Insurance arbitration clause limited to loss quantification cannot cover full repudiation of liability and excludes arbitration.

An insurance arbitration clause limited to differences about the amount of loss or damage does not cover a wholesale repudiation of liability by the insurer. A dispute over the existence of liability lies outside such a clause, so the insured must first pursue legal proceedings to establish liability before any question of quantification can arise. The Scott v. Avery condition precedent applies only where the dispute falls within the arbitration agreement. On that basis, no arbitrator could be appointed under section 20 of the Arbitration Act, 1940.

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Issues: Whether repudiation of liability under the insurance policy raised a dispute referable to arbitration under the arbitration clause.

Analysis: The arbitration clause was confined to differences as to the amount of loss or damage. The insurer did not dispute merely the quantum of loss; it repudiated liability altogether. A dispute going to the existence of liability is outside a clause limited to quantification of loss, and the condition making an award a condition precedent applies only where the dispute is within the arbitration agreement. On repudiation of the claim, the insured's remedy was to institute a legal proceeding to establish liability, after which quantification could, if necessary, arise separately.

Conclusion: The dispute was not covered by the arbitration clause and no arbitrator could be appointed under section 20 of the Arbitration Act, 1940.

Ratio Decidendi: Where an insurance arbitration clause is confined to disputes about the amount of loss or damage, a wholesale repudiation of liability by the insurer is outside its scope and cannot be subjected to a Scott v. Avery condition precedent.

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