IRWELL INSURANCE CO LTD V WATSON AND OTHERS

[2021] EWCA Civ 67, Court of Appeal, Lord Justice Bean, Lord Justice Flaux and Lord Justice Males, 22 January 2021

Insurance – Claims made in employment tribunal against insolvent employer – Whether tribunal having jurisdiction to determine the liability of the employer's insurers – Effect of arbitration clause – Third Parties (Rights against Insurers) Act 2010, section 2

Watson (W), who was employed by Hemingway Design Ltd (HD), resigned in January 2017 and brought proceedings for unfair dismissal and disability discrimination in an employment tribunal. HD became insolvent and the claim was pressed against HD's liability insurers under the Third Parties (Rights against Insurers) Act 2010. The insurers denied liability under the policy on the ground that HD had failed to comply with its policy obligations to seek legal advice before acting against an employee. The insurers contested the jurisdiction of the employment tribunal over the dispute under the policy, arguing that the tribunal could hear only employment disputes between employer and employee. Further the policy contained an arbitration clause, which the insurers argued was binding on W in his claim under the 2010 Act.