MUMBAI: The Night Time Industries Association joined forces with NDML brokers to coordinate claims against insurance companies for refusing to pay out under their business interruption policies, which included Arch, Argenta, Ecclesiastical, Hiscox, MS Amlin, QBE, Royal & Sun Alliance and Zurich.

A case of this nature would normally take at least a year to get to trial. That it is happening in under two months is remarkable and commendable. This is a supreme example of the legal system responding to the urgency of a case.

On 9th June the FCA started its claim in the High Court. The case is set out in a document called “Particulars of Claim” which is a 184-page account of the issues in the case and what the FCA says the result ought to be. The FCA has succeeded in incorporating the necessary detail, extracting the issues which are in common between the different insurers.

Within a week, on 16th June, the Court had heard a “case management conference”, at which the court gave direction for the progress of the case. The insurers have just one week, until 23rd June, to file their respective defences.

There will then be a further case management conference which, like the first one, will be live streamed. The FCA will file its pleaded reply by 3rd July. There then follows the submission of “skeleton arguments” which will set out the parties’ arguments on the law.

The case will, highly unusually, be heard by two judges, both top experts in insurance law, Lord Justice Flaux, who is a Court of Appeal judge, and Mr Justice Butcher, who is a Commercial Court judge. The Court has set aside a full 8 days for the hearing between 20th and 30th July.

The judgment of the Court will bind the insurers, subject of course to any appeal. The case is being heard under what is called the Financial Markets Test Case Scheme. This allows, in appropriate cases, a relevant trade, professional or regulatory body or association, or a third party affected by the determination of the issues to ask for permission to be joined as a party or otherwise allowed to be represented. The general rule is then that there shall be no order as to costs.

In deciding whether to apply to be joined, NTIA and NDML have been particularly concerned to see whether FCA is a) fighting the corner of claimants or taking a broadly neutral stance and b) whether it is effectively putting their case. Their judgment is that the FCA is passing both tests, by some margin.

One of the issues particularly being relied on by Hiscox is that claimants have suffered no loss because even if the government had not closed premises, they would not have been able to trade profitably in the midst of a pandemic. This gives rise to the question of the “counterfactual”. I.e. what would have happened if it had not been for the insured peril? Our argument is and always has been that the counterfactual is a world in which there is no pandemic, not just one in which there is no closure but there is still a pandemic. The FCA has entirely grasped and is running with our argument. This is dealt with repeatedly in the Particulars of Claim. For example:

“Moreover, if and to the extent that it is necessary and appropriate to consider what would have happened but for the insured peril (whether under an applicable ‘trends’ clause or otherwise), the correct counterfactual is a world in which there was no COVID-19 and no Government intervention related to COVID-19.”

NTIA and NDML take the strong view that the FCA claim is being prosecuted swiftly, vigorously and with outstanding skill. They are unable to see any advantage for a policyholder to bring their own claim, which would at best reinvent the wheel. The disadvantage is that a large part of their winnings will end up in the hands of lawyers and litigation funders. However, every policyholder must of course feel free to make their own decision.

We will continue to provide updates as the case progresses.

Michael Kill CEO Night Time Industries Association:

‘The speed and efficiency with which the FCA have approached this case is extremely positive for all involved, and we look forward to watching the proceedings unfold over the coming months. The FCA are taking unprecedented steps in support of claimants, and we hope that the conclusion of this case will result in further financial support for operators who are struggling to survive through this crisis’

Simon Mabb MD NDML Insurance Broker:

‘We are heartened by the efforts of the FCA legal team in getting a swift and clear outcome for policyholders. We watch with interest as this all unfolds over the next month or so and are committed to keeping our customers up to date with the latest developments.’

Philip Kolvin QC, who is advising NTIA and NDML in respect of the Hiscox claims has said:

“The speed with which this claim is being pursued, the enormous skill and care which have gone into the claim documents and the responsiveness of the Court are all hugely commendable. Policy-holders have been put through the mill by their insurers, but in my judgment, they could not wish for a better friend than the FCA at this difficult time.”