FCA and seven insurers file 'precautionary' applications for Supreme Court BI test case appeal

Supreme Court

The Financial Conduct Authority and seven out of the eight insurers involved in the regulator’s business interruption test case have filed applications to ‘leapfrog’ an appeal of the High Court judgment handed down earlier this month to the Supreme Court.

The FCA said that the applications had been filed on a precautionary basis, preparing for the event that outstanding issues of dispute between the regulator and insurers cannot be resolved without the need for an appeal process by the close of business on Wednesday.

It follows a 4pm deadline on Monday for applications to kick start an appeals process. The High Court is set to consider the applications at a consequential hearing on Friday, for which the parties must make written submissions by noon on Wednesday.

On 15 September, the High Court ruled that some of the businesses that held business interruption insurance and were forced to close as a result of the coronavirus pandemic could be entitled to be compensated by the insurers involved in the test case.

Among the insurers known to have lodged precautionary applications to appeal are RSA and Hiscox. Zurich is understood to be the only participating insurer not to have applied for an appeal.

A Zurich spokesperson said: “Zurich has not filed an application for a certificate to appeal the outcome of the FCA test case. The recent judgement confirmed that the wordings represented by Zurich do not provide cover for business interruption in relation to the Covid-19 outbreak.”

The other insurers that participated in the test case were Arch, Argenta, Ecclesiastical, MS Amlin and QBE.

The FCA said: “The FCA’s intention has, throughout the process, been to achieve clarity on affected BI policies at speed. We believe that clarity was provided in the initial judgment handed down on 15 September.

“The FCA, therefore, continues to work closely and at speed with the eight insurers and two intervenors that participated in the test case to reach an agreement in principle on a range of issues whereby an appeal process would not be required, and payments would be made on eligible claims as soon as possible. Positive discussions continue with all parties.”

In a statement to the London Stock Exchange, this morning Hiscox said: “In order to preserve the ability of any appeal to proceed straight to the Supreme Court, Hiscox, together with certain other Insurers and the FCA, has taken the necessary procedural step of applying to the High Court for a leapfrog certificate before yesterday’s statutory deadline for doing so had passed.

“However, Hiscox has not yet made a decision on whether it will seek to appeal.

“At the next hearing on 2 October, the court will decide the appropriate declarations to be made to give effect to the judgment it handed down on Tuesday 15 September.

“The declarations are the orders from the court as to how the conclusions set out in the judgment should be applied to the claims and circumstances of relevant individual policyholders.

“Discussions are ongoing with the FCA and other parties to try to resolve any outstanding issues in line with the original judgment before this date.

“Hiscox remains committed to an expedited resolution and today’s application, pending this hearing, preserves speed of process for all parties should there be an appeal.

“In the event that any party seeks permission to appeal, Hiscox may remain a party to any subsequent proceedings which could impact its ability to progress claims until the final outcome of the industry test case is known.”

RSA added in a Stock Market statement: “RSA yesterday followed the necessary procedure to seek permission to appeal the court’s findings in the FCA’s recent business interruption test case at the Supreme Court.”

Should the application to ‘leapfrog’ an appeal to the Supreme Court be turned down by the High Court on Friday, the parties will have until 9 October to apply to the Court of Appeal to appeal that refusal.

However, Garon Anthony, a partner in the litigation practice at Squire Patton Boggs, told Post that he felt that such a refusal would be “unlikely given the issues at stake.”

“For an appeal to be expedited to the Supreme Court, the case must be seen as a point of law of general public importance and both parties must have agreed to the ‘leapfrogging’, which they have in this case,” said Anthony.

“The purpose of a ‘leapfrog’ appeal here would be to avoid the time, cost and court resources used in litigating an appeal to the Court of Appeal where it is generally understood and accepted by the parties that it is likely that the Court of Appeal’s judgment would be appealed again to the Supreme Court.

“It is therefore to achieve the maximum clarity possible for the maximum number of policyholders and their insurers in a timely and proportionate way.”

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