{"id":90,"date":"2016-11-01T00:00:00","date_gmt":"2016-11-01T00:00:00","guid":{"rendered":"https:\/\/fenchurchlaw.hostingsystems.co.uk\/sg\/blog\/2016\/11\/01\/one-event-or-two-what-is-the-proper-construction-of-the-phrase-arising-from-one-event-within-the-aggregation-clause-in-a-reinsurance-contract\/"},"modified":"2024-08-21T17:02:15","modified_gmt":"2024-08-21T16:02:15","slug":"one-event-or-two-what-is-the-proper-construction-of-the-phrase-arising-from-one-event-within-the-aggregation-clause-in-a-reinsurance-contract","status":"publish","type":"post","link":"https:\/\/fenchurchlaw.com\/en-sg\/one-event-or-two-what-is-the-proper-construction-of-the-phrase-arising-from-one-event-within-the-aggregation-clause-in-a-reinsurance-contract\/","title":{"rendered":"\u201cOne event or two?\u201d What is the proper construction of the phrase \u201carising from one event\u201d within the aggregation clause in a reinsurance contract?"},"content":{"rendered":"

Re MIC Simmonds v. AJ Gammell<\/em><\/p>\n

The commercial court upheld an arbitration award and concluded that the arbitrators had correctly applied the test for the interpretation of an aggregation clause. The arbitrators had to decide what was the proper construction of the phrase \u201carising from one event\u201d within the aggregation clause in a reinsurance contract.<\/p>\n

The facts<\/strong>
\nThe dispute centred around on whether or not claims made against the Port of New York (PONY) following the attacks on the World Trade Centre (WTC) were to be aggregated as liabilities arising from that event. The allegation was that PONY had failed to provide adequate protective equipment to around 10,000 rescue workers in the course of the clean-up operation causing respiratory conditions. The claims were settled and a claim was made on the excess of loss reinsurance programme.<\/p>\n

The dispute<\/strong>
\nThe arbitrators found that reinsurers were liable to indemnify the loss as the policy provided for cover for \u201closs, damage, liability or expense or a series thereof arising from one event\u201d. As all claims could be aggregated together as losses or liabilities arising from one event, namely the attacks on the WTC which caused the destruction of the twin towers. The appellants argued that it did not. The argument was this: where the insured\u2019s liability arises as a result of a continuing state of affairs, was this to be treated as a single event of negligence or does the relevant event only arise when the harm giving rise to the insured\u2019s liability occurs? The appellants argued:<\/p>\n

    \n
  1. The failure to provide adequate protective equipment did not constitute one event, in other words, the attack on the WTC which was disassociated form the negligence which gave rise to the underlying claims could not be a single event for the purposes of the aggregation clause.<\/li>\n
  2. The respiratory claims arose from a continuing failure and there were therefore many events.<\/li>\n
  3. The attacks on the WTC were too remote to constitute an event.<\/li>\n<\/ol>\n

     <\/p>\n

    Judgment<\/strong>
    \nThe court reviewed the relevant authorities and affirmed:<\/p>\n

    There are three requirements for a \u201crelevant event\u201d when considering a \u201cseries of losses and \/ or occurrences arising out of one event\u201d for the purposes of aggregation, namely that:<\/p>\n

      \n
    1. there is a common factor which could properly be described as an event;<\/li>\n
    2. the event satisfies the test of causation;<\/li>\n
    3. it is not too remote.<\/li>\n<\/ol>\n

       <\/p>\n

      The court agreed with the arbitrators that:<\/p>\n