10th September 2020

Coronavirus & Business Interruption Cover (FCA High Court Test Case Judgment - Expected 15 September 2020)

By Rob Hammond
Associate Director - Technical Claims
London City
Judgment Day….?

At the conclusion of the two-week hearing of the Test Case brought by the FCA in the High Court, Lord Justice Flaux indicated that he and Mr Justice Butcher hoped to be in a position to deliver their judgment around the middle of September. True to their word, it has just been announced that the judgment will be handed down at 10.30am on 15 September 2020.

The FCA have confirmed they will publish the judgment on their website: https://www.fca.org.uk/firms/business-interruption-insurance#latest-updates

What are we expecting?

Throughout the two-week hearing, there were many twists and turns from the Counsel for all sides (FCA and insurers), with each presenting their opposing views on how they believed the various policies and issues arising should be interpreted. As all the leading minds in insurance law were involved, it was only to be expected that convincing arguments would be presented both for and against and with that an ‘ebb and flow’ of expectations.

We are hopeful the Court are convinced by the arguments advanced by the FCA, however it remains difficult to predict the outcome.  We do not believe there will be a ‘blanket’ yes or no. With so many issues at stake and with so many nuances to the matters, we believe there are likely to be some points won by the FCA and some won by insurers, leaving a position where the judgment still needs to be interpreted on a case-by-case basis.

Following the final conclusion of the case, be it after an appeal or in the coming weeks, we anticipate the FCA will set a pathway or guidance notes that they expect insurers to follow for handling – similar to their guidance for their expectations of insurers leading up to the Test Case. This could include an expectation of insurers to review their own position against the judgment and also provide key dates for communicating this to clients.

Insurers themselves will therefore want to take some time to digest the judgment and interpret what it means for them, so we are likely to see them issue holding responses whilst they do so.

If the judgment is positive for policyholders, when will we see payments?

With the huge number of claims involved and with a cumulative value running into many millions of pounds, insurers will of course be restless awaiting the judgment on 15 September 2020. If there is any positive news for policyholders, we anticipate that one or more of the insurers will wish to appeal the judgment.

Should it prove that the outcome is largely negative for policyholders, we are unsure if the FCA will appeal.

If any party intends to appeal, they have 40 days following the handing down of the judgment to seek permission to appeal. It is only after this limitation date that the case could be said to be finally concluded or, of course, after any appeal has been heard.

Due to the vast array of matters being considered, many commentators are anticipating an appeal, and to expedite an appeal it is possible that the case could jump the Court of Appeal and be heard in the Supreme Court, with some believing that such a case would be heard in early 2021.

So what now?

Of course much of what we have said above is crystal ball gazing and we, as much as anyone, await the judgment with bated breath. What we do know, for sure, is that we will continue to communicate with our clients to guide them through one of the biggest insurance disputes in history.

If you have any questions or concerns, please do not hesitate to get in touch with your usual Aston Lark contact.