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On 15 January 2021, the Supreme Court handed down its judgment in the FCA COVID-19 test case, heard on a “leapfrog” appeal (bypassing the Court of Appeal) from the first instance decision of Lord Justice Flaux and Mr Justice Butcher (see our previous blogs here and here ). The Supreme Court judgment can be accessed here.
The Supreme Court substantially allowed the appeals of the Financial Conduct Authority (“
FCA”) on behalf of the policyholders and dismissed the appeals of the insurers, and in doing so, has broadly endorsed (and in some cases extended) the finding at first instance that many of the policies in question provide cover, albeit for slightly different reasons. As part of its reasoning, the Supreme Court concluded that the
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A January 15, 2021, decision from the UK’s highest court spells good news for English policyholders. In
The Financial Conduct Authority v. Arch Insurance (UK) Ltd., and others, UKSC 2020/0177, the Court held that 21 insurance policies sold by eight leading business interruption insurers provide coverage for losses resulting from COVID-19 and resulting public health measures taken by UK authorities. Approximately 700 types of policies across over 60 insurers and 370,000 policyholders could potentially be affected by the outcome of the Supreme Court’s rulings.
The Court interpreted the following four types of clauses in the relevant policies:
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COVID-19: Insurance - The UK Supreme Court Judgment Brings Positive News for Policyholders in FCA s Business Interruption Test Case Tuesday, January 19, 2021
Background to the Test Case
Following a four day hearing in November 2020, the UK Supreme Court has handed down the appeal judgment in the test case brought by the Financial Conduct Authority (FCA) on behalf of UK based small and medium enterprises (SMEs) seeking clarity on the coverage provided by certain extensions of cover for COVID-19 related business interruption losses (The Financial Conduct Authority v Arch and Others). The test case related to the interpretation of certain Disease Clauses, Prevention of Access and so-called Hybrid Clauses, and whether or not they provide insurance cover under English law for business interruption losses resulting from the COVID-19 pandemic and related measures taken by UK authorities. Further information on the High Court judgment can be found in our alert