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trigger litigation cases, Supreme Court, 28 March 2012

17 April 2012

Since the 2006 decision in Bolton, a PL mesothelioma case, which held that injury occurs when the tumour starts to develop, which is 10 years before symptoms present, shifting insurer responsibility from the time of exposure, to the time the tumour started, the courts have tussled with the impact of the ruling on EL policies of insurance. There is little doubt that certainty was delivered in the Supreme Court on the 28 March 2012.

Lord Mance in delivering the lead judgement revisited the Fairchild/Barker principle, as enshrined in the Compensation Act 2006, finding that the law accepts a broad causal link in mesothelioma cases, such that a liability will arise where the exposure to asbestos may (rather than on a balance of probability) have caused the mesothelioma which has later developed. The concept of the disease being caused during the policy period of insurance had to be flexibly interpreted.

Against that backdrop, The Supreme Court held that whether the policy of insurance used the word sustained, contracted or caused the focus of the EL policy of insurance is the employment relationship and on the liabilities arising out of the activities of the employer during the period of insurance. It follows that the trigger on which the policy should respond is the period of exposure during employment which may have caused the injury and not the much later date when the injury is deemed to occur.

In other words, the Supreme Court restored the insurance market practice which had handled mesothelioma cases on a causation basis, whereby EL insurance indemnified on the basis of the period of exposure during the period of the policy of insurance.

So what has happened in the last two weeks? We have seen a flurry of activity in practice.

  • Cases which have been on hold, have had apportionments agreed and monies released.
  • Clients who have had funds set aside in their company accounts to meet a potential liability have been able to release those funds for use.
  • Owners of long defunct companies, but with assets can rest easy in the knowledge that they do not have to sell those assets to meet a potential liability.
  • Public funds are on a more secure footing as potential liabilities are agreed with their insurers.

The implications are positive as the judgement provides certainty, clarity and comfort for clients, employees and their families and the current EL insurance market.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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