The construction of facultative contracts

The Court of Appeal has, in Wasa International Insurance Co Ltd and AGF Insurance Co Ltd v Lexington Insurance Co [2008] EWCA 896 Civ, taken an important step towards clarifying the law affecting the construction of a reinsurance contract which is written in effectively identical terms to the underlying policy. The Court of Appeal, reversing the first instance decision of Mr Justice Simon, discussed in the August 2007 issue of Insurance Law Monthly, has emphasised that ultimately everything depends upon the intentions of the parties objectively ascertained, and that phrases such as ‘back to back’ cover do not necessarily take the inquiry any further forward.