XL Insurance Ltd v. Toyota Motor Sales U.S.A. Inc.

Unreported judgment of 14 July 1999 (1999)

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XL Insurance Ltd v. Toyota Motor Sales U.S.A. Inc.

England and Wales High Court of Justice, Queen’s Bench Division
Unreported judgment of 14 July 1999 (1999)

Facts

XL Insurance Ltd. (XL) (plaintiff) provided excess coverage for Toyota Motor Sales U.S.A. Inc. (Toyota) (defendant) in the United States. As part of an insurance contract, the parties also agreed to nominate one arbitrator each to the arbitral tribunal and then to allow the two arbitrators to nominate a third arbitrator. The arbitration clause specifically provided that if the two arbitrators fail to agree on a third arbitrator, then the parties could apply to a judge of the High Court of England to name an arbitrator. The parties agreed to refer disputes to arbitration in London under the English Arbitration Act; however, the contract also noted that the substantive law that governed was the laws of New York. In September 1998, Toyota made a demand for arbitration and selected an arbitrator who was an American insurance lawyer. In October 1998, XL nominated a British lawyer with experience in insurance law and arbitration. Subsequently, the American attorneys for XL sent a letter to Toyota, suggesting that any arbitrator appointed by the two arbitrators should be subject to the parties’ approval. However, the parties could not agree on any of the proposed names for the third arbitrator. XL wanted to appoint a third arbitrator with knowledge of English arbitration law and practice. Toyota insisted the third arbitrator have knowledge of U.S. tort law and practice and of New York insurance law specifically. XL took the issue to the High Court of England, asking for the court to appoint the third arbitrator.

Rule of Law

Issue

Holding and Reasoning (Aikens, J.)

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