Insurance and reinsurance disputes seem to have increased in number hugely over the last 20 years. Two or three years ago Lloyds Law Reports, who formerly published a single set of commercial law reports, decided to bring out a separate set of reports devoted exclusively to insurance and reinsurance disputes-Lloyds Insurance and Reinsurance Law Reports-and I am one of the editors. Even so, we have more material than we have room to publish and of course that does not include arbitration awards, which are confidential to the parties.

The reasons for the explosion in dispute resolution in this field are not of direct relevance to the theme I have been asked to write about. What is true is that, for the most part, the sums involved range from large to huge and are often so enormous that one sometimes feels that the party being asked to pay has no real option in commercial terms but to look for ways of contesting its liability.

Arbitration is just one of the methods of resolution in the field of insurance and reinsurance disputes but it is the favoured form. In insurance as opposed to reinsurance disputes there is a good deal of litigation and, of course, mediation is becoming increasingly adopted. I say a little about mediation at the end of this paper. But certainly as far as reinsurance disputes are concerned arbitration is the most widely used method.

In this paper I deal principally with arbitration in the United Kingdom (and that in practice means arbitration in London), because that is the system I am most familiar with. That is of course not to suggest that insurance and reinsurance arbitration is confined to London. A good deal of arbitration in this area takes place in the United States and there is an organisation called ARIAS US which is devoted to formulating and implementing the highest standards of excellence in arbitration in this particular area. An increasing amount of specialist insurance arbitration is taking place in Bermuda and the Far East, particularly in Hong Kong and Singapore, and there is a certain amount in Australia. Nonetheless, I propose to address principally arbitration procedures and practices in London.

In the field of insurance and reinsurance disputes most of the arbitration that takes place is 'ad hoc'. In arbitration terminology, 'ad hoc' can mean different things in different contexts. One meaning is that the insurance contract between the parties contains no arbitration clause and after the dispute between them has arisen they agree to refer it to arbitration. However, what I mean for present purposes is that, whether or not the insurance or reinsurance contract [Page44:] provides for arbitration, there is no agreement that the resulting arbitration should be under the aegis of an institutional arbitration service-provider such as ICC or the London Court of International Arbitration (LCIA).

Most of the insurance and reinsurance arbitration that takes place in London is ad hoc in this sense. There will almost invariably be an arbitration clause in the insurance (by which I include, of course, reinsurance) contract and the clause will usually say nothing about institutional arbitration. The clause will sometimes provide that the arbitrators are to be active or retired insurance executives and that can cause difficulties if one of the parties wishes to appoint an insurance lawyer. What usually happens the moment one of the parties refers a dispute to arbitration is that both parties will appoint a firm of experienced insurance solicitors in London. Many of the litigants in this field will have had previous experience of arbitral resolution and have their own ideas as to whom to appoint as their arbitrator. But if not, the solicitor they instruct will be able to advise them.

Arbitration awards are these days virtually unappealable,1 so it is particularly important that the parties end up with a tribunal in whom they have confidence. Appointment of a sole arbitrator does sometimes happen. But it is rare. More often than not each side will appoint its own arbitrator and the two so appointed will choose and appoint a third.

So far as party-appointed arbitrators (as distinct from the third arbitrator) are concerned, the sort of person who gets appointed very much depends on the nature of the dispute. If the dispute essentially concerns issues of law it would be normal to appoint a lawyer, often an experienced Queen's Counsel (i.e. member of the Bar) or, sometimes these days, a solicitor as party-appointed arbitrators. If the party-appointed arbitrators have the task of appointing a third arbitrator they will usually appoint a Queen's Counsel or a retired judge. If the case also involves disputed issues of fact the same sort of tribunal may well be appropriate and will often be appointed.

But where the case involves issues of market practice or highly specialist areas of insurance or reinsurance the ideal tribunal is, in my view, active or retired market men appointed by the parties, the so-called wingmen (or of course women), with a barrister, solicitor or retired commercial judge in the middle. Any lawyer, even one who has spent a lifetime handling insurance disputes, would be foolish to believe that he has more than a superficial understanding of some of the more recherché areas of contemporary insurance business. Speaking as one such I can confidently say that we are all on a continuous learning curve. We may have a considerable understanding of the way in which the business is done, at least in general terms, and of the jargon in which it is conducted. But that may be a long way from knowing what the 'insurance' answer is to a particular problem.

It is, I believe, of the greatest importance that the decisions of arbitration tribunals command the confidence not only of the parties but also of the market. This is particularly so with arbitration awards being extremely difficult to overturn on appeal. If you go to court and the judge gets it wrong, or you think he has, you can take the case to the Court of Appeal.2 But the only safe way to approach dispute resolution by arbitration is to proceed on the basis that it is one-stop shopping. You get one opportunity, and usually only one, to get the result that you want. So getting the choice of tribunal right is essential.

As I mentioned earlier, for the sort of market dispute which regularly comes before London arbitration tribunals, particularly in the field of reinsurance, I regard a [Page45:] mixed tribunal of two market men and an experienced lawyer in the middle as the ideal combination. I regularly sit as third arbitrator/chairman in panels of this kind and they invariably work well. If the two wingmen are in agreement on an issue of market practice I will think long and hard before disagreeing with them, although, of course, each arbitrator has full power of decision. It is in my view important to have an experienced lawyer as third arbitrator. Making decisions is likely to be second-nature to him (or her). The mere presence of a well-known lawyer/arbitrator in the chair means that the proceedings will be subject to the necessary control and discipline and he is, of course, well equipped to draft an award in such terms that it should survive an attempt by the losing party to get permission to appeal.

Under English law, the applicant for insurance or reinsurance is under an obligation to disclose to the insurer or reinsurer all information that is material for the latter to know in deciding whether to write the risk and at what premium. Many of the disputes which are brought before arbitration panels involve a claim by the insurer to avoid the insurance contract by reason of some misrepresentation or non-disclosure made prior to the conclusion of the contract. I have invariably found it an advantage to have a mixed tribunal of two experienced market arbitrators and a lawyer as chairman when dealing with disputes of this kind. In my experience lawyers tend to apply this area of the law more strictly in favour of insurers than market practitioners. Before the law was tightened up in the decision of the House of Lords in Pan Atlantic,3 the potential ability of the insurer to avoid an insurance contract on the ground of misrepresentation or non-disclosure was so wide that many of us worried that insurance contracts had become almost a voluntary engagement which could be repudiated virtually at will. It was often the market wingmen during this time who made sure that the outcome of the arbitration did not depart from the commercial realities of the market place.

Some of the fiercest battles tend to take place over the appointment of the third arbitrator. If the party-appointed arbitrators cannot agree on the appointment of the third arbitrator, one or other of the parties can apply to the court to make the appointment.4 In a recent case involving the Bermudian carrier, XL, the parties were unable to agree on the identity of the third arbitrator and the court was invited to make the appointment. A good deal of insurance arbitration takes place in London involving the two Bermudian companies, XL and ACE. The policies regularly used by the two companies provide for New York law, with certain qualifications, to apply but they then provide for arbitration to take place in England. Insurers invariably appoint an English lawyer as their arbitrator and they routinely do all that they can to ensure that at least two of the three arbitrators are English lawyers. A New York lawyer may be proposed as third arbitrator but agreement to that course is likely to meet firm resistance from insurers. In the case in question the parties (or more accurately their arbitrators) were unable to agree and the Commercial Court decided to appoint a retired senior English judge.

It used to be the case that the third arbitrator was often appointed as umpire as opposed to third arbitrator. The distinction is important. The umpire does not enter upon the reference unless and until the other two arbitrators have disagreed. If that happens at all, it does not happen until the end of the case. Until then the umpire has to follow the case and in particular has to be present at the hearing because of the possibility that he may be called upon to make the ultimate decision. The practical problems for an umpire can be immense. Take, for example, a three-week hearing with a daily transcript being produced at the end of each day. Does the umpire not only attend the hearing (which he clearly must do) but also read [Page46:] the transcript each day because of the possibility that he may be called upon to make the ultimate decision? In many insurance and reinsurance disputes the three arbitrators may reside in three different countries and there is a need for one of the arbitrators to take the lead in managing the dispute in the period from commencement of the arbitration down to the hearing itself. Normally the third arbitrator will discharge that function but in practical terms it is impossibly difficult for him to do so if he is umpire rather than chairman of the tribunal. Arbitration clauses which provide for the appointment of the third arbitrator as umpire as opposed to chairman are fortunately rare these days, and where they are found, it is common for the parties to agree a variation of the contractual scheme and appoint the third arbitrator as chairman of the tribunal rather than as umpire. But I had a case recently where I was appointed umpire and where there was an objection by one of the parties to my being appointed chairman of the tribunal rather than umpire. In the absence of agreement I had, of course, to confine myself to acting as umpire and the practical difficulty and inconvenience that resulted were considerable.

A former practice, not to my knowledge followed in insurance arbitration but which used to apply in some charterparty and bill of lading disputes, was for the party-appointed arbitrators to act as advocate for the party appointing them vis-à-vis the third arbitrator in the event of their agreeing to disagree on the substance of the dispute. Such practice does not apply in insurance arbitration. Each arbitrator must be independent of the party appointing him and is expected to apply a wholly impartial mind to the dispute, regardless of the interests of the party appointing him. My experience is that the practice mirrors the legal obligation and that arbitrators tend to be fiercely independent of the party which appointed them.

Nature of the proceedings

One of the questions that is often raised is the extent to which the procedure adopted in an arbitration resembles the procedures which apply in court. The English Arbitration Act of 1996 sets out three general principles which govern the sort of arbitration with which we are presently concerned. Section 1 of the Act provides as follows:

General principles

1. The provisions of this Part are founded on the following principles, and shall be construed accordingly-

(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;

(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;

(c) in matters governed by this Part the court should not intervene except as provided by this Part.

Principles (a) and (b) are of particular importance in this context. The first of these enjoins all concerned with the arbitral resolution of a particular dispute, and in particular the arbitrators, to seek to achieve a fair resolution of the dispute without unnecessary delay or expense. Principle (b) enshrines the concept of the maximum possible party autonomy.

The effect of these two general principles is that it is open to the parties and, in the absence of agreement between the parties, it is incumbent on the arbitrators to [Page47:] devise a procedure which is appropriate to the particular dispute. Clearly, this does not mean that everyone goes back to the drawing-board as soon as a dispute is referred to arbitration. Those engaged are likely to be experienced in commercial litigation and arbitration and in England, as in any other sophisticated jurisdiction, there are well-accepted interlocutory steps which are usually taken by the parties or ordered by the tribunal in the period between commencement of the arbitration and the hearing of the case. But it does mean that the parties and the tribunal are encouraged to be inventive in creating and agreeing procedures which are exactly appropriate to the issues in dispute. For example, if the case essentially involves a dispute between the parties on a point of law, there may be no point in ordering discovery of documents. If the parties agree to that procedure then the tribunal will certainly not stand in their way-general principle (b). If they do not agree, the tribunal may nevertheless order that there be no discovery or that discovery be very limited to begin with, with each party having the ability to apply to the tribunal for wider discovery on specific issues if a case can subsequently be made justifying such an order.

The whole purpose of the exercise is to balance the need for a fair resolution of the dispute with a procedure which eliminates all unnecessary delay and expense. Clearly, any procedure which is adopted needs to be tested against the fundamental requirement that the rules of natural justice be observed. But within that important overriding constraint there is really little or no limit to what can be ordered if it is appropriate to resolving the issues between the parties. I am talking here of course about ad hoc arbitration. If the dispute is under the aegis of an institution such as ICC, the rules of procedure of that institution will have to be strictly observed.

Organisational meeting

Many of the arbitrations I am involved in have an American arbitrator on the panel. American arbitrators usually expect that the tribunal will call an organisational meeting shortly after the appointment of all three members of the panel is completed.

I believe that an early organisational meeting can often be helpful, but only where it is necessary and one or both of the parties wants one to be held. In the typical reinsurance arbitration where I am appointed third arbitrator and chairman of the tribunal, there will be considerable sums at stake and each side will be represented by a major and experienced firm of London solicitors. The usual practice where firms of this kind are involved is that the solicitors will readily agree a procedural timetable without any involvement on the part of the tribunal other than that of informing the tribunal what has been agreed. To insist on the holding of an organisational meeting in such circumstances makes no sense, can be a very expensive exercise if (as is often the case) some of the arbitrators live outside the UK and would not be consistent with the avoidance of unnecessary delay and expense.

Ex parte communications

There are distinct differences in practice between English arbitrators and their counterparts in the United States about ex parte communications between the parties and the tribunal.5 In the States it is normal for a party to make contact with the person whom he is minded to appoint as arbitrator and to discuss the issues in the case. Were any attempt made to do that with any English arbitrator, certainly a legally-trained arbitrator, it would be met with a refusal to discuss the issues which [Page48:] arise for resolution. The attitude of English arbitrators is well known to the experienced firms of American lawyers who tend to be involved in these cases, so it is unlikely that the discussion will occur in the first place. Nevertheless, it is becoming increasingly popular, particularly with American appointers, for a potential arbitrator to be 'beauty paraded' before appointment. There are a number of things that can properly be discussed, such as, for example, whether any conflict of interest may arise, but discussion about the substantive legal issues in the case is not one of them.

The other difference between arbitration in the two countries is that in the States ex parte communications continue until a much later stage than they do in England. Some arbitrators would say that ex parte communications with the party making the appointment should cease from the date of that appointment. My own view is that it is proper to have ex parte communications after that date but only in relation to the appointment of a third arbitrator where it is the two party-appointed arbitrators who are enjoined to choose the third. It seems to me that it is important to know sufficient about the issues in the case to make an informed and appropriate choice of third arbitrator. But that, in my view, is the only proper subject for ex parte communications and even then I have on occasions asked to be supplied with a written description of the issues and requested that a copy of that document be supplied to the other party or its representatives. The procedure of a running ex parte correspondence going on between an arbitrator and the party appointing him during the course of the period leading up to the hearing and the hearing itself, which I have witnessed in arbitration on the Continent, is unheard of in England and simply would not happen. If it did, and it was discovered, it would probably amount to a serious irregularity and constitute grounds for challenging the award in court pursuant to Section 68 of the Arbitration Act, 1996.

Correspondence with the tribunal

Practice varies on this issue from one case to another. Sometimes solicitors bring the case up to the point where it is ready for hearing with little or no involvement on the part of the tribunal. The first that an arbitrator may know that the case has proceeded from the delivery of points of claim up to a hearing is when he is informed that a date for the hearing is being proposed and he is asked whether it can be accommodated to fit in with his other commitments.

In other cases, the parties or their solicitors may decide to copy the tribunal in to virtually every piece of correspondence that passes between them. Some cases are bitterly contested at every stage in their progress towards the hearing date and the interlocutory correspondence between the solicitors can become lengthy and disputatious, with several missives passing by fax during the course of a single day.

Quite often, correspondence of this kind will include a request that the tribunal order that a particular step be taken, for example, that fuller documentary discovery be provided on a particular issue. Each case is, of course, different and needs to be handled differently. If a tight timetable is in operation and there is little or no slack in it I may suggest to the other members of the tribunal that we intervene straight away, subject always to giving both parties a proper opportunity to make or resist the application. But if time is not so tight it may be better to let the correspondence continue for a few days, particularly if there is reason to think that with a little encouragement from the tribunal the issue is likely to be resolved without formal intervention. [Page49:]

However, when it becomes clear that the tribunal needs to get involved, there is a choice between inviting parties to make written submissions or fixing a meeting for directions. Written submissions may well be unnecessary, the parties having committed more than enough ink to paper in the preceding correspondence. The sensible course in such circumstances is to fix a short meeting to take place within a few days after court hours, say at 5pm, where the tribunal can listen to submissions and make an order. This is easy enough when all the arbitrators are resident in or near London. Sometimes, where one or more of the arbitrators is located outside the UK, the parties agree either at the outset or for the purposes of the specific application that the chairman should make interlocutory rulings on his own or that such matters should be dealt with by two out of the three. In a recent arbitration I was involved in as a wingman, the chairman was located in Sydney, my co-arbitrator was a Singaporean lawyer, the legal representatives of one party were based in Singapore and those of the other party were in Chicago. We held two meetings for directions by conference call and they were both highly successful. The agenda for the meetings was carefully prepared beforehand and a transcript of the call as well as the resulting order of the tribunal were circulated shortly afterwards. Plainly, such meetings can also be conducted by video conferencing or by e-mail.

Security for the claim

One of the differences between insurance and reinsurance arbitration in England and in the United States is that in the States it is quite normal for the claimant to seek an order from the tribunal that the respondent to a monetary claim put up security for the claim. Such procedure is unheard of in England. The most that can be done is in certain circumstances to order that security be put up by the claimant for the costs of the arbitration.6

Discovery

In the practice followed in English arbitration there can be documentary discovery but not discovery by way of deposition in the American manner. In recent years the ambit of documentary discovery has been considerably limited by both the courts and arbitration tribunals. Indeed, the practice in arbitration has been to get away from the very wide approach to discovery which pre-dated the photocopier. Such approach was adopted in arbitration well before the English courts followed suit.

A number of points can usefully be made about the discovery process. The first is that, in accordance with general principle (b), it is in the first instance for the parties themselves to determine the extent of the discovery which they regard as appropriate to give. If they are agreed about it, there is no reason for the tribunal to order differently. But the usual situation will be that the parties are not in agreement on the extent of appropriate discovery and it is then for the tribunal to determine the proper level of discovery.

The second point is that it is not always necessary to make a single definitive order concerning discovery. It is sometimes sensible to order that discovery take place in stages. In reinsurance cases there can be thousands of contracts or cessions which may be contained within a relevant book of business. In one case I had recently it was common ground that there were 10,000 cessions. One of the parties wanted discovery of all 10,000 contracts and related documentation so that they could be analysed for their compliance with a particular criterion of coverage. Disclosure of [Page50:] all 10,000 contracts is likely to be a hugely oppressive exercise with no guarantee that it will be worth the effort. On the other hand, it may very well be that discovery of the documentation, or at least some of it, may yield important evidential results.

In such cases the answer may be to order sample discovery to take place. If discovery is ordered in the first instance of, say, 300 contracts chosen either at random or by the party seeking discovery and on analysis these sample contracts, when disclosed, indicate that further and wider discovery should be ordered, then a further application can be made to the tribunal. In this way the costs of discovery can be kept under control and some sort of proportionality achieved between expense on the one hand and evidential gain on the other. It is in this sort of situation that the contribution of market wingmen is of the utmost importance. It is difficult for a lawyer to be able to gauge the likely results of discovery of this kind. But it is necessary to have some idea what may be thrown up by sample discovery before deciding whether to make any order at all and, if so, how many contracts to order to be disclosed.

The hearing

One of the first tasks of the tribunal is usually to fix the hearing date. More often than not the tribunal is made up of three arbitrators (as opposed to a sole arbitrator) and finding a date which is convenient for three arbitrators as well as the legal teams of both sides and the clients and witnesses of each party can sometimes prove very difficult. Once a date has been identified and entered in everyone's diary, dates for the interlocutory steps down to the hearing day, covering such matters as pleadings and discovery of documents, can be agreed or fixed. There is often great pressure on all concerned in this process to make sure that the timetable does not slip. Some cases can, of course, be highly contentious and in the few weeks before the hearing date applications to the tribunal can come thick and fast. If the timetable is tight and one of the parties would clearly like to engineer an adjournment, the tribunal can find itself very busy. As always, a balance has to be struck. A hearing date fixed months earlier will not be readily abandoned, not least because of the difficulty of finding another date in the near future.

So far as the procedure to be followed at the hearing is concerned, in the absence of agreement between the parties as to the procedure to be followed (which in ad hoc arbitration is rare), it is for the tribunal to determine. As long as the procedure which is adopted is fair and follows the rules of natural justice there is, in theory at least, no legal constraint on the procedural rules which the tribunal is free to adopt. It can tailor the procedure to suit the specific issues in the case and the particular circumstances with which it has to deal.

Having said that, there is of course no point reinventing the wheel and experienced tribunals will almost invariably follow the procedures commonly adopted these days in English arbitration. Before briefly describing them, it is fair to point out that the procedures in arbitration closely follow those adopted before the English courts and in particular the Commercial Court. More accurately, the English courts have in recent years adopted procedures that originated in English arbitration. In particular, witness statements were used in arbitration in the early 1970s when I first started acting as an advocate, but their use has been taken up by the courts only in the last 10 to 15 years.

In the absence of agreement between the parties or order of the tribunal specifying some different procedure, the arbitration will commence with the claimant's [Page51:] counsel making an opening statement. Both parties will have filed a 'skeleton argument', which is a written submission discussing the issues, explaining the facts of the case and making arguments for the conclusion that the party's case should succeed. Do not be fooled into thinking that there is necessarily anything 'skeletal' about them! The name came into use many years ago when many courts were sceptical about the use of written material of this kind. At that time our procedures were almost completely oral, other than the initial written pleadings. So the expression 'skeleton argument' was coined in an effort to persuade the court that the 2-3 page document that was being tendered was there to set out the bare bones of the submission (the 'bullet points') and to save the court from excessive writing.

Those days have happily gone, but the name remains. There are some courts in England now where you cannot even seek an adjournment without the court saying, through the clerk, 'Where's your skeleton argument?' On a substantive hearing the length of the skeleton will reflect the complexity of the case. A simple case may need no more than 5 to 10 pages. A complex arbitration involving many sets of issues may require much more. In one very complex reinsurance arbitration in which I was involved the 'skeleton' arguments of each party ran to well over 100 pages. From the advocate's point of view, it is the first real opportunity to seek to influence the tribunal. Advocacy is the art of persuasion and this, the first occasion that the advocate has to paint the scene he wishes the tribunal to reproduce in its award, can be crucially important.

What is particularly important is that the advocate should not just read out his skeleton argument in opening the case. If the case starts on the Monday the tribunal will probably have ordered skeleton arguments to be exchanged between the parties and sent to the tribunal by close of business on the previous Thursday. A diligent tribunal will have read both skeletons by the following Monday. The documents in the case will have been delivered to each member of the tribunal well before the case starts, together with a chronology (hopefully agreed by the parties) and a suggested reading list from each side. So the tribunal is likely to attend on the first day of the hearing with a reasonable grasp of the issues in the case.

The advocate opening the case for the claimant will have read the respondent's skeleton argument and will have a good idea of what common ground there is between the two sides and where the real battleground lies. The purpose of the claimant's opening submission is to identify for the tribunal the real issues that divide the parties and then to persuade the tribunal that, when the evidence has been heard, it ought to conclude that the claimant's case succeeds. If the skeleton arguments have been well written, the opening oral submissions need not be, indeed should not be, particularly lengthy. It is usual these days to give the respondent's counsel an opportunity to make an opening submission at an early stage. This is usually not the occasion for a lengthy speech. It is more an opportunity for the respondent to set out his stall, put to rest any misconceptions that may have arisen from the claimant's opening and to begin the process of attempting to turn the tribunal in his favour.

When the opening sets of submissions are completed the claimant will lead his evidence. The factual issues raised for decision these days in insurance and reinsurance arbitrations are becoming increasingly complex, merely reflecting the increasing complexity of commercial life generally, and as often as not the parties will wish to call expert evidence on a particular issue. It is often more convenient to have the expert witnesses called together at the end of the non-expert factual evidence. This is because the experts may need to have heard all the factual evidence of both sides before they can establish the factual premise on which their [Page52:] expert evidence is posited. Where the evidence of the experts is likely to depend on the factual evidence given at the hearing, the tribunal is likely to order that all of the factual evidence of both the claimant and the respondent be heard first. Then the claimant's expert will be called, followed immediately by that of the respondent.

Where there are complex disputes relating both to liability and quantum the tribunal may well, at a much earlier stage, have ordered that issues of liability and quantum should be heard separately. That is a common way in which the issues can be divided up. But there are many other ways. I remember a very complex insurance dispute with huge sums of money at stake a few years ago where there were five or six separate hearings with interim awards being produced at each stage. This was at the request of the parties and reflected the fact not only that the issues were complex but also that some of the issues had to be determined before other sets of issues became relevant or could be addressed.

The evidence of witnesses will invariably be led by the production of witness statements. Each side will exchange witness statements. It may be sensible for some or all of the witnesses to produce reply statements and in an appropriate case the tribunal will, if necessary, make an order to that effect. In other cases it may be enough to ask the witness in chief what answer he gives to the points raised in the other side's witness statements. But, subject to that, the witness will be asked in chief if the contents of his witness statement are true and the written document then stands as his evidence in chief. Cross-examination will then start immediately, followed by re-examination and any questions the members of the tribunal may themselves wish to pose.

It is not uncommon for an insurance tribunal sitting in London to be asked to apply foreign law. As I mentioned earlier, there is a good deal of arbitration in London involving the big Bermudian carriers, XL and ACE. Their contracts invariably provide for New York law, as qualified, to apply, but for arbitration to take place in London. Unless all members of the tribunal are US lawyers (which would be unusual), the question will arise whether New York law should be proved by US lawyers giving expert testimony or taken by US lawyers making legal submissions to the tribunal.

Depending on the particular legal issue and the wishes of the parties, my strong preference (and I believe that my views are widely shared) is to have the legal issues explored by way of submissions rather than by evidence. Certainly that is my preference where English lawyer arbitrators are being asked to apply US law. The legal techniques in the two countries are very similar. The approach to legal issues and the way judgments are written is not dissimilar and a number of arbitrators who regularly sit in London went to law school in the States. In an important insurance dispute a few years ago where I was a member of the tribunal, New York law was presented on both sides by New York lawyers who were part of the respective legal teams presenting the case. The decision to hear issues of New York law by way of submission was the correct way to go and proved very successful.

When the evidence, including the expert evidence, is completed, the advocates will make their final closing submissions. If the case is a complex one, the parties may ask for and be given a couple of days' break between the completion of the evidence and closing submissions during which they can prepare and submit a closing submission in writing. If the expense is justified (and I am sorry to say, sometimes even when it is not), the evidence will have been recorded in transcript form (either real time or available later the same day) and the parties will wish to give appropriate references to the bits of the evidence they want to emphasise. [Page53:] Reasons for the award are invariably given, unless the parties wish otherwise (a rare scenario), and so written closing submissions provide an opportunity in effect to write for the tribunal the award that that party would like to see produced.

The award

It is impossible of course to say how long the parties can expect to wait before the award is published ('published', that is, to the parties, not to the world at large). But even in a very complex case it should not take more than 4-8 weeks and in a more straightforward case it may be much quicker than that.

This is not the occasion to deal with challenges to arbitration awards before the English courts. That is a topic in itself and much has been written about it. The Arbitration Acts of 1979 and 1996 have deliberately made it difficult to obtain permission from the court to appeal. I regret to say, however, that the Commercial Court from time to time gives permission to appeal in circumstances where it frankly should not do so. So it remains important, in particular in a 'market' arbitration, to have a legally-qualified chairman who can write the reasons for the award as carefully as possible, so as to make the award as appeal-proof as can reasonably be achieved.

Confidentiality

There is one final point of a practical nature which I wish to touch on. It concerns the confidentiality of arbitration proceedings and the confidentiality of the award. The insurance community will tell you that there are a number of reasons why they opt for arbitration in their contracts. One of them is the fact that they want disputes determined by a tribunal who understand the business and are familiar with the sort of market problems which come up. Another important reason is confidentiality. In the 'avoidance through misrepresentation or non-disclosure' disputes which are a staple diet of so much insurance and reinsurance arbitration and where the background is so often a combination of poor broking by the insured's broker and poor underwriting by the insurer, none of the parties understandably has any desire to wash its dirty linen in public.

But it should not be assumed that the result of the arbitration will not become known, at least by those in the market place. One thing is for sure: it will not be the arbitrators or lawyers who do not respect the fact that arbitration is confidential. But the result is likely to get out. Sometimes of course that is unavoidable. Suppose a claim is made on reinsurers by an insurer who has successfully attempted in arbitration to avoid the contract with the original insured. It is likely in those circumstances that the reinsurer will get to know some at least of the prior history of the reinsured's claim.

In the first instance I suspect that the gossip as to what happened in the arbitration starts with market chat over a beer in the local pub at the end of the working day. The reality is that the market is likely to know the result of the more important arbitrations and if the information is not gleaned informally, it will be picked up and disseminated by publications such as JTW News. I admit, however, that in a recent arbitration I was surprised to discover about a month after the award (which I had written with two colleagues) was issued that the whole text was available on payment of a fee from a commercial organisation in Miami. When the English [Page54:] solicitor for one of the parties wrote complaining about the breach of confidentiality, not to say copyright, he was reminded that the First Amendment to the United States Constitution guarantees freedom of speech.

Mediation

Insurance and reinsurance disputes are increasingly being submitted to mediation. My experience of mediation in this area is that it can be a very useful method of achieving a compromise result between the parties. I am not aware of any statistics about the success rate in this particular field, but, generally speaking, the success rate for mediation is fairly high. Mediation of insurance and reinsurance disputes is particularly useful where there are a number of different parties who need to be brought into the resolution of the dispute (for example, where a risk has been written in a subscription market) or where both insurers and reinsurers are to be involved in disposing of the claim of the original insured.

Conclusion

Arbitration of insurance and reinsurance disputes is the favoured method of dispute resolution and certainly those engaged professionally in this area as advocates and arbitrators are kept very busy. What is of the utmost importance is that the service which is provided is quick, efficient and as cheap as circumstances permit and, above all, responsive to the needs of the insurance community.

1
Under sections 67-69 of the Arbitration Act, 1996, following the general approach adopted in the Arbitration Act, 1979, permission of the court is needed before an award can be challenged in court and the grounds on which an appeal can be made are severely limited. Very few applications for permission succeed.

2
I ignore for present purposes that an appeal of a court decision to the Court of Appeal has recently become more difficult in the English system.

3
Pan Atlantic Ins. Co v. Pine Top Insurance Co Ltd [1995] 1 AC 501.

4
Section 18 of the Arbitration Act, 1996.

5
The difference between insurance and reinsurance arbitration in the two jurisdictions is regularly explored at meetings of ARIAS US and its counterpart ARIAS UK.

6
Section 38(3) of the Arbitration Act, 1996.