The T&N litigation

The insolvency of T&N in the face of a mass of asbestos injury claims by employees and others has given rise to much insurance-related litigation in England and elsewhere. T&N went into administration in England, and into Chapter 11 bankruptcy protection in the US, and attempts were then sought to reach settlements with claimants so that the liquidation of T&N could be avoided. Those settlements involved T&N, its liability insurers (including its captive, Curzon) and their reinsurers. As far as the English courts are concerned, the cases – which have predominantly been applications by administrators for directions – have thus far raised in particular the coverage of T&N’s liability policies (T&N Ltd v Royal and Sun Alliance plc (No 2) [2004] Lloyd’s Rep IR 106, following an initial skirmish on the relevance of an arbitration clause in a market settlement, T&N Ltd v Royal and Sun Alliance plc (No 1) [2004] Lloyd’s Rep IR 102); whether the Third Parties (Rights against Insurers) Act 1930 prevents the operation of a policy term which transfers claims-handling to insurers (and then to reinsurers) on the assured’s insolvency (Centre Reinsurance International Co v Freakley [2005] Lloyd’s Rep IR 303) and whether proposed settlement arrangements were in contravention of reinsurance arrangements (Freakley v Centre Reinsurance International Co [2005] Lloyd’s Rep IR 264). Four more actions have recently come before the Chancery Division, this time raising choice of law, reinsurance and compulsory insurance issues. The four actions are outlined in what follows.