At The Appointment Stage, The Court Only Checks The Clause Exists
A shrimp exporter's flood insurance claim was only partly paid. When the two party-appointed arbitrators could not agree on a third, the Madras High Court's Chief Justice named one.
The Court held its role under Section 11 is limited: it checks prima facie whether an arbitration agreement exists. The policy had an arbitration clause, the insurer did not dispute its existence, and both sides had already named their arbitrators. So it appointed the presiding arbitrator, leaving the insurer's objection — that liability, not quantum, was disputed — for the tribunal.
- Section 11 is a narrow gate. The court checks the clause exists, not the merits.
- Part payment matters — the exporter argued it showed liability was admitted.
- The insurer's objection survives for the arbitral tribunal to decide.
- Two arbitrators could not agree, so the court named the third.
- Court
- High Court of Judicature at Madras
- Bench
- Justice HONOURABLE THE CHIEF JUSTICE
- Citation
- Arb.O.P.(Com.Div.) No. 531 of 2026
- Case
- Arb.O.P.(Com.Div.) No. 531 of 2026
- Decided
- September 2026
- Outcome
- Petition allowed; presiding arbitrator appointed
The claim
The petitioner, a Tuticorin seafood exporter, insured its building, machinery and stock for Rs 30 crore. Floods in December 2023 inundated its premises.
After a surveyor's report, it claimed about Rs 9.39 crore. The insurer paid about Rs 4.18 crore and disallowed about Rs 4.77 crore under the head of finished goods, attributing most of that loss to an excluded peril: damage to stock in cold storage from change of temperature.
The exporter said the temperature rose only because floodwater and the resulting power cut entered the cold store, so the loss flowed from the insured peril of flood.
The arbitration dispute
The policy's clause sends disputes over the amount payable, liability being admitted, to arbitration. The exporter invoked it and named an arbitrator; the insurer named its own but did not concur on a sole arbitrator, and the two could not agree on a presiding one.
Before the Court, the insurer argued it had denied liability for the disallowed portion, so the clause did not apply. The exporter relied on SBI General Insurance v. Krish Spinning, where part payment was held to make the dispute one of quantum.
What the Court did
The Court said that at the Section 11 stage it is only required to see whether a prima facie case about the existence of an arbitration agreement is made out.
Here the clause existed, the insurer did not dispute its existence, and both sides had appointed arbitrators but could not agree on the presiding one. The Court was left with no option but to appoint him, and expressly did not go into the merits, leaving the issues to the tribunal.
A senior advocate was appointed presiding arbitrator, with the arbitration seated at the Madras High Court Arbitration Centre under its rules.
Who argued it
Appearances as recorded in the judgment of the Court.
Frequently asked
Will the High Court decide whether my insurance dispute is arbitrable?
Not at the appointment stage. It checks the clause exists and leaves such questions to the tribunal.
Does part payment by an insurer matter?
It can indicate liability was admitted, making the dispute one of quantum, as the Supreme Court held in Krish Spinning.
When an insurer resists arbitration on a part-paid claim
- Keep records of every payment the insurer made on the claim.
- Invoke the policy's arbitration clause in writing and name your arbitrator.
- If the arbitrators deadlock, apply under Section 11 for the third.
- Be ready to argue quantum versus liability before the tribunal.
Source. High Court of Judicature at Madras, Arb.O.P.(Com.Div.) No. 531 of 2026, decided September 2026 by Justice HONOURABLE THE CHIEF JUSTICE. This explainer is written from the judgment text as reported.
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