UK Supreme Court delivers judgement in the Financial Conduct Authority's (FCA) Business Interruption test case

29 January 2021

On 15th January 2021, the UK Supreme Court delivered its judgment in the Financial Conduct Authority’s (FCA)’s business interruption insurance test case.  The judgment is complex, runs to 112 pages and deals with many issues which will affect many sectors.  The potential relevance to the mining sector could include the following:

• Construction of policy wordings and the objective assessment of what the parties meant at the time of contracting and not what Insurers intended or what “pedantic lawyers” after the loss can come up with in terms of coverage arguments that if correct make the coverage purchased “illusory”;
• The ability to claim BI losses that commence prior to the trigger event, e.g. the period of downtime whilst the mine/facility is preparing to weather an impending hurricane/flood;
• The removal of the use of trends clauses and the “but for the damage“  adjustment language to reduce indemnity, meaning that the natural and inevitable consequences of the peril that causes the damage are not relevant to calculating quantum (wide area damage),  an example of which is where Insurers claim a credit where commodity prices spike allegedly as a result of the production loss and from which the insured benefited for resumed production;
• BI claims as a result in reduced operation at the direction of a public authority as a result of the virus and the fact that advice to reduce operations is enough of a trigger where the authority can back it up legally;
• BI claims for similar constraints at suppliers (e.g. export terminals) and customers (e.g. import terminals) for similar reasons.

A full briefing is included in the attached document prepared by Wordley Partnership. Click here

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