Norton Rose Fulbright advises on landmark ruling in the Court of Appeal

Press release - Business April 2019

Global law firm Norton Rose Fulbright has advised Equitas in its successful appeal from an arbitration award. This marks the first reinsurance case before the Courts to consider the presentation of reinsurance claims arising out of mesothelioma liabilities involving the so-called Fairchild enclave. 

In 2012, Municipal Mutual Insurance Limited (MMI) changed its usual practice of presenting reinsurance mesothelioma claims on a pro rata, time-on-risk basis and sought to spike such claims into a single reinsurance year of its choosing, irrespective of the number of years that MMI was on risk for the claim. Equitas refused to pay the spiked reinsurance claims and arbitration proceedings were commenced by MMI in 2013. MMI argued that spiking was justified as it had not allocated its settlements of inwards claims to any particular insurance policy, and each policy on risk during the exposure period was 100% liable for the claim. Flaux LJ, sitting as a judge-arbitrator, agreed with MMI.

Equitas sought and obtained permission to appeal from Gloster LJ and Sir Jack Beatson, who found that the award was at least open to serious doubt and the matters were of general public importance. The hearing took place last month before the Court of Appeal, who unanimously overturned the award of Flaux LJ. In doing so, the Court of Appeal held that a reinsured needed to present mesothelioma reinsurance claims in a manner which is not arbitrary, irrational or capricious, consistent with the principle of good faith. 

The team advising Equitas was led by London based Norton Rose Fulbright partners, Michelle George and Jon Ogle. 

Michelle George commented: 

“This is a welcome development for Equitas as well as a landmark decision for the reinsurance market. The Court has taken a pragmatic and straightforward approach to a complex set of issues. This judgment provides clear guidance as to how all mesothelioma reinsurance claims should be handled going forward.”

The ruling is one of a very few arbitration awards that has been successfully appealed under Section 69 of the Arbitration Act 1996.

For further information please contact:

Kate Farrell, Public Relations Executive
Tel: +44 (0) 20 7444 3724; Mob: +44 (0) 7515 324 290
kate.farrell@nortonrosefulbright.com

Notes for editors:

Norton Rose Fulbright 

Norton Rose Fulbright is a global law firm providing the world’s preeminent corporations and financial institutions with a full business law service. The firm has more than 4,000 lawyers and other legal staff based in Europe, the United States, Canada, Latin America, Asia, Australia, Africa and the Middle East.

Recognized for its industry focus, Norton Rose Fulbright is strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare. Through its global risk advisory group, the firm leverages its industry experience with its knowledge of legal, regulatory, compliance and governance issues to provide clients with practical solutions to the legal and regulatory risks facing their businesses.

Norton Rose Fulbright operates in accordance with its global business principles of quality, unity and integrity, aiming to provide the highest possible standard of legal service in each of its offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright Verein, a Swiss verein, helps coordinate the activities of Norton Rose Fulbright members but does not itself provide legal services to clients. Norton Rose Fulbright has offices in more than 50 cities worldwide, including London, Houston, New York, Toronto, Mexico City, Hong Kong, Sydney and Johannesburg. For more information, see nortonrosefulbright.com/legal-notices.