i-law

Lloyd's Maritime and Commercial Law Quarterly

ENGLISH INSURANCE LAW

Margaret Hemsworth*

CASES

55. AIG Europe Ltd v OC320301 LLP (formerly the International Law Partnership LLP) 1

Construction—aggregation clause—Solicitors Act 1974

214 investors brought claims in excess of £10m against a firm of solicitors (ILP) alleging negligence, breach of fiduciary duty, misrepresentation and breach of escrow agreements, all such failings occurring in connection with two property development schemes, one in Turkey and the other in Morocco, each having been led by the same development company. ILP had professional indemnity insurance with AIG with a limit of liability of £3m (together with an excess of £7,500 subject to an overall aggregate limit of £22,500). The governing aggregation clause was that stipulated under the Minimum Terms and Conditions, being a requirement of professional indemnity insurance provided in compliance with the Solicitors Act 1974. A dispute arose as to the proper construction of the aggregation clause. The clause read:
“The insurance may provide that, when considering what may be regarded as one Claim for the purposes of the limits contemplated by clauses 2.1 and 2.3: (a) all claims against any one or more insured arising from (i) one act or omission; (ii) one series of related acts or omissions; (iii) the same act or omission in a series of related matters or transactions; (iv) similar acts or omissions in a series of related matters or transactions and (b) all Claims against one or more Insured arising from one matter or transaction will be regarded as One Claim.”
The dispute concerned the proper construction of subclause (iv): “similar acts or omissions in a series of related matters or transactions”. AIG commenced proceedings seeking a declaration that the third-party claims were one claim for the purposes of the aggregation clause as being within the scope of the subclause.
At first instance Teare J held that the claims were not interconnected nor were they interdependent for the aggregation clause to apply.
AIG appealed to the Court of Appeal, contending that the 214 claims were sufficiently connected to result in all being aggregated as a single claim or that in the alternative there were two claims, one pertaining to each of the development sites.
Court of Appeal decision: Appeal allowed in part.

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