Unless the terms of an arbitration clause in an insurance policy are satisfied there is no requirement to stay legal proceedings pending arbitration of the dispute.
In DC Bars Ltd and another v QIC Europe Ltd [2023] EWHC 245 (Comm) the court has dismissed an application by the defendant insurer to stay legal proceedings initiated by the claimant until the parties have arbitrated the dispute.
The case concerned a business interruption insurance policy covering the claimants’ business operating restaurants and bars in London, Manchester, Birmingham, Cardiff and Leeds.
The policy provided that the defendant would indemnify the claimant in respect of interruption of or interference with the business during the policy period of December 2019 to December 2020 following any occurrence of a notifiable disease within a radius of 25 miles of the premises.
Cover was for a maximum period of three months. The policy also provided that if any difference should arise as to the amounts to be paid under the policy (liability being otherwise admitted) such difference should be referred to an arbitrator.
In March 2020, the claimant notified the defendant of a claim under the policy as a result of the Covid-19 pandemic and the first lockdown and claimed a sum in excess of £3.1m. Following the Supreme Court’s judgment in FCA v Arch Insurance (UK) Ltd and others [2020] UKSC 0177 the defendant agreed to pay just over £2.1m.
The claimant then sought a further £4m for three subsequent claims caused by further government intervention between September and December 2020 which imposed reduced hours and lockdowns, asserting that a fresh cause of action arose under the policy for every separate occurrence of Covid-19 within 25 miles of each of their premises.
The defendant disputed the claimant’s entitlement to pursue multiple claims on the basis that the policy was limited to one three-month period. The claimant issued legal proceedings and the defendant sought a stay of the proceedings to require the claimant to pursue arbitration under the terms of the policy.
The court decided, following New Hampshire Insurance company v Strabag Bau AG [1990] International Litigation Procedure 334 that the arbitration clause related only to disputes as to quantum or assessment of loss where liability was admitted. Here, liability for the further claims under the policy was in dispute. It was not simply a dispute as to quantum as the defendant argued. Consequently, there was no agreement to arbitrate.
Louise Clark is a property law consultant and mediator
