In Brief
Oriental Insurance Company repudiated an insurance claim for cyclone damage to a factory, citing reasons including alleged inventory shortage, exaggerated losses, and inherent vice. The insured invoked an arbitration clause (Clause 13) in the policy to resolve the dispute. The High Court appointed an arbitrator, reasoning that repudiation of a claim did not equate to disputation of liability. The Supreme Court reversed this decision, holding that Clause 13 explicitly excludes disputes from arbitration where the insurer has "disputed or not accepted liability." The Court found that the insurer's repudiation on substantive grounds constituted denial of liability, not a quantum dispute, and therefore fell outside the arbitration clause's scope. The insured's remedy is to institute a civil suit.
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