On 6 September 2024, the Court of Appeal handed down judgment in favour of the owners of London's ExCel Centre. In doing so, the court has upheld the decision of the lower court and further cemented the 2021 decision of the Supreme Court in FCA v Arch.
The decision provides certainty to policyholders with so-called "at the premises" (or ATP) clauses in their policies, shifting the dial yet further in favour of policyholders with outstanding business interruption losses post pandemic.
Background
In 2022, ExCel brought a £16 million pound claim against their insurers in respect of pandemic related losses. A key issue in the case was whether or not the closure of businesses due to COVID related issues was covered under insurance policies containing ATP clauses.
These clauses essentially provide an indemnity for loss arising from closure of the insured business as a result of the outbreak or occurrence of a notifiable disease at the insured's premises.
The High Court ruled that the 2021 Supreme Court ruling in Arch, which held that radius clauses covered losses caused by diseases within a specific radius of the business, would also apply to ATP policies. A major win for those policy holders with ATP policies.
Allianz, Aviva, Chubb and Zurich challenged that decision, but the Court of Appeal came to the same conclusion as the lower court, albeit by adopting a different approach.
Whereas the High Court held that the radius and ATP wording was not fundamentally different enough to justify the application of a different causation test, the Court of Appeal decided it was not whether the clauses differed, rather how the clauses were interpreted. Ultimately, despite ruling that the two policies were different, the Court of Appeal agreed with the lower court and said the same test for causation should apply.
What does this mean?
In a nutshell, this decision provides policyholders with much needed certainty on the effect of ATP policy wording. They will be pleased to hear that, provided that there is evidence of COVID during the time period in question, the policyholders will not need to prove that a specific occurrence was the sole cause of the business closure. Furthermore, there is no requirement for the relevant local or governmental authority to have knowledge of the occurrence of the disease at the relevant premises.
So where do we go from here?
Insurers could be facing hundreds of millions of pounds in future claims as well as an influx of previously rejected claims being reviewed as a result of this decision. There has been little, if any, comment from the insurers at this stage. Aviva has declined to comment on the ruling so far, and an Allianz spokesperson has said they are reviewing the ruling's implications and will be in touch with any customers who are affected.
Given the impact this ruling will have on future and ongoing business interruption claims, including those of Premier League clubs Liverpool and Arsenal, the insurers might look to take the case to the Supreme Court. The insurers may make the argument that given the FCA judgment came from the Supreme Court, guidance from the highest court is required on this point. However, the Court of Appeal decision was unanimous, and fits within the broader landscape of BII decisions to date. It is difficult to see what further point could be taken to distinguish the ATP wording from the radius wording.
It is inevitable that policyholders will be rushing to review their claims in light of this most recent judgment, however there does still remain the challenge of proving the occurrence of COVID at the premises and insurers are likely to scrutinize costs closely. We would suggest policyholders continuing to work with brokers and specialists as well as fully documenting all expenses incurred as a result of the pandemic.
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