Claimant and defendants being parties to reinsurance contracts, which subject of claims brought against four airlines following hijackings on September 11 in America

Aioi Nissay Dowa Insurance Company Ltd v Heraldglen Ltd and another company: Queen's Bench Division, Commercial Court: 8 February 2013

The claimant was a global insurance and financial services company. The claimant and defendant insurance companies were parties to reinsurance contracts, which became the subject of claims brought against four airlines following the four hijackings on 11 September (9/11) in America. Property and business interruption claims flowing from 9/11 were the subject of a $1.2bn global settlement, the liability for which was allocated in different amounts between the four airlines.

Each of the claims under 10 inward reinsurances was settled on the basis that the attacks on each of the Twin Towers were separate events. Some of the inwards contracts were written on a 'one-event' basis; others were written on an 'each aircraft' or 'each insured' or 'one-event' basis at the discretion of the reinsured. All of the inwards claims to the first defendant were settled on a two-event basis. The claimant contented that their liability under the outward XL reinsurances was on a one event basis. The matter was referred to arbitration.  

One of the questions the tribunal had to decide was whether the losses sustained by the defendants on the 10 (inward) reinsurance contracts, arising out of the 9/11 attack, had been caused by one or more occurrences or series of occurrences 'arising out of one event' for the purpose of applying policy limits and deductibles in four retrocession excess of loss reinsurances written in favour of the defendants by the claimant. The relevant reinsurance contracts were subject to London Standard Wording (LSW) 351, article 4 of which provided, inter alia, that the term 'each and every loss' shall be understood to mean 'each and every loss or accident or occurrence or series thereof arising out of one event'. The tribunal concluded that the losses which arose on the inward reinsurances had been caused by two separate occurrences arising out of separate events. The claimant appealed.

The issue for consideration was whether the tribunal had erred in law. The claimant submitted that, instead of confining their analysis to whether the attacks on the Twin Towers constituted one event, the tribunal had wrongly focussed on, and had been wrongly influenced by, their conclusion as to the number of loss events arising out of the hijackings of all four flights. The appeal would be dismissed.

The tribunal had made no error of law in reaching their conclusion that the insured losses caused by the attacks on the World Trade Center arose out of two events and not one. It had accurately identified the applicable law pursuant to which it had undertaken an exercise of judgement. The tribunal's decision was one which had been open to it to reach and in making it the tribunal: (i) had correctly applied the law; (ii) had had regard to all materially relevant matters; and (iii) had not taken into account impermissible considerations (see [40] of the judgment). Kuwait Airways Corpn v Kuwait Insurance Co [1996] 1 Lloyd's Rep 664 considered; Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] 2 All ER (Comm) 190 applied; Dawson's Field Award, Re (29 March 1972, unreported) considered; Mann v Lexington Insurance Co [2001] 1 All ER (Comm) 28 considered.

Michael Crane QC and Patrick Goodall (instructed by Addleshaw Goddard LLP) for the claimant; Alistair Schaff QC and Nicholas Craig (instructed by Holman Fenwick Willan LLP) for the defendants.