Today, a California appeals court, invoking the court’s power while sitting in equity, upheld a trial court’s refusal to compel the arbitration of an equitable contribution claim.  The arbitration would have taken place, pursuant to the insurance contract, in London.  The opinion, in the matter of Crowley Maritime Corp. v. Boston Old Colony Ins. Co. is posted here.

Crowley was sued by two tugboat captains for asbestos-related claims.  Crowley settled the lawsuits.  It sought indemnity, or repayment of the damages, from its insurer, Boston Old Colony Insurance Company.  Boston only partially paid, so Crowley sued for the balance.  In turn, Boston sued two of Crowley’s other insurers.  Boston claimed that it was entitled to equitable contribution from the other insurers.

The twist in this case was that Crowley and the other insurers had agreed to arbitrate any disputes in London, using English law.  No such agreement existed between Boston and the other insurers.  The other insurers attempted to compel arbitration citing their respective contracts with Crowley, the Federal Arbitration Act, and California’s strong public policy favoring arbitration of disputes.  Because there was no contract between Boston and the other insurers, there was no arbitration provision.  Because there was no arbitration provision to enforce, the court refused to compel it.

Most maritime insurance policies are issued by entities in England.  The policies in this case called for arbitration in England (this clause is called a forum selection clause)  Grappling with forum selection clauses in the maritime contract context has been vexing in our global marketplace.  The Sky Reefer case caused controversy which the international community has tried, without success, to resolve by treaty. 

As this article points out, forum selection clauses tend to export litigation abroad.  Domestic shippers and maritime companies may not want their disputes resolved in London.  At least in California, with multiple insurance companies fighting over defense and indemnity, that dispute will stay home.