Interactive E-Solutions v O3b Africa: Court of Appeal re-affirms that exclusion clauses in commercial contracts do not have to be construed narrowly

In Impact Funding v AIG Europe (see Weekly Update 38/16), the Supreme Court confirmed that exclusions clauses in insurance policies should not always be construed narrowly. In this case, the Court of Appeal has confirmed that the same approach applies to exclusion clauses in general contracts too.

In construing an exclusion clause in a master services agreement, it was noted by the Court of Appeal that the traditional approach of the courts towards exclusion clauses was one of hostility, which began to change with the passing of the Unfair Contract Terms Act 1977 (and an acceptance by the courts that such clauses are an integral part of pricing and risk allocation in commercial contracts).

However, the courts have also recognised that a clause which is drafted too broadly might be entirely ineffective because it would be unreasonable to exclude fraud. As a result, it has become common to include a fraud carve-out in exclusion clauses to reflect "the commercial common sense that a contracting party may be prepared to assume the risk of negligence by his counterparty, but not the risk of fraud." (as per Jacob J in Thomas Witter Limited v TBP Industries [1996]). In the context of the clause in this case, the Court of Appeal held that a fraud would be a relevant fraud if "an allegation of fraud is a necessary ingredient of the legal basis on which loss is claimed".

In reaching that conclusion, the Court of Appeal rejected an argument that the judge's interpretation of the clause had rendered certain parts of the contract redundant or superfluous: "the argument from redundancy seldom carries much weight because, as it has been graphically put, drafters frequently employ linguistic overkill and try to obliterate the conceptual target by using a number of phrases expressing more or less the same idea".

Campbell v Campbell: Court of Appeal confirms that litigant in person can't recover costs of a foreign lawyer

CPR r46.5 provides that, where the court makes a costs order in favour of a litigant in person, the litigant in person can recover (amongst other things) "payments reasonably made by the litigant in person for legal services relating to the conduct of the proceedings".

The issue in this case was whether that included payments made for the services of a foreign lawyer. The Court of Appeal held that it did not. The legal services had to be "provided by or under supervision of a lawyer" and it was said to be implicit that the lawyer "must be someone who can be expected to be competent to supply services "relating to the conduct of the proceedings" in this jurisdiction": in other words, a lawyer qualified in England and Wales.

Resilience report: Parametric insurance, closing the protection gap:

Every year, natural disasters wreak havoc across the world, causing immense harm and destruction to millions of livelihoods. With only a third of these losses being covered by insurance the protection gap is significant. The insurance industry has a vital role to play in closing the protection gap and building global resilience. Well-designed insurance solutions can help mitigate the effects of natural catastrophes by enabling communities to get back on their feet quicker and more efficiently.

Clyde & Co's recently launched report explores the growth of 'Parametric Insurance' and considers the important role it has to play in helping businesses and communities become more resilient. In addition, it will explore some of the legal and regulatory challenges and considerations that arise as parametric products are increasingly used in the industry. A link to the report can be found here:

(Re)insurance Weekly Update 4- 2018

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