Deals & Cases

Arbitral Tribunal rules that insurance company lacks standing to sue in light of subrogation waiver clause

25 September 2012 – Walder Wyss arbitration team members Daniel R. Wyss and Michael Cartier, representing Respondent, successfully obtained an ICC Final Award concluding that Claimant, an insurance company, lacked any standing to sue and dismissing its claim with prejudice. Respondent (domiciled in Germany) had delivered equipment to an associated company (domiciled in Canada) under a purchase agreement containing an ICC arbitration clause. An explosion occurred at the premises of the Canadian company, and the equipment in question was destroyed. Claimant compensated the Canadian company under its insurance policy and then sought to recoup that payment on the basis of an (alleged) subrogation.

Claimant invoked subrogation under the insurance policy both with respect to jurisdiction and its standing to sue. However, the insurance policy contained a waiver clause, which denied any subrogation with respect to claims against companies associated with the insured, inter alia to avoid the transfer of (insured) losses between group companies. It was in dispute whether this clause applied to the specific circumstances of the case (complex holding structure, multiple insured parties, claims arising from contractual deliveries). Applying the theory of double-pertinent facts (“doppelrelevante Tatsache”), the Arbitral Tribunal found that while Claimant had, at the jurisdiction stage of the proceedings, coherently asserted subrogation for jurisdictional purposes, at the merits stage it ultimately failed to show any valid subrogation as a result of the subrogation waiver clause. As a result, the Arbitral Tribunal found that while it had jurisdiction over the dispute, Claimant’s claim ultimately failed due to the lack of any standing to sue.