Court of Appeal
Jan. 25, 26, 27 and 28, 1993; Jan. 28, 1993
Before Lord Justice Ralph Gibson Lord Justice Leggatt and Lord Justice Hoffmann
Lord Justice HOFFMANN:
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As against these considerations, is there anything in the policy of the rule which is alleged to invalidate the retrocession agreements which requires that the arbitration clause should also be invalid? I have already expressed my doubts as to whether the rule had any effect upon the initial validity of the agreements at all. I shall assume, however, that one was dealing with an insurance contract which was alleged to fall within the scope of the implied prohibition in the Insurance Companies Act, 1974. Is there anything in such a provision which would be undermined by allowing the issue of whether it applied to be determined by arbitration? Mr. Longmore submitted that as a matter of policy all questions of illegality were better determined by the Court than by arbitration. From my part, I cannot see why this should be so. In any case, Mr. Longmore had to concede that any such policy was not applied when it came to allowing arbitrators to decide whether a contract had been frustrated by supervening illegality. Since Heyman v. Darwins Ltd., there has been no doubt that they have jurisdiction to do so. As for the specific statutory provisions, Lord Justice Kerr in the Phoenix case wrung his hands over the conclusion to which he felt obliged to come and said that the invalidity of the substantive agreement itself could not be justified on any grounds of public policy. In those circumstances, it seems to me unnecessary to carry the effect of the prohibition even further and hold that it also invalidates an agreement to arbitrate the question of whether it applies.