London Calling…Be Mindful of the International Arbitration Clauses in Insurance Contracts!

Companies seeking insurance rarely pay much attention to the dispute clauses in the policy.  Understandably, the main concern when seeking insurance is obtaining adequate coverage for potential losses.  Dispute clauses and, in particular, international arbitration provisions in contracts of insurance often are not focused on.   This can be a costly mistake as London, England is the seat of so much of the world’s insurance industry and International Arbitrations in London can be massively expensive, especially for non-resident claimants.  The arbitrators, lawyers, venue, accommodations, and just about everything else is much more expensive in London.

In the recent case, Trade Finance Solutions Inc. v. Equinox Global Limited, 2018 ONCA 12 (CanLII) the Court of Appeal for Ontario sent the Ontario Plaintiff, Trade Finance Solutions Inc. (TFS), packing for arbitration in London in accordance with the International Arbitration clause found in the policy of insurance which was in question in the litigation.  TFS chose to bring its claims in the Ontario Superior Court of Justice but the Defendants, Equinox Global Limited and London’s Lloyd’s Underwriters, brought a motion to stay the action and to have the matter submitted to arbitration under the London Court of International Arbitration (LCIA) Rules.  At first instance the motion was dismissed but the Court of Appeal for Ontario disagreed with the motion judge and ordered that the action be stayed and that the Plaintiff’s claims proceed to arbitration in London.

In summary, the Court of Appeal held that the motion judge failed to properly give effect to the mandatory arbitration clause in the insurance policy.  This clause clearly required that all disputes “shall be referred to and finally resolved by arbitration” in London.  The court also rejected the motion judge’s finding that the UNCITRAL Model Law did not govern the disputes in question and the motion judge’s effective variation of the arbitration provision’s wording.

This case should be read by practitioners who deal with International arbitration issues and by transactional and in-house counsel tasked with the responsibility of reviewing insurance contracts for their employers.

Read the Trade Finance Solutions Inc. v. Equinox Global Limited, 2018 ONCA 12 case here.

Jon-David Giacomelli

Jon-David Giacomelli is a Canadian lawyer and an internationally known leader practicing in the area of the recognition and enforcement of foreign judgments and arbitral awards in Canada.

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