Insurance Law Monthly

The UK and EU authorities on the scope of compulsory motor insurance have taken a divergent approach. The UK legislation demands a causation approach based on liability caused by or arising out of the use of a vehicle on a road or in a public place. The EU approach is to ask whether the liability arose from the use of its vehicle for its normal function. The outcome differs most significantly where the vehicle is on private land when the accident occurs, but otherwise there is general consistency.

It has long been settled that the overriding duty of an insurance broker is to protect the assured against litigation risks. In Dalamd Ltd v Butterworth Spengler Commercial Ltd [2018] EWHC 2558 (Comm) the insurers denied liability for loss caused by a fire by reason of non-disclosure and breach of policy terms. The assured alleged that these breaches were by reason of the failure of the broker to give proper advice on what had to be disclosed and on the existence and meaning of the conditions of the policy.

Mamancochet Mining Ltd v Aegis Managing Agency Ltd and Others [2018] EWHC 2643 (Comm) was a consequence of the political fall-out between the US and the EU on the need for the imposition of sanctions against Iran. Until May 2018 sanctions imposed by both the US and EU in 2012 had been suspended in January 2016. However, on 8 May 2018 the US unilaterally re-imposed the sanctions.

The Court of Appeal in Aspen Underwriting Ltd v Credit Europe Bank NV (The Atlantik Confidence) [2018] EWCA Civ 2590 has upheld the decision of Teare J, known at first instance as Aspen Underwriting Ltd v Kairos Shipping Ltd (The Atlantik Confidence) [2017] 2 Lloyd’s Rep 295. There is important discussion by the Court of Appeal of the special jurisdiction rules for matters relating to insurance in the Brussels Regulation Recast, European Parliament and Commission Directive 1215/2012/EU.

It is settled law in England that a person seeking to rely upon an insurance policy to which he is not a party is nevertheless bound by the terms of the policy, including any arbitration clause. The point has arisen in an unusual context in Hong Kong, in AIG Insurance Hong Kong Ltd v McCullough [2019] HKCFI 1649, in which English principles were applied. The decision was handed down by Sir William Blair, retired Commercial Court judge and sitting as a Deputy High Court Judge of the Hong Kong Court of First Instance.

The decision of Stevenson J in the New South Wales Supreme Court in Bank of Queensland Ltd v AIG Australia Ltd and Others [2018] NSWSC 1689 provides an interesting contrast to the decision of the UK Supreme Court in AIG Europe Ltd v Woodman [2017] Lloyd’s Rep IR 209, on the meaning of “series” and “related” in an aggregation clause. The authorities demonstrate that minor differences in wording can lead to quite different outcomes.

The much-awaited ruling of the Supreme Court in R & S Pilling (t/a Phoenix Engineering) v UK Insurance Ltd [2019] UKSC 16 has proved to be something of a disappointment. The Supreme Court did not get to grips with the key causation issue and instead confined its attention to the wording of the policy itself. Wider questions as to the scope of compulsory motor insurance thus remain unanswered.

Defence costs clauses in liability policies are many and varied. The clause in Australasian Correctional Services Pty Ltd v AIG Australia Ltd [2018] FCA 2043 imposed an obligation on the insurers to pay defence costs. The insurers raised two defences: part of the claim against the assured was not covered by the policy, so that the costs should be apportioned; and the costs included both costs payable to the third party and costs incurred by the insurers for the purposes of a policy deductible.