Arbitration to settle an insurance dispute - any advice or experience?

[Getbackinthebox]

I have a dispute with our legal expenses insurer which is likely to be very substantial in terms of sums of money involved. I am aware of the Financial Ombudsman and indeed I have previously referred complaints to them regarding this insurer as there have been a few issues arising over the life of the claim which has taken a few years. However, whilst the Financial Ombudsman has found in our favour the compensation awarded has been in the region of £100 or £200 for past complaints. I have seen from the website that this is pretty typical of what they award. Without going into lots of detail, as our losses disputed are going to be a great deal more than this I was considering whether the option of arbitration might be more appropriate. However, I know very little about arbitration. I think the decisions are perhaps always secret unlike the Financial Ombudsman's decisions or court cases? Therefore, it is difficult to know whether we would be at a big disadvantage in going this route when the insurance company would be well-clued-up on the process and we would be clueless. I wondered if anyone had used arbitration to resolve insurance disputes, especially ones involving a legal expenses insurer, and for substantial amounts of money? Or any lawyers out there who can tell me about this type of arbitration and how to tackle it as a consumer? Would it be best to appoint a lawyer to articulate our claim for us if we were to consider this route and if so can legal costs form part of the sum awarded in arbitration? Anyone had experience of using arbitration for this type of thing and if so with hindsight are you glad you did or do you think it was a mistake and regret it? Is it very costly? I really have no clue about this! Thank you!

You took a risk

you “won”

but it is a meagre win

and you should have been advised that this was likely going to be the case (if you used legal representation) or research’s yourself of pursuing yourself independently

Hi Spottyshirt, I dont think you have answered my questions at all and you arejumping to conclusions on something you apparently have no knowledge of. I am hoping to hear from anyone who can answer my questions.

My advice would depend on how much “a great deal more than £100” is, to be honest.

If we’re talking about say £15k for example, while that sounds like a lot of money, it really isn’t once we’re into arbitrator fee, their hourly fees, plus your own solicitors fees to advise you and help you put together your evidence/story (which I would really advise, good legal advice will massively help you put your best foot forward but won’t be cheap, £350+ an hour). Nothing is guaranteed, you could win or lose, even if you win there is no guarantee the other side would be ordered to pay all of your legal fees so a win of 15k doesn’t mean much if you’re fees ended up being 15k. So it’s for me really worth weighing up cost vs realistic reward vs likelihood of success.

If you’ve already had legal advice from a solicitor who knows all details of your case and who has told you that you have a strong case/evidence, if I was willing to invest in that solicitor to help me prepare, and if you’d potentially be looking at £100k for example then I’d do it.

This isn’t something I’d go into blind though, get proper legal advice.

Good luck op
sounds like you have potentially one heck of a fight on your hand. With a legal expenses insurer no doubt… likely to know their own chances of success

Thanks Mrsttcno, not had the legal advice yet on this, hence considering what to do before taking the plunge. It sounds though like a solicitor would be advisable whether we are opting for arbitration or litigation hence we can discuss this with a solicitor once we are at that stage. I really wanted to find out about arbitation first in case it is a scheme where legal fees aren’t awarded and it is expected that the consumer puts their case themselves before I started down the route of getting a solicitor involved, especially if we are offered a CFA and then committed to a particular path! The sums are potentially worth the involvement of a solicitor yes although we would of course be having them assess the situation before going too far along that path! I am just trying to do my research first on how best to deal with this!

Do you know if arbitration for this type of thing has benefits over potential litigation? I mean benefits to us, rather than the insurer?

There isn’t an easy answer to that question really @Getbackinthebox. There are absolutely benefits to arbitration, one big one is that with arbitration both parties get to choose & agree on the arbitrator, this means you get to choose one who has the relevant expertise for your case, who really understands it- if you go for litigation you don’t get to choose your judge and there is the risk that the judge may not fully understand all technicalities of the case (nobody knows everything), so arbitration gives you the chance to choose someone who will have expertise, experience and a full understanding.

Another benefit of arbitration is that while still expensive once you factor in the fee, hourly rate & solicitor hours- it’s still going to be much cheaper than litigation. But there are (depending on your case) benefits to litigation, despite it being more expensive, because with litigation the court mandates both parties to be cooperative, arbitration doesn’t have that power, and litigation allows for more discovery than arbitration so if you have a case where there is more evidence or you think there is more evidence to find- litigation might be your best bet.

It’s a weigh up really of what matters most to you. Arbitration is going to be much quicker than litigation to get a resolution, and it’s going to be cheaper, plus you get to choose your arbitrator, but the risk with arbitration is you don’t have a right of appeal. Their decision is final so if you don’t like it, that’s just tough.

It’s a personal decision really, if I was you I’d be seeking legal advice before you make any real decisions either way.

What dispute resolution mechanism does the contract with your insurer contain? Is it arbitration or litigation. You need to follow the route that is in the contract. If arbitration is an available route, what institution is used?

Costs can be awarded in arbitration. There is usually discretion but typically the losing party will be ordered to pay most of the successful party's costs.

Arbitration is best thought of as private litigation. Instead of a state appointed judge an arbitrator chosen by the parties will hear the dispute. The downside to this is that you will be paying them.

You can self-represent but if substantial sums are involved it would be worthwhile instructing a lawyer to help you.

With respect to Mrsttcno1 I disagree with some of the points made above.

Arbitration can be cheaper than litigation but not always.

Disclosure in arbitration can be as broad (or broader) than that in litigation.

It is difficult to generalise.

Thank you for your comments, Mrsttcno1 and wigjockey which are helpful. From recollection arbitration is offered but there is no compulsion to use it. However, the legal costs of bringing a claim to court against the legal expenses insurer wouldn't be covered by the policy. However, I wouldn't attempt to use the policy for that anyway as I wouldn't want the bias of a panel solicitor serving its master interfering with this type of dispute against an insurer anyway! The disclosure aspect is interesting though. As the insurance customer I would say that the insurer would have very little to gain from disclosure as they already obtain everything from the panel solicitors anyway but we as the insured don't see much documentation or correspondence that may have been taking place between the insurer and others such as panel solicitors. Therefore, if they can block disclosure in arbitration that may be a big disadvantage for us. I assume if the arbitrator acts in more of an agreed capacity between the parties they don't make orders to force one party to do things against their wishes whereas a judge can do this. Or am I wrong and arbitrators can do this too once they are appointed?

Once arbitrators are appointed they have similar case management powers to a judge, but can't threaten to throw you in jail for contempt of court.

Oh I see, thanks wigjockey! Hopefully no-one would be committing contempt of court but I suppose if an insurer ignores a disclosure order is that potentially contempt of court?? Otherwise it sounds OK. However, as there seems to be no appeal allowed in an arbitration presumably the choice of arbitrator is very important. The problem I would guess is that the insurer has to agree on the arbitrator and they may only agree to ones they know are more likely to rule on their side? I would guess they have an advantage in that they or their contacts would have a good knowledge of all the potential arbitrators whereas it might be harder for us to gather the same intelligence?

PS, one thing I would say, taking into account Mrsttc01's comments on the judge's powers to force disclosure, that might matter as, judging from experience so far, I think it will take quite a bit of nudging to get disclosure from them. However, I am curious as to how easy effective this is. I have had the experience of opponents on the other side of our case not disclosing documents for example and then finding out later that the solicitors had them! They just ignored the specific requests etc to material that I either knew existed or was almost certain to exist. It turned out that the solicitors were withholding it not the defendants who I had original though must be withholding it! Therefore, I do wonder how easy it is to extract full disclosure even if a judge orders it if the other side don't want to play ball (and they won't if the material is dynamite of course!).

Sorry the contempt of court thing is kind of a red herring. I only mentioned it to illustrate that the day to day powers are broadly the same and it is really only at the extreme end that judges have additional powers over litigants.

You do have to choose your arbitrator and yes the insurance company will have some industry knowledge there that you won't have. They should be completely impartial but as with any field there are some bad apples who will be "insurer friendly" and get repeated appointments as a result. That said, most arbitrators are highly ethical and will be completely even handed.

I'm pretty surprised by that. The solicitor could potentially be in big trouble with their regulator for withholding materials the court had ordered to be disclosed.

Thank you wigjockey, I will bear that in mind! However, I assumed that the regulator would not be interested in any complaint coming from an opponent but would only pay attention if it came from a client!

I don't think you can but if a judge found they were deliberately withholding materials in breach of a court order they should report themselves.