UK: Buncefield – The Insurance Market’s Black Cloud?

Last Updated: 10 May 2006
Article by John Hanson

Originally published in the Insurance Law Quarterly - Spring 2006 - Issue 62

On 11 December 2005, possibly the largest explosion ever to occur in Europe took place at the Buncefield Oil Depot near Hemel Hempstead. As might be expected, there was immediate speculation as to cause, with possibilities including arson, terrorism, fuel leak, storage tank failure and pipeline failure. Early estimates put the damage at £300 million; at the time of writing, some estimates have now reached £1 billion.

The Buncefield explosion made headlines around the world and cast a black cloud over much of southern England. For insurers, the consequences could be costly. BLG is already acting for over 40 separate claimants, either through insurers or directly from commercial insureds. Those claims alone look likely to be in excess of £100 million.

Experts expressed surprise that such a big bang should have been caused by a petrol leak. However, even at this early stage, it seems unlikely that the explosion was caused deliberately. This has reduced the alternative causes and suggests that a substantial leak occurred, possibly resulting in a vapour cloud which could have been ignited by any electrical spark. The progress report from the investigation board does not provide any conclusions on causation and we could be waiting some time for a final report.

Damage outside of the Depot

The explosion occurred at 6.26am on a Sunday morning. Thankfully there was no loss of life. Also, the fire was largely contained on site and it is our understanding that, at least locally, soot and smoke damage was limited - presumably, rising and dispersing over south east England.

However, very substantial damage has been caused by pressure waves – shattering windows, causing damage to building cladding, stock and other damage. There was no consistency in the damage to buildings. In one street a building was severely damaged, but in the next, very little damage has occurred - it appears to have depended entirely upon the direction of the pressure wave. Early damage estimates are at £300 million or thereabouts, although the actual claims may exceed this considerably.

Subrogation targets

Clearly, those who have suffered damage will be seeking to recover their losses from someone. The obvious subrogation targets are the joint venture operators of the Depot, namely Total and Texaco, and possibly the pipeline operator. As it may be many months before forensic scientists are allowed on site by Health & Safety, conjecture as to who is ultimately responsible will continue.

It will be interesting to see whether the operators and their insurers will wish to dispute liability for any length of time. An early admission of liability (or at least an early settling of claims on a 100 per cent basis) would certainly avoid very substantial legal costs, but is it likely in this case? No doubt much will depend upon the overall estimate of damage and the interaction between the open market insurers, the oil mutual and the joint venture partners. However, if possible, in respect of such a large and politically sensitive disaster, a market solution to property damage claims would seem to be the sensible result. Total is, of course, familiar with this type of disaster management following its involvement in the Toulouse chemical plant disaster. If such is the intention of the joint venturers then it may be sensible for their adjusters to become involved in the adjusting of the property damage claims.

Type of damage

In addition to insured losses which are likely to be based primarily on repair costs and any consequential business interruption loss, both freeholders and leaseholders may have uninsured losses for diminution of value caused by blight if it is not transitory.

Various views have been expressed that the explosion and its results may well have a permanent effect on the land use in the area, and on property values. At the time of writing this article, a homeowner’s class action has been commenced focusing on loss of value of property in the immediate vicinity of the explosion.

Legal causes of action

It is too early to speculate about causes of action; however, they are likely to include negligence and nuisance. It used to be thought nuisance required ongoing interference with a neighbour’s enjoyment of its property. However, it now seems possible to establish nuisance even where the interference happens for a limited period of time.

There is no doubt that those acting for the owners of damaged properties will also be looking at a Rylands v Fletcher claim because of its advantage of strict liability. Rylands v Fletcher (1863) provides that "a person who for his own purposes brings on his land and collects and keeps there anything likely to do mischief, if it escapes, must keep it in at his peril and, if he does not do so is prima facie answerable for all the damage which is the natural consequence of its escape."

In addition, the "purpose" must be a nonnatural and/or extraordinary use of the land. Certainly, the fuel would amount to a necessary "thing". Also, one might expect that the bringing on to a site of such vast quantities of fuel would be considered to be a non-natural and/or unusual use of the site. For example, Lord Goff said in Cambridge Water Co Ltd v Eastern Counties Leather Plc (1994) "I feel bound to say that storage of substantial quantities of chemicals on industrial premises should be regarded as the classic case of non-natural use; I find it very difficult to think that it would be objectionable to impose strict liability for damage caused by their escape."

Also, it is clear that that which escapes and does the damage need not be the thing that the defendant actually accumulated. In fire cases, for example, the thing brought on to the land does not escape itself; it catches fire and the fire escapes. Smoke damage caused by a fire has been said to be sufficient if it escapes and we see no difference between smoke escaping and pressure waves escaping from an explosion. It is clearly foreseeable that if the fuel catches fire it will explode and cause damage through pressure waves.

Therefore, at this early stage, noting the large amount of fuel on site and the severe consequences resulting from the accumulation of fuel, (as demonstrated by the explosion and its effects) this may well be a loss where, unusually, the strict liability as imposed by Rylands v Fletcher applies. If this is accepted by the joint venture operators of the Depot, then it will make it more likely that liability will be accepted at an early date.

The next step?

As BLG are representing a large number of those involved in property damage claims resulting from the Buncefield explosion, we cannot discuss specific cases or tactics in detail. However, we expect that in the near future, the various lawyers acting for property owners with claims will have met to discuss further action. We anticipate that all parties will benefit if channels of communication between the joint venturers and their insurers can soon be established with those whose property was damaged.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions