Reinsurers clean up

Ed Stanley examines a long-awaited judgment on the Exxon Valdez spill

THE UK Commercial Court has now delivered its eagerly-awaited decision in King v Brandywine Re (UK) on the vexed question of whether underlying settlements in relation to the 1989 Exxon Valdez oil spill could be recovered from reinsurers. The issue had been long unresolved, creating a settlement log-jam on one of the more notorious LMX spiral claims. One of Exxon’s insurers, Commercial Union, had pursued some of its excess-of-loss carriers for summary judgment, claiming they were bound to follow its settlements. But the Court of Appeal held in Commercial Union v NRG Victory Re [1998] that the wording of the relevant loss settlements clauses did not permit this. That case then settled out of court.