UK: (Re)insurance Weekly Update 16- 2016

Last Updated: 16 May 2016
Article by Nigel Brook

A summary of recent developments in insurance, reinsurance and litigation law.

Late Payment Damages and Rights of Third Parties:

The Enterprise Bill received Royal Assent on 4th May 2016. The late payment provisions, which are drafted as an amendment to the Insurance Act 2015, will therefore come into force on 4 May 2017.

The Third Parties (Rights against Insurers) Act 2010 has now been updated by regulations (the Third Parties (Rights against Insurers) Regulations 2016) to reflect changes in insolvency law. The 2010 Act will come into force on 1 August 2016.

This week's caselaw:

Greenway v Johnson Matthey: Court of Appeal decides whether employees had suffered actionable personal injury – of possible interest to employers' liability insurers

http://www.bailii.org/ew/cases/EWCA/Civ/2016/408.html

The first instance decision in this case was reported in Weekly Update 44/14. The claimant employees were exposed to complex halogenated platinum salts and as a result had developed sensitivity to platinum. Since this sensitivity can, with further exposure, lead to an allergy, the employees were removed from their regular posts and eventually handed in their notice. The claimants sought to argue that they had sustained actionable injury because the sensitivity had led directly to a reduction in their earning capacity. That argument was rejected by Jay J, who held that the progression to an allergy would not occur if the employee is removed from the source of the sensitisation. Although such a removal may result in economic loss for the employee, that is not the same as an injury. The sensitivity in itself is not harmful.

The Court of Appeal has now dismissed the appeal from that decision.

In order to establish liability, the Court of Appeal confirmed that the claimants had to show that they had suffered actionable physical injury. They were unable to do so, since, on the medical evidence, platinum sensitisation is not harmful: "It is a physiological change analogous to the development of pleural plaques in the lungs in the Rothwell case, and hence does not constitute actionable damage or injury. Unlike the lung scarring from pneumoconiosis in Cartledge, platinum sensitisation is not a "hidden impairment" which has the potential by itself to give rise to detrimental physical effects in the course of ordinary life".

Nor could the claimants bring a claim for breach of contract, on the basis that the defendant had failed to take all necessary and reasonable steps to ensure that the appellants were safe while at work. That claim failed because the employer has a duty to protect an employee from physical injury and not from economic harm. Nor could a claim be brought in tort for damages for pure economic loss. There was no implied contractual term, nor any duty inherent in the contractual relationship between the parties, to protect the employee from financial harm.

The Court of Appeal concluded that: "At the heart of this case is an attack by the appellants, from various different directions, on the conventional view that under the law governing the relationship between employer and employee, whether in contract or in tort, an employee needs to show that he has suffered physical injury in a case such as this in order to be able to claim substantive damages which cover also the financial losses he has suffered as a result of such injury". The various arguments raised by the claimants were rejected because the need for actual physical injury is "deeply embedded in the law".

The Copenhagen Reinsurance Co (UK) Ltd & Anor, Re: Sanction of insurance business transfer scheme – should guarantees for the benefit of the transferring company's policyholders be replaced?

http://www.bailii.org/ew/cases/EWHC/Ch/2016/944.html

The court made an order sanctioning an insurance business transfer scheme (pursuant to Part VII of the FSMA 2000). One issue which the court was required to consider was the treatment of two guarantees, entered into in 1989 and 1995, in favour of the Institute of London Underwriters ("ILU") for the benefit of policyholders in the transferring company (whose policies were signed and issued through the ILU). Under the guarantees, if the transferor company had been unable to make full payment to the policyholders covered by the guarantees, the guarantor would pay the outstanding balance. When the transferor company was sold to Enstar in 2009, the guarantors were not released. However, they now argued that they should not be covered by the scheme, but instead they should be replaced with guarantees from Enstar (on the basis that the scheme was being proposed for the benefit of the Enstar group).

That argument was rejected by Snowden J. The variation of the guarantees should not be treated in the same way as the transfer of outwards reinsurance protection (which are routinely transferred under a scheme). Instead, it was necessary for the court to rely on section 112(1)(d) of FSMA, which allows the court to make an order "with respect to such incidental, consequential and supplementary matters as are, in its opinion, necessary to secure that the scheme is fully and effectively carried out". The writing of policies with the benefit of the ILU guarantees was an integral part of the transferor's business and it was part of the policyholder's legitimate expectations that those guarantees should continue to be available: "In such circumstances, it seems to me an entirely natural use of language, and in accordance with the overall purpose of Part VII FSMA, which clearly requires the court to have regard to the interests of policyholders, to conclude that the Scheme would not be fully and effectively carried out if the benefit to policyholders of the ILU Guarantees associated with their policies was lost as a result of the transfer".

Furthermore, the judge said that section 112(1)(d)  should not be read narrowly. It did not matter that the PRA, FCA and Independent Expert had not indicated that discontinuation of the guarantees was a matter which required them to object to the scheme. Section 112(1)(d) empowered the court to do what was necessary to secure that the scheme was "fully" carried out ie the court can go beyond the bare minimum without which the Independent Expert would withdraw his support.

Standard Chartered Bank v Independent Power Tanzania Ltd: Court of Appeal approves judgment on clause waiving jurisdictional arguments

http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2015/1640.html&query=(standard)+AND+(chartered)+AND+(tanzania)

The parties entered into various agreements, which contained non-exclusive English jurisdiction clauses as well as forum non conveniens ("FNC") waiver clauses ("Each party irrevocably waives any objection which it may at any time have to the laying of the venue of any Proceedings in [any other court of competent jurisdiction] and any claim that any such Proceedings have been brought in an inconvenient forum").

Proceedings were commenced in Tanzania, and when (four years later) further proceedings were commenced in England, an application for a stay of the English proceedings was made. At first instance, Flaux J held that it is possible for the English court to grant a stay on the basis that England is not an appropriate forum (notwithstanding the FNC waiver and non-exclusive jurisdiction clause) if very strong or exceptional grounds are demonstrated, provided that such grounds "can properly be described as unforeseen and unforeseeable at the time the agreement was made. In other words, the bargain which the defendant makes in entering a contract with an FNC waiver is that he will not seek to argue that England is not an appropriate forum in relation to forum non conveniens grounds which were foreseeable at the time that the relevant agreement was made." The judge went on to find that it had been foreseeable that proceedings might take place in Tanzania as well as in England and so no stay was justified.

The appellant accepted that the judge's conclusions on the law were correct. However, it sought to argue on appeal that a stay should be granted because so much time and money had already been spent on the Tanzanian proceedings before the English proceedings were commenced. That argument was rejected by the Court of Appeal. The judge had been justified in concluding that the sums spent in Tanzania had been spent "essentially on interlocutory battles" and that both the English and Tanzanian proceedings were still in their preliminary stages, and nowhere near ready for trial.

The Court of Appeal also rejected the argument that there should be a stay of the English proceedings on case management grounds (ie because the Tanzanian proceedings were more advanced and so should be the main proceedings). Although it was held that a FNC waiver clause does not preclude an application for a  case management stay in "rare and compelling cases" (especially if such a stay will promote "an orderly process of litigation"), there was no reason to interfere with the judge's exercise of his discretion in refusing such a stay. The question should also be looked at at the time the stay application is made, and not when it is determined.

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 Mondaq.com.

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

Authors
Nigel Brook
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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