The Employers’ Liability Trigger Litigation

Consistency, certainty and clarity of outcome in the Supreme Court.

Alison McCormick of Outer Temple Chambers is junior counsel for the claimant in Action 1, Durham v BAI, in the multi party test action “The Employers’ Liability Trigger Litigation“.

Almost five and a half years since the claim form was issued in Durham v BAI, on 28th March 2012 the Supreme Court handed down its judgment.

The case is composed of six lead actions involving four insurers which resisted claims made against them in respect of the fatal asbestos related disease of mesothelioma in which there can be an interval in excess of 40 years between exposure to asbestos and manifestation of the disease.

The Supreme Court was asked to decide the meaning of a number of employers’ liability insurance policies. The majority of the insurance contracts were expressed to operate only where injury or disease is sustained or for injuries sustained and diseases contracted during the policy year in question.

The crux of the case was – what has to happen in any policy year to make the insurer on risk during that year liable to respond and so indemnify the employer? Is it the tortious exposure to asbestos or is it the onset of the mesothelioma?

By a majority of 4:1 (Lord Phillips dissenting) the Supreme Court found in favour of all of the individual Claimants and corporate employers.

This outcome means a “one size fits all” approach to the differently worded employers’ liability insurance policies. Whether the policy is worded on a “sustained” or a “contracted” basis, if tortious asbestos exposure occurs during the policy year, then the policy responds.

The insurers will have to revert to the practice which had been in place for many years prior to 2006, whereby mesothelioma claims were paid out on an “exposure” basis irrespective of the policy wording.

“The judgment of the Supreme Court will bring comfort to mesothelioma victims and their families as they will now receive compensation. It also provides much needed consistency, certainty and clarity“.

News 27 Mar, 2012