Qatar Insurer Denied Right To Intervene In FCA Test Case

By Martin Croucher
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Law360, London (October 2, 2020, 8:47 PM BST) -- Qatar Insurance Co. Europe Ltd. has been denied the right to intervene in a legal battle over the payment of insurance claims for businesses forced to close during the coronavirus lockdown.

Judges Christopher Butcher and Julian Flaux on Friday rejected an application by the Malta-based insurer to join the test case, which was brought by the Financial Conduct Authority.

The application was made at a High Court consequentials hearing, where the FCA and the insurers represented in the case filed for precautionary certificates to appeal the Sept. 15 judgment directly to the Supreme Court.

The test case, on business interruption insurance, was brought by the regulator to seek a ruling on whether an estimated 370,000 companies should be able to claim on their policies for the period of the lockdown.

It is not yet known whether the case will proceed to the Supreme Court, as the FCA is currently in negotiations with insurers on reaching a settlement.

Qatar Insurance Co., referred to as QEL, shares the same policy wording as used by RSA Insurance. The court ruled on Sept. 15 that insurers with that policy wording should pay out to customers.
 
Stephen Hofmeyr QC, representing QEL, said it was concerned that RSA would not appeal the ruling on that wording, meaning it would have to pay out £114 million ($147.4 million) as a result to its customers.

"RSA's attitude is probably not a fight-them-on-the-beaches one," he said. "Unless there's an appeal in this case, there's bound to be more litigation."

He added that a decision not to appeal would mean that insurers across the market will need to pay out £750 million in claims, numbers the FCA said it disputed.

Judge Flaux said it would be inappropriate for QEL to intervene when RSA had not yet agreed to settle.

"It would be verging on abusive for QEL to muscle in on these proceedings in circumstances where RSA is still taking an active part," he added.

Judge Flaux granted an application for costs filed by lawyers for the FCA and other insurers against QEL, over the time spent in the hearing listening to the company's failed attempt to intervene.

The trial, which took place in July under the financial markets test case scheme, turned a spotlight on so-called nondamage extensions in business interruption policies.

Such insurance typically covers lost earnings only if a company is prevented from operating because of physical damage to a premises.

But insurance companies sell many policies with extensions that offer cover if trading is disrupted by other factors, such as an order from a public authority for a business to close because of an outbreak of an infectious disease.

Qatar Insurance Co. Europe Ltd. is represented by Stephen Hofmeyr QC of 7 King's Bench Walk. Full counsel details were not immediately available. 

The FCA is represented by Colin Edelman QC of Devereux Chambers and Leigh-Ann Mulcahy QC and Richard Coleman QC of Fountain Court Chambers, instructed by Herbert Smith Freehills LLP.

The hospitality group policyholders are represented by Philip Edey QC of Twenty Essex Chambers.

Hiscox policyholders are represented by Ben Lynch QC of Fountain Court Chambers, instructed by Mishcon de Reya LLP.

Arch Insurance UK is represented by John Lockey QC and Jeremy Brier of Essex Court Chambers, instructed by Clyde & Co LLP.

Zurich Insurance PLC is represented by Andrew Rigney QC and Caroline McColgan of Crown Office Chambers and Craig Orr QC and Michelle Menashy of One Essex Court, instructed by Clyde & Co LLP.

QBE UK Ltd. is represented by Mark Howard QC of Brick Court Chambers and Rachel Ansell QC of 4 Pump Court, instructed by Clyde & Co LLP.

Argenta Syndicate Management Ltd. is represented by Simon Salzedo QC and Michael Bolding of Brick Court Chambers, instructed by Simmons & Simmons LLP.

Ecclesiastical Insurance Office PLC and MS Amlin Underwriting Ltd. are represented by Gavin Kealey QC and Andrew Wales QC of 7 King's Bench Walk, instructed by DAC Beachcroft LLP.

Hiscox is represented by Jonathan Gaisman QC of 7 King's Bench Walk, instructed by Allen & Overy LLP.

RSA is represented by David Turner of 4 New Square, instructed by DWF Law LLP.

The case is The Financial Conduct Authority v. Arch Insurance and others, case number FL-2020-000018, in the High Court of Justice of England and Wales.

--Editing by Orlando Lorenzo.

For a reprint of this article, please contact reprints@law360.com.

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