{"id":109,"date":"2017-08-21T00:00:00","date_gmt":"2017-08-20T23:00:00","guid":{"rendered":"https:\/\/fenchurchlaw.hostingsystems.co.uk\/uk\/blog\/2017\/08\/21\/bae-systems-pension-funds-v-rsa\/"},"modified":"2024-08-21T17:02:13","modified_gmt":"2024-08-21T16:02:13","slug":"bae-systems-pension-funds-v-rsa","status":"publish","type":"post","link":"https:\/\/fenchurchlaw.com\/en-uk\/bae-systems-pension-funds-v-rsa\/","title":{"rendered":"BAE Systems Pension Funds \u2013 v \u2013 RSA"},"content":{"rendered":"

Third Parties (Rights against Insurers) Act 2010<\/u><\/strong><\/p>\n

An analysis of the first judgment on the Third Parties (Rights against Insurers) Act 2010 (\u2018the Act\u2019)<\/strong><\/p>\n

BAE Systems Pension Funds Trustees Limited (\u2018the Claimant\u2019) brought proceedings against 4 Defendants following the construction of a large warehouse. The damages sought exceeded \u00a310 million.<\/p>\n

Protective proceedings were issued against the Defendants on 24 August 2016. In February 2017, the third Defendant, Twintec Limited (\u2018Twintec\u2019), went into administration, and a few weeks later Twintec\u2019s solicitors revealed that it was insured by RSA. The Claimant accordingly applied to join RSA to the claim.<\/p>\n

RSA resisted the application on the grounds that:<\/p>\n

    \n
  1. They were not in fact liable to indemnify Twintec for the claim;<\/li>\n
  2. The policy and any dispute as to coverage was subject to French law and must be determined by arbitration or by the French courts.<\/li>\n<\/ol>\n

     <\/p>\n

    The First Ground<\/u><\/p>\n

    It was uncontroversial that Twintec had become a \u2018relevant person\u2019 under section 1 of the Act i.e. it had incurred a liability to the Claimant, and had become insolvent in one of the ways specified by the Act.<\/p>\n

    Section 2 entitled the Claimant to bring proceedings directly against RSA seeking a declaration as to Twintec\u2019s liability and\/or a declaration as to RSA\u2019s potential liability to the Claimant.<\/p>\n

    RSA argued, somewhat ambitiously, that Twintec was not entitled to indemnity because of an exclusion for pre-existing circumstances, and, if there was thus no cover, section 2 was not engaged.<\/p>\n

    The Judge, Mrs Justice O\u2019Farrell DBE, found that Section 2 was engaged even where there was a dispute as to coverage. This did not require the Claimant to establish that there was a relevant insurance policy which necessarily responded to the loss \u2013 all that was needed was for the Claimant to make a claim<\/em> that there was such a policy.<\/p>\n

    RSA argued that a number of difficulties could arise if Section 2 was engaged where cover was disputed. In particular, they suggested that this could pave the way for any<\/em> insurer to be joined to an action, or possibly an insurer who had provided cover for a previous irrelevant period. The Judge gave short shift to this point, and stated that the Court, in these circumstances, could simply strike out those proceedings as having no prospect of success. The Judge\u2019s decision was obviously right. Were it otherwise, the 2010 Act would not avail a Claimant where an insurer had denied indemnity.<\/p>\n

    RSA also suggested that there was an irreconcilable conceptual difficulty insofar as they would be faced with defending a claim for a declaration, when, in their view, the Claimant did not have the right to step into Twintec\u2019s shoes. Again the Judge was unpersuaded, and found that it was entirely a matter for RSA as to the submissions they wished to make in response to the Claimant\u2019s claim (and whether they wished to take any substantive part in the proceedings at all).<\/p>\n

    The Second Ground<\/u><\/p>\n

    The policy contained two dispute resolution clauses. The first clause provided for any dispute between the parties to be referred to the French courts and \u201cshall be subject exclusively to French legislation\u201d.<\/p>\n

    The second clause provided that, in the event of a dispute regarding the activation of cover, the parties agreed to refer their disputes to two arbitrators chosen by each party.<\/p>\n

    The claimant argued that the coverage dispute was caught by neither of the clauses. RSA, by contrast, argued that the coverage dispute was caught by both<\/em> clauses.<\/p>\n

    The Judge was satisfied that the coverage dispute would be covered by one or other of the clauses i.e. it should be decided by either the French courts, or by arbitration. It did not, however, affect her finding as to whether section 2 was engaged.<\/p>\n

    The Result<\/u><\/p>\n

    The Judge granted the Claimant\u2019s application to join RSA to the Claim, and, somewhat predictably, made it clear that in order to engage section 2 of the Act, a Claimant need not establish, as a pre-condition, that there is valid coverage. Were it otherwise the case, insurers would have carte blanche to reject any claims made against insolvent insureds.<\/p>\n

    Alexander Rosenfield<\/a> is an associate at Fenchurch Law<\/p>\n","protected":false},"excerpt":{"rendered":"

    Third Parties (Rights against Insurers) Act 2010 An analysis of the first judgment on the Third Parties (Rights against Insurers) […]<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3,12],"tags":[189,4,120,152,183,184,185,186,187,188],"class_list":["post-109","post","type-post","status-publish","format-standard","hentry","category-news","category-case-law","tag-twintec","tag-fenchurch-law","tag-rsa","tag-alexander-rosenfield","tag-rights-against-insurers","tag-184","tag-bae-systems","tag-claimant","tag-mrs-justice-ofarrell-dbe","tag-third-parties"],"acf":[],"yoast_head":"\nBAE Systems Pension Funds \u2013 v \u2013 RSA - Fenchurch Law UK<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fenchurchlaw.com\/en-uk\/bae-systems-pension-funds-v-rsa\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BAE Systems Pension Funds \u2013 v \u2013 RSA - 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