POSSEHL ELECTRONICS HONG KONG LTD V CHINA TAIPING INSURANCE (HK) CO LTD

[2014] HKCA 590, Hong Kong Court of Appeal, Justice of Appeal Hon Lam Vice President, Justice of Appeal Barma and Justice Poon, 1 December 2014

Arbitration - Clause applying to quantum disputes only - Insurers denying liability - Whether dispute about quantum

The claimant assured obtained two insurance policies from the defendant insurers, against property damage and business interruption. The property policy required proceedings to be brought within three months of any denial of liability, although in the event of any dispute "as to the amount to be paid under this Policy" proceedings had to be brought within three months of any arbitral award in favour of the assured. Following a fire on 4 June 2011 the insurers denied liability on 1 June 2012 by reason of breach of warranty in the property policy. The assured commenced proceedings. It was held by the Court of Appeal that the three-month time-bar applied: when the insurers rejected the claims, they denied liability altogether, so the dispute was not on quantum only but was on liability. The dispute did not become one about quantum simply because the assured sought full payment and the insurers were not prepared to pay anything.