The Court of Appeal has today ruled that consequential losses caused by the 2011 riots are recoverable in a landmark case involving an attack on the Sony distribution centre.
The Sony distribution warehouse was looted and set on fire on the night of Monday 8 August 2011, in an attack described by lawyers for one of the insurers as the ‘largest ever arson in Europe’.
The Mayor’s Office for Policing and Crime (MOPAC) had originally declined to compensate the claimants under the Riot (Damages) Act 1886 for property damage and business interruption losses.
Insurers with an interest in the warehouse started a claim to recover almost £60m of indemnified losses, as well as £4m of uninsured losses suffered by the owners of stock held there.
The Commercial Court had ruled that under the act the claimants were entitled to compensation by the police authority for physical loss caused by the riots but not consequential damages to the interruption of business.
The insurers and the mayor’s office independently decided to appeal the decisions that had been decided against them respectively.
In the case Mitsui Sumitomo Insurance Co (Europe) Ltd, Royal and Sun Alliance Insurance plc and others v The Mayor’s Office for Policing and Crime (MOPAC), the Court of Appeal dismissed MOPAC’s appeal on the first issue and allowed insurers’ cross-appeal on the second.
Master of the rolls Lord Dyson today said: ‘We dismiss MOPAC’s appeal on the issue of liability and allow the claimants’ cross-appeal on the issues of damages.’
Dispute resolution firm Kennedys, which acted for insurance firm RSA - insurers of the owners of the Sony distribution centre - said the ruling was a ‘landmark decision’.
‘For the first time in 128 years [the ruling] clarifies that the compensation payable under the 1886 act is not limited to physical damage,’ it said.
‘This is no doubt welcome news to the insurance industry as a whole. Insurers (and uninsured claimants) will now be able to recover business interruption losses suffered as a result of the August 2011 riots.’
Sam Grodzinski QC and David Pievsky acted for the appellants and were instructed by the director of legal services at the Metropolitan Police.
Michael Crane QC, Tamara Oppenheimer and Marianne Butler from Fountain Court Chambers acted for the respondents and were instructed by international firm DAC Beachcroft.
Michael Crane QC and Charles Doughterty QC of 2 Temple Gardens appeared for the second respondent and were instructed by Kennedys. Simon Pritchard from Blackstone Chambers appeared for the third respondents, instructed by London firm Keystone Law.