15/01/2021

Orient-Express Goes West: Victory for insureds in the FCA business interruption test case

The much anticipated Supreme Court judgment in the business interruption insurance test case was handed down today. In a significant win for insureds, the Court decided that all insuring clauses in issue on the appeal provide cover for the business interruption caused by the pandemic.

Particular highlights in the judgment include:

• “But for” causation is neither always necessary nor always sufficient for proximate causation. In this case, it was not necessary. Each case of COVID-19 was a proximate cause of any interruption caused by the government’s nationwide response to the pandemic.
• Orient-Express Hotels v Assicurazioni General SA [2010] Lloyd’s Rep IR 531 was wrongly decided and is overruled. If the insured’s losses had two concurrent causes (one insured and one uninsured) which arose from the same underlying fortuity, loss resulting from both causes operating concurrently is covered.
• Insurers cannot adjust claims down by relying on trends clauses. These clause are intended to address losses entirely outside the insured peril.
• Pre-trigger downturns in revenue caused by the source of the insured peril will not reduce insured’s claims.

Philip Edey QC and Susannah Jones (with Josephine Higgs of 7 KBW), instructed by Sonia Campbell of Mishcon de Reya LLP, acted for one of the interveners at first instance, the Hospitality Insurance Group Action (made up of various policyholders), successfully arguing that there was cover for policyholders under two of the policy wordings in which HIGA members were interested (a QBE wording and the widely used “Resilience” wording placed by Marsh / Jelf).

Read the judgment

The case has been reported on widely in the media, including:

The Financial Times
BBC

Further reading