Insurance Law Monthly

The decision of Christopher Clarke J in Omega Proteins Ltd v Aspen Insurance UK Ltd [2010] EWHC 2280 (Comm) is notable for two reasons. First, it concerns the extent to which judgments, awards and settlements which impact upon the insured’s liability to a third party are binding as between insured and liability insurer. The judge declined to follow the decision of Tomlinson J in London Borough of Redbridge v Municipal Mutual Insurance Ltd [2001] Lloyd’s Rep IR 545 and subjected it to serious criticism. Secondly, the judge considered the effect of a contractual liability exclusion clause of a kind commonly found in public liability and public liability policies. The case is discussed by Mark Cannon QC and Fiona Sinclair of 4 New Square.

Business interruption policies have been discussed on relatively few occasions by the courts, largely because most of the disputes relate to figures rather than to legal principles, but their application can give rise to important issues of construction. In New World Harbourview Hotel Co Ltd v Ace Insurance Ltd, April 2010, Hong Kong CFI, Reyes J considered the meaning of a business interruption policy in the context of loss of business by a firm providing leisure facilities when revenue was lost as the result of an epidemic. The decision was upheld in a short judgment by the Court of Appeal in October 2010, and his reasoning was adopted in all respects. This note thus concentrates on the first instance decision.

The long-awaited decision of the Supreme Court in Global Process Systems Inc v Syarikat Takaful Malaysia Berhad (The Cendor Mopu) [2011] UKSC 5 has clarified the complex relationship between the insured risk of perils of the seas and the excluded peril of inherent vice. Following the lead of the Court of Appeal the Supreme Court has confirmed that there is only inherent vice if the loss has been caused by something internal to the insured subject matter and not as a consequence of the operation of some external fortuity.