UK: Asbestos Update

Last Updated: 20 April 2010
Article by David Abbott and Tanguy de Schwarz

(Re)insurers will welcome recent clarification in the long-running pleural plaques and Employers' Liability 'Trigger Litigation' cases.

The House of Lords' decision in Rothwell v Chemical and Insulating Company Limited and Others (2007) that pleural plaques did not constitute compensatable damage stands following the recent announcement by the Ministry of Justice. This article considers the announcement along with the developments in the Employers' Liability Trigger Litigation.

Pleural Plaques

The issue of whether pleural plaques should be compensatable has been debated heavily during the past two years. Insurers and the public have been able to witness how different the Scottish and UK governments are in their approach to the problem.  In the last week of February 2010, the Ministry of Justice issued a statement clarifying the UK Government's intentions on pleural plaques, which highlights such difference. Insurers will welcome this latest, and perhaps final, instalment in the long-running saga as to whether pleural plaques are compensatable, in the rest of the UK, at least. In Scotland, the position is currently very different.

The House of Lords, in Rothwell, decided that the existence of pleural plaques did not constitute compensatable damage. The Scottish parliament legislated to overturn this ruling and made pleural plaques a condition capable of constituting actionable and compensatable damage. The Damages (Asbestos-Related Conditions) Scotland Act 2009 is now law, notwithstanding resistance from insurers, who challenged the Act by judicial review. In January 2010, Lord Emslie in the Court of Session in Edinburgh rejected the insurers' case. However, that decision is being appealed, and it may yet end up before the Supreme Court in London.

Government Response to the Rothwell Decision

Following Rothwell, the UK Government published a consultation paper seeking views on a number of options, including whether to overturn the House of Lords' judgment or to establish a compensation regime based on a 'no-fault' basis. However, the Ministry of Justice confirmed on 25 February 2010 that "on the basis of medical evidence received during the course of this review, including authoritative reports from the Chief Medical Officer and the Industrial Injuries Advisory Council, we are unable to conclude that the Law Lords' decision should be overturned at this time or that an open-ended no full compensation scheme should be set up." 

Accordingly, in England, Wales and Northern Ireland, the Rothwell ruling stands: pleural plaques are not compensatable. The Ministry of Justice also announced the following measures:

  • An extra-statutory scheme of fixed payments of Ł5,000 for individuals who had begun, but not resolved, a legal claim for compensation for pleural plaques at the time of the House of Lords' ruling in October 2007.
  • Following concerns that some mesothelioma (a type of cancer originating from asbestos exposure) sufferers might not be able to seek compensation from insurers because their records are untraceable, the Ministry of Justice has announced that a consultation from the Department of Work and Pensions on the creation of an Employer's Liability Insurance Bureau, which would act as a fund of last resort to gain compensation, was underway.  This scheme would be akin to those which have been set up in Europe to respond to asbestos related claims.
  • The Third Parties (Rights Against Insurers) Act 2010, which aims to simplify the process of bringing claims against the insurers of companies which no longer exist.  
  • The creation of a working group of claimants' solicitors, trade unions, insurers, the judiciary and civil servants to examine litigation practices and procedures for compensation claims relating to mesothelioma and to identify options for streamlining them in order to reduce the time taken to conclude cases. This would possibly include changes to the law to clarify the limitation period to bring a claim for mesothelioma.  
  • The creation of an Employers' Liability Tracing Office to help people who develop an asbestos related disease to trace the relevant insurers and obtain full compensation.

Trigger Litigation: Background

Employers' Liability (EL) policies have traditionally provided cover to employers for their liability to their employees for accidents, bodily injuries or diseases caused during the policy period. A causation based wording is triggered at the time the injured employee is exposed to and inhaled asbestos dust. By contrast, Public Liability ("PL") policies traditionally insured third party liability for accidents, bodily injuries or illnesses "occurring" during the period. In the case of Bolton Metropolitan Borough Council v Municipal Mutual Insurance Limited (2006) it was decided that the word "occurring" reflected the date the cancerous tumour became malignant and not the date the victim had been exposed to asbestos.

The Trigger Litigation: Issues

In what has become known as the "Trigger Litigation", the main issue before the court was to interpret a small amount of EL policies that provided for an indemnity on the basis that an injury had been "sustained" or had "happened". In light of the decision in Bolton, this raised questions, such as who is liable to pay mesothelioma claims? Is it those who insured employers at the time an employee was exposed to asbestos or those who insured the employer when the cancerous tumour turned malignant? This was key to determining whether a particular Employers' Liability ("EL") policy with an "injury sustained" wording is triggered.  

This was the issue before the court in the Trigger Litigation. On the one hand, it was suggested that EL policies on a "sustained" basis ought to be treated in the same way as the PL policies in Bolton. Namely, "sustained" was synonymous with "occurred" and mesothelioma was "sustained" when the cancerous tumour became malignant, not when the victim was exposed to asbestos. The contrary interpretation was that "sustained" should be interpreted as being synonymous with the traditional EL causation based wording.  Thus, the policy would be triggered at the time the victim inhaled asbestos. This issue was important as potentially ex-employers may become liable for claims received many years after the date of exposure when those companies may be defunct or have insurance on different terms.

The Trigger Litigation: Decision

The court, having reviewed the factual matrix, which consisted of the background in the Workmen's Compensation Acts, the Employers' Liability (Compulsory Insurance) Act 1969 and public policy, declared that these EL policies, which were on a "sustained" basis, were to be construed as being on a "caused" basis, thus allowing for the trigger to apply at the time of inhalation.

It is also worth noting that the court decided that no injury was suffered at the date of inhalation, that even if there was injury at that time, the injury was not actionable.  What this means is, although the EL policy was triggered at the time of inhalation, a claim cannot be brought until mesothelioma manifests itself and crystallises the employer's liability for the damage suffered.  It was thought the manifestation was around 10 years, as held in Bolton, until this case where the court held that this would more likely be five years.

The decision has been appealed but the Court of Appeal has not yet handed down its decision.

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.

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