same manner as a judgment or order to the same effect; and this although the time for moving to set it aside has not elapsed. Where I have used the word court it means His Majesty's High Court of Justice, and judge means a Judge of the High Court. The Arbitration Act of 1889 does not extend to Scotland or Ireland.

ARBITRATION SPECIALLY APPLICABLE TO INSURANCE

DISPUTES.

I have given some details concerning the Arbitration Act for two reasons. One is that every insurance official and indeed every one connected with business ought to know its general scope, and secondly, because the real constitution of arbitration courts is quite unlike what is often supposed. A consideration of what arbitration really is and how carefully the legislature has provided for the settlements of disputes under it disposes of the idea which I have seen expressed that the fire offices by their arbitration clause compel the insured to "contract out of their remedy of the courts of the country". It will be seen that arbitration courts are subject to the same rules as are ordinary law courts and that they form a definite statutory part of the judicial machinery of the country. In fact, it is a rare thing nowadays to see a commercial contract on which disputes as to matters of account might arise in which a reference to arbitration is not provided for. The Arbitration Act was passed in order to consolidate the law relating

to the numerous arbitration proceedings which had grown up. The advantage of the method of proceeding before an arbitration, over the hearing by jury, was so obvious that the Arbitration Act specially provided that "if a case or matter requires any prolonged examination of documents or any scientific or local investigation which cannot in the opinion of the court or judge conveniently be made before a jury or conducted by the court through its other ordinary officers," or "if the question in dispute consists wholly or in part of matters of account," the court or judge may at any time order the whole cause or matter, or any question or issue of fact arising therein, to be tried before a special referee or arbitrator respectively agreed on by the parties, or before an official referee or officer of the court. The description of the subjects in dispute which may be conveniently heard before a referee or arbitrator so precisely fits the ordinary differences as to the loss or damage caused by a fire that it looks as if the framers of this section of the Act had this class of dispute in mind.

CHAPTER VI.

AVERAGE.

IN the following chapter I shall direct attention to the subject of "Average" in fire insurance and consider the principles upon which it is based and the manner in which those principles are worked out in practice. It is a subject which has its terrors, but that is only the stronger reason why one should tackle it seriously.

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In a fire insurance policy which is "subject to average" there are usually two average conditions, but only the first of these is, strictly speaking, entitled to the name. By the word “ average" mean an arrangement under which the loss or damage caused by a fire is shared between the insured and the insurance company or companies which has granted him an indemnity. Where we have to do with the sharing of a loss between individual companies we have then merely an arrangement for contribution and not an average. It is for this reason that the first so-called "Average Clause" is better named the "Pro Rata Average Clause," and the second one dealing with contribution of fire offices merely the "Contribution or Apportionment Clause". By using these names we shall help to clarify our minds and

not to mix up things which are essentially different by including them under the same name.

We shall also tend to greater clearness by keeping the two parts of the subject distinct and by dealing with them as if they had no close connection with one another. Readers will see that where one policy covers two or more properties or interests—a floating policy of which the protection moves backwards and forwards from one property to another, by reason of the changing nature of their values-then the second or contribution clause will have to be applied before the first or pro rata clause can come into operation. And this is what must happen in practice. But for our purpose we can leave the consideration of this more complicated application of the contribution or apportionment clause until after we have looked into the elementary principle of average, or the sharing of losses between the insurance companies and the insured.

PRO RATA SHARING OF Loss.

The pro rata average clause at present in use in this country runs as follows:

Whenever a sum insured is declared to be subject to average, if the property covered thereby shall, at the breaking out of any fire, be collectively of greater value than such sum insured, then the insured shall be considered as being his own insurer for the difference and shall bear a ratable share of the loss accordingly.

The meaning of this condition will be plain by means of an arithmetical example :—

Then the value uncovered by insurance is £2,000 and of this the insured is "considered as being his own insurer". We have therefore :

Insurance

at risk of £8,000 = of value fire office

Property

at risk of £2,000 = of value insured

Suppose a loss occurs of £4,000, then this loss is divided up between the fire office and the insured in proportion to the amount which they respectively have at risk. Thus of £4,000 is borne by the fire office and of £4,000 by the insured.

Fire Office pays # of } = £3,200

£4,000

Property owner pays} = £800

of £4,000

Just the same sharing of loss between the insurance company and the insured takes place where there have been expenses incurred, such as for salvage. These expenses are then divided up pro rata in just the same way as for the ascertained loss.

Thus in the above example suppose that £500 had been expended in salving property at risk. Then the office would pay of £500 and the insured would pay of £500. The arithmetical result would have been the same if we had added the salvage expenses of £500 on to the ascertained amount of the loss, making it £4,500 and then split it up pro rata, but it is clearer to keep the different factors distinct. If the reader will regard the insured's portion of the risk—the amount, that is, for which he is uninsured

-as merely his share in the "adventure," as marine policies put it, then it will be seen that he has to bear his ratable share of all losses and expenses which arise in connection with a fire.