EQUITAS INSURANCE LTD V MUNICIPAL MUTUAL INSURANCE LTD

[2018] EWCA Civ 991, Court of Appeal, Lady Justice Gloster and Sir Jack Beatson, 4 May 2018

Reinsurance - Mesothelioma - Spiking of claims against reinsurers - Application for permission to appeal against arbitration award - Arbitration Act 1996, section 69

Flaux LJ, sitting as a judge arbitrator, held in an award of 7 April 2017 that: (i) MMI was entitled to "spike" each reinsurance claim to any applicable year of reinsurance cover of its choice; (ii) the duty of utmost good faith was limited, in a claims context, to a duty not to act dishonestly in connection with the making of a claim, and the exercise by MMI of an absolute contractual right to spike claims was not subject to any implied term or duty of utmost good faith; and (iii) MMI was correct in apportioning the loss for which the "spiked" reinsurance contracts were liable between the retentions and the various layers of reinsurance in each of the applicable years of reinsurance cover, on the basis of the independent liability method. Equitas sought permission to appeal under section 69 of the 1996 Act against these three rulings.