COVID-19 Public Policy Considerations Insufficient To Render A Dispute Non-Arbitrable

• Published date: 07 September 2021
• Subject Matter: Wealth Management, Litigation, Mediation & Arbitration, Coronavirus (COVID-19), Wealth & Asset Management, Arbitration & Dispute Resolution, Operational Impacts and Strategy
• Law Firm: Dillon Eustace
• Author: Ms Rachel Turner

Charwin Limited T/A Charlie's Bar v Zavarovalnica Sava Insurance Company D.D [2021] IEHC 489

The High Court has found that the circumstances of the COVID-19 pandemic, although entirely unprecedented, do not trigger sufficient public policy considerations to require a dispute to be determined in a public court as opposed to a private arbitration.

Background

The plaintiff company, the owner and operator of a public house trading as 'Charlie's Bar', commenced proceedings against the defendant, its insurer, arising from the closure of the plaintiff's public house on 15 March 2020 due to COVID-19 and the defendant's refusal to provide an indemnity to it under its insurance policy.

Following the proceedings being entered in the Commercial List, the defendant made an application for orders under Article 8(1) of UNCITRAL Model Law (the Model Law) referring the parties to arbitration and staying the court proceedings.

Model Law

Article 8(1) of the Model Law places an obligation on a court to refer the parties to arbitration provided that (a) the action had been brought before the court in respect of a dispute between the parties; (b) the action must concern a matter which is the subject of an arbitration agreement; and (c) one of the parties requests reference to arbitration no later than when submitting his first statement on the substance of the dispute.

If these requirements are satisfied, then the court must refer the parties to arbitration unless the court finds that the arbitration agreement is (i) 'null and void' or (ii) 'inoperative' or (iii) 'incapable of being performed'.

Defence

The plaintiff opposed the application. The main ground of contention was that the dispute between the parties was not arbitrable on the grounds that it gave rise to fundamental issues of public policy that were not capable of being determined at arbitration. The plaintiff maintained that the dispute had arisen in unprecedented circumstances, in particular, referring to the COVID-19 pandemic and the Central Bank of Ireland's 'COVID-19 and Business Interruption Insurance Supervisory Framework' (the CBI's Supervisory Framework). Subject to that argument, the plaintiff also maintained that part of its case against the defendant did not fall within the scope of the arbitration clause.

Judgment

In considering the defendant's application, the court first looked at whether the plaintiff's two pleaded causes of action fell within the scope of the arbitration cause. The court found that...