Canadian Reinsurance Co. v. Lloyd’s Syndicate

Issue Discussed: Arbitrator Selection / Challenges / Judicial Intervention

Submitted by Paul Bates

Date Promulgated: January 27, 1995

Canadian Reinsurance Co. v. Lloyd’s Syndicate, PUM 91 (1995), 17 C.C.L.I (3d) 165, 6 B.L.R (3d) 102 (Ontario Court of Justice, 1995)

Issue Decided: What factors should be considered by a Court in selecting an umpire.

The parties asked the Court to appoint an umpire for an arbitration yet to be held. The Court identified a number of factors to be considered in the empanelling process, noting that it has jurisdiction to rule on the motion in accordance with sections 11(4)(b) and 11(5) of the International Commercial Arbitration Act, R.D.O. 1990, c. I-9 (“ICAA”), as well as under the Model Law.

The parties each provided a list of proposed umpires to the Court. The most pertinent factors addressed by the Court were the relevance of experience in the reinsurance industry, and the nationality of the umpire.

The facts of the proposed arbitration were to be complex, involving a $17 million insurance settlement paid by the Applicants for asbestos-related bodily injury claims, and a subsequent indemnity claim by the Applicants under retrocession coverage provided by the Respondents/Cross Applicants, which required resolution of the insurance dispute as a condition precedent to a right of action of arbitration.

The Respondents/Cross Applicants preferred an umpire with experience in the reinsurance industry, while the Applicants argued that an umpire with such a background would create a real or perceived bias.

Justice Dunnett held that it was appropriate to appoint an umpire who had experience in the reinsurance industry.

Section 11(5) of the ICAA mandated that consideration be given whether the nationality of the umpire should be different from those of the parties. The Applicants argued that as the arbitration was to proceed in Toronto, the Respondents/Cross Applicants were deemed to have accepted the empanelling of a Toronto umpire with knowledge of Ontario law. The Applicants did business in Canada, and had appointed an arbitrator with such residency and knowledge. The Respondents/Cross Applicants had appointed an arbitrator resident in London. The syndicates engaged in business in the London market.

The Court held that the parties did business throughout the world, and that the element of nationality the Court had to take into account was satisfied by appointing an umpire from a country other than Canada or England. Justice Dunnett chose three possible candidates from the lists provided.

*Paul Bates is the principal of Bates Barristers in Toronto, Ontario, and is an ARIAS-U.S. certified arbitrator. Paul has extensive experience in insurance and reinsurance law, as well as a broad range of commercial litigation matters.