Top UK Court Promises Quick Decision In FCA Insurance Case

By Martin Croucher
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Law360, London (November 19, 2020, 6:31 PM GMT) -- The president of the U.K. Supreme Court on Thursday promised a fast decision on whether an estimated 370,000 companies can claim on their insurance for the U.K.'s first lockdown as a four-day hearing in the test case over how to interpret business interruption policies wrapped up.

Justice Robert Reed, part of the five-judge panel hearing the landmark case, said space had been cleared in the listings to allow a quick turnaround on the judgment in the high-profile case brought by the Financial Conduct Authority, but he declined to say whether it would be ready before Christmas.  

The test case will have wide implications not only for the companies seeking to claim under their business interruption policies for the pandemic, but also for principles of causation and trends clauses in future cases.

"We are well aware of the practical importance of a judgment, particularly for the businesses that have been affected," Justice Reed said. "We will do what we can to produce a decision, just as quickly as we can. Whether that will be before Christmas or some time in January, I can't comment."

During Thursday's arguments, insurers sought to counter the FCA's call for the Supreme Court to revisit the High Court's 2010 judgment in Orient-Express Hotels Ltd. v. Assicurazioni Generali SpA , which established a causation test underwriters have sought to use to limit their liability during the lockdown.

That ruling, which never went up on appeal, held that a company's claim for business interruption coverage can be limited if its turnover would have suffered regardless of the immediate event that forced it to close because of wider circumstances beyond the scope of the policy. Two High Court judges ruled in September that Orient Express had no relevance to the test case, although they said it was "wrongly decided" even if it did apply.

But insurers urged the Supreme Court on Thursday not to rush into abandoning that "but for" legal test. 

"There could hardly be a more dangerous invitation for the highest court of the land in an expedited hearing … to go off and discard the 'but for' test in a proximate cause insurance case," said Gavin Kealey QC, counsel for MS Amlin. "If your lords had really wanted to do that, you should have given me two more days of legal argument."

The FCA is represented by Colin Edelman QC of Devereux Chambers, Peter Ratcliffe and Adam Kramer of 3 Verulam Buildings and Max Evans of Fountain Court Chambers, instructed by Herbert Smith Freehills LLP.

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

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

Hiscox is represented by Jonathan Gaisman QC, Adam Fenton QC and Douglas Grant of 7 King's Bench Walk, and Miles Harris of 4 New Square, instructed by Allen & Overy LLP.

MS Amlin Underwriting Ltd. is represented by Gavin Kealey QC, Andrew Wales QC, Sushma Ananda and Henry Moore of 7 King's Bench Walk, instructed by DAC Beachcroft LLP.

QBE UK Ltd. is represented by Michael Crane QC of Fountain Court Chambers, Rachel Ansell QC and Martyn Naylor of 4 Pump Court, and Sarah Bousfield of Brick Court Chambers, instructed by Clyde and Co LLP.

RSA is represented by David Turner QC, Shail Patel, Anthony Jones and Clare Dixon of 4 New Square, instructed by DWF Law 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 and Co LLP.

The Hiscox Action Group is represented by Ben Lynch QC, Simon Paul and Nathalie Koh of Fountain Court Chambers, instructed by Mishcon de Reya LLP.

The lead case is Financial Conduct Authority (Appellant) v. Arch Insurance (UK) Ltd. and others (Respondents), case number UKSC 2020/0177, in the Supreme Court of the United Kingdom.

--Editing by Alyssa Miller.

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

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