One Or More Events: Recent Ruling From English Court

Author:Mr Keith Richardson
Profession:Barlow Lyde & Gilbert
 
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Murray Arnold Campbell Scott - v - The Copenhagen Reinsurance Company (UK) Limited, Commercial Court, 11 July 2002

Aggregation issues have attracted considerable interest in connection with the legal issues arising out of the terrorist attacks against the US on 11 September 2001. This recent judgment of the English Court has provided some further useful analysis of the applicable principles.

Last May the Commercial Court heard what was described by the Defendant as a "friendly action" brought with the co-operation of the London reinsurance market to determine the excess-of-loss aggregation issues that arose out of the invasion of Kuwait and the capture of Kuwait International Airport in August 1990. The issue was whether the misappropriation by Iraq of 15 aircraft owned by the Kuwait Airways Corporation ("KAC") plus a considerable quantity of spares and the destruction of a Boeing 747 owned by British Airways arose out of one event or whether the loss of the aircraft and the spares each constituted a separate event under the standard excess-of-loss reinsurance wording used in the London market.

The Claimant argued that the capture of the KAC aircraft and spares was one of the principle objectives of the Iraqi evasion of Kuwait and, consequently, their loss should be aggregated as arising from one event, i.e. the invasion and capture of the airport. The Defendant asserted that the removal of the KAC aircraft and spares over a period of days and weeks after the invasion and the ultimate destruction of the BA B747 during the early phase of Desert Storm in January/February 1991 each constituted a separate event, or in the case of the spares, several separate events.

Mr Justice Langley's view was that whether a set of circumstances constituted one or a number of events is "a question of impression which does not bear too much analysis". He concurred with the Claimant's view that the KAC aircraft and spares were a specific target of the Iraqis. However, he did not accept that the BA aircraft fell into this category preferring to regard it as "stranded" when the invasion occurred. He then applied the "unities" approach set out by Lord Justice Kerr in the Dawson's Field Arbitration in 1972, subsequently adopted and approved by Mr Justice Rix in the proceedings between KAC and the Kuwait Insurance Company in relation to the direct KAC war risk policy. Mr Justice Langley concluded that there was unity of intent on the part of the Iraqis both to...

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