mr Matovu reminds me of the caution by Bingham J in Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14 (repeated by Morison J in Fidelity Management SA v Myriad International Holdings BV [2005] 2 Lloyd's Rep 508 at 509 (para 2)), namely:
“As a matter of general approach the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards and with the objective of upsetting or frustrating the process of arbitration. Far from it. The approach is to read an arbitration award in a reasonable and commercial way expecting, as is usually the case, that there will be no substantial fault that can be found with it.”
The dispute between the Claimant and the Respondent concerns various reinsurance claims arising from the Claimant's participation in an excess of loss reinsurance programme which protected the Respondent's casualty book of business worldwide from 1976 to 1983. 25 reinsurance contracts are in issue, the total amount claimed being some US$ 1.6 million plus interest. As explained in paragraphs 2 and 5 of the Award, this total consists of a large number of small claims, some of which are, by themselves, de minimis in value, and in November 2008 it was agreed that the Arbitrators should in the first instance determine claims in relation to eight selected losses, which amounted to a significant proportion of the total sums claimed under the programme. The Arbitrators, Messrs Simon Twigden, William Bower and Richard Outhwaite, found for the Respondent in respect of each of the eight selected losses, and ordered the Claimant to pay a sum of US$ 665,055.51 accordingly: the six out of the eight matters upon which this appeal is based relate to sums totalling US$ 489,958.73.
The six cases where there are appeals relate to US liability insurance. Two of these claims are in respect of the liability of manufacturers of silicon breast implants (AHS and 3M), two of liability of producers of products derived from blood contaminated by HIV or Aids (Baxter Travenol (“Baxter”) and Revlon), one in respect of the liability of a company engaged in a business involving the use of asbestos (Owens Corning (“Corning”) and one in respect of environmental pollution claims against a manufacturer of chemical and agricultural products (Stauffer). All the claims were compromised by the underlying insurers, including the Respondent, by compromise settlements which were in each case “agreed, presented and almost universally supported/paid by the London market” (paragraph 19 of the Award) and found by the Arbitrators to be “reasonable and businesslike” compromises. The issue before the Arbitrators, and now before this Court on appeal, is and was whether in each of those six cases the sums paid under the compromise agreement and claimed and paid out by the insurers including the Respondent are properly recoverable by the Respondent against the Claimant, as reinsurer. As I have stated there are two cases, and one particular issue in relation to the Baxter and Revlon cases, where there is no appeal, so that only paragraphs 1–57, 61–62 and 74–85 of the Award are material on this appeal.
The four grounds for which I gave permission to appeal are as follows: in fact the first and second plainly run together and were argued together before me:
“(a) To what standard of proof is it necessary for a reinsured to prove his case under a “double proviso” follow settlements clause of the type described in Hill v Mercantile [1996] 1 AC 1239and Equitas v R & Q [2009] EWHC 2787: “balance of probability” or “arguability”?
(b) In considering the question of proof of loss under such a follow settlements clause what is the correct approach to the facts as a matter of law: is it appropriate to look to the underlying facts of the original claim, or to the basis of the claim as compromised?”
These issues arise in respect of AHS, 3M, Baxter and Revlon.
“(c) As a matter of law what requires to be proved in relation to a “losses occurring during” clause in a reinsurance contract containing such a follow settlements clause: is evidence that a loss occurred within the period necessary?”
This arises in respect of AHS, 3M, Corning and Stauffer.
“(d) What is the test for whether a loss was a loss “arising out of an event”? Does it suffice that the loss in each year stemmed from a single cause?”
This arises only in respect of Corning.
With regard to the first two grounds of appeal, they revolve around the “NOTICE OF LOSS CLAUSE”, which is effectively a standard 'double-proviso' 'follow settlements' clause:
“All loss settlements made by the Reinsured, including compromise settlements, shall be unconditionally binding upon Reinsurers provided such settlements are within the conditions of the original policies and/or contracts and within the terms of this reinsurance, and amounts falling to the share of the Reinsurers shall be payable by them upon reasonable evidence of the amount paid being given by the Reinsured.”
With regard to the third ground of appeal, a Period clause was included, which of course in each case would be varied according to the precise period of cover. Miss Cockerill complains that this clause is not expressly cited in the Award, but, as can be seen, its wording is hardly distinctive, and it is plain that the 'allocation' argument, as it was characterised, was very much in the forefront of both argument and decision:
“PERIOD
This reinsurance covers all losses as herein defined occurring during the period commencing with … and ending with …, both days inclusive, local standard time at the place where the loss occurs.”
In the case of the fourth ground of appeal, the relevant clause was the “EACH AND EVERY LOSS” clause:
“For the purpose of this reinsurance, the term “each and every loss” shall be understood to mean each and every loss and/or occurrence and/or catastrophe and/or disaster and/or calamity and/or series of losses and/or occurrences and/or catastrophes and/or disasters and/or calamities arising out of one event.”
Effectively by way of a Respondent's Notice (because the contention was raised in response to the appeal and I gave leave for it...
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