AXA SEGUROS SA DE CV V ALLIANZ INSURANCE PLC

[2011] EWHC 268 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Christopher Clarke, 2 March 2011

Reinsurance - Reports obtained by reinsurers - Whether litigation protected by litigation privilege - Whether litigation possible when reports were made - Purpose of commissioning of reports - Loss of privilege

Axa Seguros, a Mexican insurance company, obtained facultative reinsurance from the defendant reinsurers. The reinsurance covered Axa's participation in a policy which covered risks of physical damage to a "Toll Road Network concession" in Mexico for the period 1 November 2000 to 31 December 2001. The reinsurance stated that cover extended only to those roads "constructed to Internationally acceptable standards", and surveys were to be conducted within a reasonable time from inception to confirm the quality. In February 2001 Grupo Mexicano was appointed by Axa to survey the roads. The reinsurers not satisfied with the level of detail in the report, and imposed a reverse onus of proof clause under which Axa had to prove that the roads were of the right standard. Between 30 September and 2 October 2001 Hurricane Juliette caused torrential rainfall in parts of Mexico and the Don Nogales highway was damaged. Halcrow were appointed by the reinsurers to survey the road, and reports were produced in 2002 and 2003. At the end of 2003 the assured obtained an arbitration award against Axa, and in 2008 Axa sought indemnity from the reinsurers. Their defence was that the roads were not constructed to the appropriate standards. Axa sought disclosure of reports produced by Halcrow, and the reinsurers claimed litigation privilege.