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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Allianz Insurance Plc & Anor v Tonicstar Ltd  EWCA Civ 434 (13 March 2018)
Cite as:  WLR(D) 407,  EWCA Civ 434
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE TEARE
Strand, London, WC2A 2LL
B e f o r e :
(Sir Brian Leveson)
LORD JUSTICE UNDERHILL
LORD JUSTICE LEGGATT
| ALLIANZ INSURANCE PLC (FORMERLY CORNHILL INSURANCE PLC)
SIRIUS INTERNATIONAL INSURANCE CORPORATION (PUBL) (LONDON BRANCH)
|- and -
|TONICSTAR LIMITED (ON ITS OWN BEHALF AND BEHALF OF THE OTHER CORPORATE MEMBERS OF LLOYD'S SYNDICATES 62, 1861 AND 2255)
Mr Andrew Burns QC (instructed by DLA Piper UK LLP) for the Respondent
Hearing date: 1 March 2018
Crown Copyright ©
LORD JUSTICE LEGGATT:
"Unless the parties otherwise agree the arbitration tribunal shall consist of persons with not less than ten years' experience of insurance or reinsurance."
The question raised on this appeal is whether a Queen's Counsel who has practised as a barrister specialising in the field of insurance and reinsurance for more than 10 years satisfies this requirement.
Company X v Company Y
The respondent's case
Overturning a settled meaning?
"Where a contract has been professionally drawn, as in the case of the Institute Clauses, the draftsman is certain to have in mind decisions of the courts on earlier editions of the clause. Such decisions are part of the context or background circumstances against which the particular contract falls to be construed. If the draftsman chooses to adopt the same words as previously construed by the courts, it seems to me to be likely that, other things being equal, he intends that the words should continue to have the same meaning."
A second, related reason for adhering to an established interpretation is the value of certainty in commercial law. Lord Denning MR made this point in The Annefield  P 168 at 183, when he said:
"Once a court has put a construction on commercial documents in standard form, commercial men act upon it. It should be followed in all subsequent cases. If the business community is not satisfied with the decision, they should alter the form."
In Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) (No 2)  AC 724 at 737, Lord Diplock said:
"It is only if parties to commercial contracts can rely upon a uniform construction being given to standard terms that they can prudently incorporate them in their contracts without the need for detailed negotiation or discussion."
Other judicial statements to similar effect are collected in Sir Kim Lewison's book on The Interpretation of Contracts (6th Edn, 2015) at para 4.08.
"This is not one of those cases where there are respectable arguments either way. With regret, the conclusion has to be that it is not possible to defend the decision on any rational basis. It is not enough to say that it has stood for more than 25 years."
In the same way, in my view, the decision in Company X v Company Y cannot be defended and should now be overruled.
"The Arbitrators shall be persons (including those who have retired) with not less than 10 years' experience of insurance or reinsurance within the industry or as lawyers or other professional advisors serving the industry."
This makes explicit what, as I interpret it, was already the effect of the previous wording.
LORD JUSTICE UNDERHILL:
THE PRESIDENT OF THE QUEEN'S BENCH DIVISION: