Financial Conduct Authority Coronavirus Pandemic Test Case – has the dust settled?
Since the publication of the judgment in the The Financial Conduct Authority v Arch Insurance (UK) Ltd. and Ors [2020] EWHC 2448 (Comm) on 15th September 2020 there has been plenty of commentary and debate but how does the land lie one month on?
Judgment
The purpose of the test case was to clarify the interpretation and application of Business Interruption Insurance Policies (BII) applicable to claims caused by COVID-19. The judgment is weighty, having covered multiple differing policy wordings and sets of circumstances. Accordingly, it cannot be summarised in one short article. In essence, however, the Judgment largely came down in favour of policyholders with the Court in particular finding that those policies which provide cover as a result of notifiable disease were largely determined as providing cover for COVID-19 losses. Conversely, those policies which required prevention of access as the cover trigger were construed much more restrictively.
Post-judgment steps
Following the hearing the FCA wrote to insurers outlining their expectations in the wake of the judgment and urged them to progress claims promptly where they were able to do so, irrespective of appeals. The FCA and insurers continued discussions throughout September regarding the implications of the Judgment, but no agreed solution across the board was reached and the FCA estimated that hundreds of thousands of policyholders could potentially be affected by the test case. Unsurprisingly therefore, prior to the deadline to file ‘leapfrog’ applications to appeal to the Supreme Court on 28 September 2020, both the FCA and 7 of the 8 defendant insurers made precautionary appeal applications. With 8 applications for leave to appeal, the grounds for appeal were wide ranging.
At a hearing on 2 October the Court ordered various declarations as to the effect of the Judgment which are yet to be published. The Court also gave permission to the FCA and 6 of the defendant insurers (one application having been withdrawn) for the appeal process to move to the Supreme Court and indeed the Court of Appeal in the event the Supreme Court will not grant permission to appeal. This enables the FCA and the 6 defendant insurers to seek leave to appeal directly from the Supreme Court no later than 2 November 2020.
The FCA have since confirmed that in the absence of agreed solution between the FCA and the defendant insurers, they will continue with the appeal to the Supreme Court. Considering not only that Proceedings thus far having been heavily expedited, but also that so many policyholders are no doubt in desperate need of pay-outs pending yet another potential lockdown, it is thought that the Supreme Court will consider the appeal by the end of the year – relatively speedy in legal terms perhaps, but not in commercial terms.
What does this mean at present?
In summary, one month on, whilst the judgment provided useful guidance and is not subject to an all-encompassing appeal, with so much money at stake, insurers are unlikely to be in a hurry to settle claims where there is any prospect of them falling within the remit of an appeal. It therefore looks likely that many policyholders will have to wait at least until the New Year for a final decision. In short whilst policyholders are ahead at half time, much is still to play for and many policyholders will certainly not feel like the winners at present.
Loney Stewart Holland LLP is a specialist commercial dispute resolution practice headquartered in Bristol with a base in London. Please visit our website for further details on the specialist insurance coverage disputes services we offer or contact Jaime Davis.
Jaime Davis
M: 07830 668265
jdavis@loneystewartholland.co.uk