Lloyd's Maritime and Commercial Law Quarterly
English Insurance Law
Margaret Hemsworth*
CASES
61. BAE Systems Pension Fund Trustees Ltd v Royal & Sun Alliance Insurance Plc 1
Joinder—Third Parties (Rights against Insurers) Act 2010—insurer liability contested
The claimant applied under s.2 of the Third Parties (Rights against Insurers) Act 2010 (“the 2010 Act”) to join insurers alleged to have provided liability cover to a defendant company which had been placed into administration following the commencement of legal proceedings. It was common ground that the 2010 Act applied and that s.1 provides that a claimant who is able to establish liability of an insured defendant acquires that insured’s rights against the insurer as regards that liability. Section 2 makes provision for the claimant to bring proceedings against the insurer so as to establish both the liability of the defendant and the insurer’s obligation under the policy of insurance. The insurer opposed the application on two grounds: (i) that it had no liability under the relevant contract of insurance, although accepting that a policy of insurance existed in respect of the matters claimed, and (ii) any dispute under the relevant contract of insurance was subject to an arbitration clause, requiring any dispute as between insured and insurer to be determined in accordance with French law.
The policy of insurance had been written on a claims-made basis but the wording purported to exclude from cover matters about which the insured was aware prior to inception. The insurer contended that documentary evidence established the insured’s awareness of a potential claim prior to inception, a fact that was in dispute.
Decision: The claimant’s application for joinder of the insurer succeeded.
Held: (1) Section 2(1) of the 2010 Act is engaged when there is a potential dispute as to coverage (see the wording referring to the claimant who “claims to have rights”). In order to establish the insurer’s liability, it is necessary for the claimant to establish both the defendant’s liability to the claimant and also that the liability is insured. It is not necessary for those matters to be established before s.2 is engaged. Section 2 itself provides the machinery for establishing those rights. If a claim is made where it is unarguable that any relevant cover is in place, the court could strike out such proceedings as having no real prospect of success.2
If the insurer is joined, it is entitled to make such submissions and call such evidence as it wishes in response to the claim made against the defendant who the claimant alleges
* Senior Lecturer, University of Exeter.
1. [2017] EWHC 2082 (TCC) QB (O’Farrell J).
2. See CPR Pts 3 and 24.
English Insurance Law
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