|November 25, 2013|
Previously published on November 18, 2013
In Arts & Antiques Limited v Peter Richards & Towergate London Market Limited & Zurich Insurance Plc  EWHC 3361 (Comm), the Court struck out claims by Arts and Antiques Limited (A&A) which sought to relitigate issues that were subject to a binding arbitration award.
A&A, a jeweller, insured their stock under an all risks policy of insurance with Zurich Insurance Plc (Zurich). The policy was arranged by Mr Richards, a broker at Towergate London Market Limited (Towergate), and included a condition precedent that required A&A to keep and maintain detailed records of their stock.
In May 2007, A&A’s shop was robbed. A&A claimed under the policy and Zurich resisted payment on the basis of a breach of the condition precedent. A&A commenced arbitration proceedings against Zurich but was unsuccessful. A&A made an arbitration application to appeal the decision but was again unsuccessful.
A&A subsequently brought a claim in the High Court against Zurich, Mr Richards and Towergate disputing the inclusion of the condition precedent into the policy of insurance and alleging professional negligence and false representations against Mr Richards and Towergate. Zurich argued that as the cause of action and issues had already been arbitrated, A&A were unable to re-challenge them and in any event, such a challenge would be an abuse of process.
The claim was struck out. Mr Justice Hamblen found that there were no special conditions which would make recognising the arbitrator’s award unjust and therefore the policy was subject to the condition precedent. To allow the claim would be unfair and oppressive to Zurich and amount to an abuse of process.
Despite Mr Richards and Towergate not being parties to the arbitration hearings, Hamblen J held that to relitigate the issues in proceedings against them would involve a collateral attack on the arbitrator’s final and binding decision. Hamblen J did however allow a claim to proceed against Towergate on the distinct issue of its alleged failure to advise on the effect of the condition precedent.
The case reiterates the Courts’ long standing reluctance to subvert the binding decision of an arbitrator.