Authored by Patrick Bracher.
In September 2026 the Singapore High Court found that the insured frozen seafoods product supplier under a fire policy could not proceed to arbitration which was only permitted if “liability being otherwise admitted”, because there were still some undecided liability issues. The court rejected the insured’s argument that arbitration could be used even if liability was partially and not fully admitted.
A fire caused an electrical fault and severe damage to the insured’s premises as well as millions of dollars’ worth of inventory. A number of liability issues had been admitted but there remained a clear dispute as to whether the cold rooms fell under the policy and whether the sale of the premises after the fire converted the claim to a claim for a loss in value under the policy.
The court referred to foreign case law and found the reasoning in English case law compelling that liability has to be fully admitted before resort can be had to arbitration. The court did not follow US decisions which allowed arbitration where some portions of the claim were no longer in dispute. There were three principal reasons for the court’s interpretation of the phrase “liability being otherwise admitted” as limiting the arbitration agreement to disputes of mere quantum. The interpretation comports with the language of the arbitration agreement. The word “all” is not needed to give the clause the meaning it holds. The meaning asked for by the insured would need the policy to qualify the word “liability” by a word like “some” or “partial” to give it a different effect. Secondly, the interpretation fits with the reasonable commercial purpose of the clause, namely that legal questions should be decided by judges, while technical questions of quantum could be decided by a person qualified in technical disputes. Thirdly, the interpretation had acquired a degree of consistency over decades as reflected in the court’s survey of the English decisions.
The applicant had argued for arbitration because that would allow it to avoid the consequences of a time bar clause in the policy and the claim failed.
Commercial lines policies in South Africa commonly include an arbitration clause allowing any difference to be referred to an arbitrator “liability being otherwise admitted”. The same result as above would follow in a South African court, namely partial agreement on liability is not sufficient for the insurer or insured to invoke the clause. For personal lines policies the Short-term Insurance Policyholder Protection Rules do not permit a provision in a policy that, in the event of any dispute arising under the policy, the dispute can only be resolved by means of arbitration. A clause in a personal lines policy can provide that the parties may voluntarily agree to submit any dispute to arbitration after the dispute has arisen.
Far Ocean Sea Products Pte Ltd v United Overseas Insurance Limited [2026] SGHC 182