The FCA test case: true cause of business interruption following the Covid-19 outbreak

The Supreme Court’s judgment on The Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1; [2021] Lloyd’s Rep IR 63 (the “FCA test case”) was handed down on 15 January 2021. The case was brought by the UK FCA to seek clarity for the benefit of small businesses and enterprises on the meaning of 21 selected policy wordings issued by eight different leading business interruption (“BI”) insurance providers.

This article will not discuss either the chronology of the FCA test case or the Supreme Court’s interpretation of the sample clauses from the three different categories of wordings (disease, hybrid and prevention of access/public authority). Our focus here is on the Supreme Court’s analysis of the principle of causation.