In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for international arbitration.
Key developments in 2020
Last year's Annual Insurance Review started with the words "Technology in motion! As this is being written, the case of Halliburton v ChubbInsurance is being argued and aired via livestream direct from the Supreme Court." In a year that has been marked by unprecedented change, the themes for this year's report remain reassuringly similar: technology, Halliburton v Chubb Insurance and Enka v Chubb Insurance.
On technology, arbitration was further up the learning curve than most national court systems. The arbitration community has well and truly embraced the virtual world (see for example www.virtualarbitration.info and www.remotecourts.org).
This year has also seen the hand-down of two landmark Supreme Court decisions arising out of insurance arbitrations.
In Halliburton v Chubb Insurance the Supreme Court considered whether an arbitrator was bound to disclose to one of the parties to a Bermuda form insurance arbitration, his subsequent appointment in two similar cases. All three cases arose out of the Deepwater Horizon disaster, featured overlapping issues and a common party (Chubb).
The Supreme Court held that there was a duty of disclosure but that, in this particular instance, the arbitrator's failure to disclose his multiple appointments on related matters did not justify his disqualification for apparent bias. The court emphasised that context was key.
So, for example, in maritime, commodities, insurance and re-insurance arbitrations, where it is not uncommon for arbitrators to act in multiple cases arising from the same events, regard has to be had to the practice in that particular sector, where there may be a limited pool of expertise. Parties who consent to arbitration of such disputes are taken to accede to the practice in that sector.
In Enka v Chubb Insurance the Supreme Court considered the rules on what the governing law of the arbitration agreement ought to be in circumstances where: (i) the governing law of the substantive contract (i.e. the policy) and the law of the seat are different; and (ii) there has been no express choice of law of the arbitration agreement. This judgment follows a long line of decisions by the Court of Appeal on this issue (including Kabab-Ji S.A.L v Kout Food Group in which RPC was involved). Where the governing law of the arbitration agreement has been explicitly provided for, the courts will defer to that choice. However, where this is not explicit, the Supreme Court held that the law chosen to govern the substantive contract, will also govern the arbitration agreement.
The best protection is for parties to incorporate a provision as to the law governing the arbitration agreement in their contracts. However, the dawn on the day when dispute resolution clauses are given their full and proper consideration is yet to emerge!
What to look out for in 2021
Will "virtual arbitration" become the norm? Technology has brought greater efficiencies; there are murmurs of fewer airmiles and paper bundles for arbitration practitioners in the future. However, most will welcome some return to in-person hearings and witness examination.
Authored by Kirtan Prasad.
Download our full Annual Insurance Review 2021 for more insights.