An insurance company disputed liability of a claim arising out of a fire, alleging fraud and arson. These allegations were not sustained. The insurer then sought to resist liability on the basis that, by litigating, the insured was in breach of an arbitration clause in the policy. The arbitration clause applied only ‘if any difference arises as to the amount of any loss or damage’ and provided that ‘it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage if disputed shall be first obtained’.
Held: the insurance company was not entitled to rely on the arbitration clause. The arbitration clause applied only to differences concerning the amount of loss and, therefore, not to a claim that was repudiated by the insurer altogether. (Haldane obiter) ‘there has been in the proceedings throughout a repudiation on the part of the respondents of their liability based upon charges of fraud and arson, the effect of which, if they are right, is that all benefit under the policy is forfeited. But one of the benefits is the right to go to arbitration under this contract, and to establish your claim in a way which may, to some people, seem preferable to proceeding in the Courts; and accordingly that is one of the things which the appellants have, according to the respondents, forfeited with every other benefit under the contract. Now my Lords, speaking for myself, when there is a repudiation which goes to the substance of the whole contract I do not see how the person setting up that repudiation can be entitled to insist on a subordinate term of the contract still being enforced.’
References: [1915] AC 499
Judges: Viscount Haldane, LC, Lord Dunedin, Lord Atkinson, Lord Parmoor, Lord Parker of Waddington
Jurisdiction: England and Wales
This case is cited by:
- Restricted – Super Chem Products Limited v American Life and General Insurance Company Limited and Others PC 12-Jan-2004
PC (Trinidad and Tobago) A fire occurred at premises in which the stock was insured under two policies. Both insurers denied the claims alleging arson, and that it was out of time. The claimant said that the . .
(, [2004] UKPC 2, Times 28-Jan-04, , , , [2004] 2 All ER 358) - Dicta distinguished – Woodall v Pearl Assurance Co Ltd CA 1919
. .
([1919] 1 KB 593) - Explained – Sanderson and Son v Amour and Co Ltd HL 1922
‘I should say a single word as to the case of Jureidini. That case has in my view no application, for the simple reason that the clause of reference there was not a reference of all disputes, but only a reference as to the evaluation of loss. In . .
(1922 SC (HL) 117) - Explained – Heyman v Darwins Limited HL 1942
An arbitration clause will survive a repudiatory breach: ‘I agree with the Lord Chancellor in thinking that the true ground of the decision in Jureidini v National British and Irish Millers Insurance Co Ltd was the narrowness of the field of . .
([1942] AC 356, [1942] 1 All ER 337)
These lists may be incomplete.
Last Update: 27 November 2020; Ref: scu.193381 br>