The Financial Conduct Authority and Others v Arch Insurance (UK) Ltd and Others: SC 15 Jan 2021

Many businesses, having been ordered to suspend business during the Covid-19 epidemic, sought to claim under business interruption insurance. The claims were rejected by the insurers and the insurers now appealed from a finding that they had been liable under a variety of clauses.
Held: The appeal failed.
‘ A disease that spreads is not something that occurs at a particular time and place and in a particular way: it occurs at a multiplicity of different times and places and may occur in different ways involving differing symptoms of greater or less severity. Nor for that matter could an ‘outbreak’ of disease be regarded as one occurrence, unless the individual cases of disease described as an ‘outbreak’ have a sufficient degree of unity in relation to time, locality and cause. If several members of a household were all infected with COVID-19 when a carrier of the disease visited their home on a particular day, that might arguably be described as one occurrence. But the same could not be said of the contraction of the disease by different individuals on different days in different towns and from different sources. Still less could it be said that all the cases of COVID-19 in England (or in the United Kingdom or throughout the world) which had arisen by any given date in March 2020 constituted one occurrence. On any reasonable or realistic view, those cases comprised thousands of separate occurrences of COVID-19. Some of those occurrences of the disease may have been within a radius of 25 miles of the insured premises whereas others undoubtedly will not have been. The interpretation which makes best sense of the clause, in our view, is to regard each case of illness sustained by an individual as a separate occurrence. On this basis there is no difficulty in principle and unlikely in most instances to be difficulty in practice in determining whether a particular occurrence was within or outside the specified geographical area.’


Lord Reed, President, Lord Hodge, Deputy President, Lord Briggs, Lord Hamblen, Lord Leggatt


[2021] UKSC 1, UKSC 2020/0177, [2021] 2 WLR 123


Bailii, Bailii Summary, Bailii Issues and Facts, SC, SC Summary, SC Video 16 Nov 2020 am, SC Video 16 Nov 2020 pm, SC Video 17 Nov 2020 am, SC Video 17 Nov 2020 pm, SC Video 18 Nov 2020 am, SC Video 18 Nov 2020 pm, SC Video 19 Nov 2020 am, SC Video 19 Nov 2020 pm


Health Protection (Coronavirus, Business Closure) (England) Regulations 2020, Health Protection (Coronavirus, Restrictions) (No 2) (England) Regulations 2020


England and Wales


Appeal fromThe Financial Conduct Authority (FCA) v Arch Insurance (UK) Ltd and Others ComC 15-Sep-2020
Test case to determine issues of principle in relation to policy coverage under various specimen wordings underwritten by the defendants in respect of claims by policyholders to be indemnified for business interruption losses arising in the context . .
CitedOrient-Express Hotels Ltd v Assicurazioni General Sa (UK Branch) (T/A Generali Global Risk) ComC 27-May-2010
Appeal from an arbitration award. . .
CitedWood v Capita Insurance Services Ltd SC 29-Mar-2017
Construction of term of contract for the sale and purchase of the entire issued share capital of a company.
Held: The appeal was dismissed: ‘the SPA may have become a poor bargain, as it appears that it did not notify the sellers of a warranty . .
CitedRegina v Investors Compensation Scheme Ltd, ex Parte Bowden and Another HL 18-Jul-1995
A regulated firm, Fisher Prew-Smith, ran a scheme whereby elderly homeowners were persuaded to invest money in equity-linked funds by mortgaging their homes on terms that the interest would roll up unless and until the total mortgage debt reached a . .
CitedCharter Reinsurance Co Ltd v Fagan and Others HL 24-May-1996
The re-insurers appealed against a finding that they were liable to make payment under a contract which required them to pay ‘sums actually paid.’ They said that the company having become insolvent, no payment would in fact be made.
Held: The . .
CitedChartbrook Ltd v Persimmon Homes Ltd and Others HL 1-Jul-2009
Mutual Knowledge admissible to construe contract
The parties had entered into a development contract in respect of a site in Wandsworth, under which balancing compensation was to be paid. They disagreed as to its calculation. Persimmon sought rectification to reflect the negotiations.
Held: . .
CitedOrient-Express Hotels Ltd v Assicurazioni General Sa (UK Branch) (T/A Generali Global Risk) ComC 27-May-2010
Appeal from an arbitration award. . .
CitedRainy Sky Sa and Others v Kookmin Bank SC 2-Nov-2011
Commercial Sense Used to Interpret Contract
The Court was asked as to the role of commercial good sense in the construction of a term in a contract which was open to alternative interpretations.
Held: The appeal succeeded. In such a case the court should adopt the more, rather than the . .
Lists of cited by and citing cases may be incomplete.

Insurance, Contract

Updated: 07 September 2022; Ref: scu.657248