The High Court has ordered Charwin Limited, which operates Charlie’s Bar in Loughrea, to pursue its claims for business interruption and “loss of licence” cover through arbitration with its insurer. The court refused to send the company’s separate claim for damages over alleged regulatory breaches to arbitration, leaving that claim in the proceedings.
The ruling concerns the insurer’s application under Article 8(1) of the UNCITRAL Model Law to refer the parties to arbitration and stay the court case. Mr Justice David Barniville delivered judgment on 14 July 2021.
Charwin claims that its public house had to close for several months after the outbreak of COVID-19 in March 2020 and later faced restrictions. It says the insurer should indemnify it under the policy for business interruption and loss of licence. The insurer had rejected the claim. The court did not decide whether the policy provides cover or determine the merits of either claim.
The company argued that the dispute raised public policy issues which required a public court decision, including because it could serve as a test case for other policyholders. The judge rejected that argument as a reason to keep the indemnity dispute in court. He said the public policy case fell well short of the demanding threshold for finding a dispute non-arbitrable. The Central Bank’s supervisory framework expressly envisaged arbitration as one way of resolving COVID-19 business interruption disputes, he noted. The insurer had agreed with another policyholder, in separate proceedings, that its case could be treated as a test case under the framework. The judge said he could not require the insurer to give this case that status.
The arbitration clause covered disputes about the insurer’s liability in respect of a claim or the amount to be paid. Read in the context of the policy, the judge held, that language covered Charwin’s claims for policy indemnities. It did not cover the company’s alternative claim for damages under section 44 of the Central Bank (Supervision and Enforcement) Act 2013, based on alleged breaches of regulatory obligations. The judge treated that as a separate cause of action, which would arise if the company failed to establish its entitlement to indemnity.
The court therefore referred the indemnity claims to arbitration and stayed the proceedings as to those claims. It refused the application in respect of the regulatory damages claim, which remains for the court to determine. The judge made no final sequencing directions. He offered tentative observations that the parties might await a related test case’s decision on policy interpretation and that the alternative damages claim might await the outcome of the indemnity claim. He deferred further directions until hearing from counsel.