Timebar holds, says judge, refusing leave to appeal

In Midnight Marine v Thomas Miller Specialty Underwriting [2018] EWHC 3431 (Comm) a judge has said there could be no appeal for a time-barred claim.

The insurers had refused to accept liability under the issued policy, which led the insured to commence litigation in Canada, despite the policy providing for London arbitration.

The insurers then commenced arbitration, seeking a declaration that they were not liable under the policy.

The parties agreed that no further steps would be taken in the arbitration until an application for a stay was heard by the Canadian courts. The Canadian courts granted the stay, but no further step was taken in the arbitration until the assured appointed an arbitrator seven years later, by which time the insurers had closed their file.

The insurers asserted that the insured’s claim was time-barred because it was outside the six-year statutory period, a point with which the arbitrators agreed. The arbitrators held that the notice of arbitration had not stopped time running because the only matter referred to arbitration was the insurers’ claim for a declaration of non-liability and no arbitration had been commenced in respect of the insured’s claim.

For completeness, the arbitrators also held that they would have made an award dismissing the claim under section 41(3) of the Arbitration Act 1996 because of the “inordinate and inexcusable delay on the part of the claimant in pursuing his claim”. The arbitrators concluded that it would be appropriate to treat the insured as the claimant or counter claimant for the purpose of section 41(3).

The insured challenged the award, but lost. The insured then sought to challenge that decision.

Males J held that:

(1)  Citing Section 82(1) of the Act, which provides a definition of “claimant”, Males J said that the insured’s challenge on the section 41(3) point was hopeless.

(2)  In light of that finding, no permission to appeal under section 69 could be given, as the determination of the question of law on the time-bar point could not affect the rights of the parties.

Males J did, however, suggest that, had the issue stood alone, he might have been inclined to give permission to appeal because “I can see an argument that in the circumstances of the Canadian proceedings, one important purpose of the Underwriters’ notice of arbitration was to enable it to submit to the Canadian court that the Assured’s claim had been referred to arbitration in London. There would have been little benefit to the Underwriters in telling the Canadian court that its claim for a negative declaration had been referred to arbitration but that the Assured’s claim for an indemnity had not”.

Finally, the judge was critical that the application to set aside the dismissal on paper had been argued as fully as the section 68 application itself would have been:

He said that “if that were to become the standard procedure, the availability of a procedure for dismissal on paper would achieve nothing”.

The costs of the present application amounted to £150,000, while the claim itself was worth only C$625,000.

Males J commented that “while commercial parties are free to spend their money as they wish, it cannot be in the interests of London arbitration generally for costs on that scale to be incurred for a hearing of this nature. There is after all such a thing as killing the golden goose”.