ARBITRATION ACT 1986 – APPOINTMENT OF THIRD ARBITRATOR – WHETHER JURISDICTION TO APPOINT CHIEF JUSTICE – FACTORS TO TAKE INTO ACCOUNT WHEN MAKING APPOINTMENT
The plaintiff is an exempted insurance company incorporated in Bermuda and the defendant is a company incorporated in the United States.
The plaintiff sought an order appointing a third arbitrator in the arbitration proceedings which the defendant has commenced against the plaintiff. The reference to arbitration, and the appointment of the third arbitrator, are governed by the terms of the plaintiff’s insurance policy. The nature of the dispute is known to the parties. By convention, the third arbitrator acts as Chair.
Arbitration provisions in the policy
The policy provides that disputes shall be settled by arbitration under the Bermuda Arbitration Act of 1986 (“the 1986 Act”). Each party shall nominate an arbitrator of their choice. The party-appointed arbitrators shall appoint a third arbitrator.
However the parties decided that, rather than delegate this task to the party-appointed arbitrators, they would attempt to agree upon a third arbitrator themselves, through discussion between their lawyers. These attempts proved unsuccessful, hence the plaintiff’s application to the Court.
The Court’s jurisdiction to appoint a third arbitrator derives from Section 15 of the 1986 Act. Both the plaintiff and the defendant agreed that the Court should exercise its jurisdiction to appoint a third arbitrator, as they had reached deadlock.
The substantive law of the policy is New York State common law, subject to certain modifications, and the law governing the conduct of the arbitration is Bermuda law.