ARC Capital Partners Limited v Brit UW Limited & Anr.

Gavin Kealey QC
Charles Holroyd

ARC Capital Partners Limited v Brit UW Limited & Anr. [2016] EWHC 141 (Comm)

Gavin Kealey QC and Charles Holroyd have succeeded in establishing the right of a private equity fund manager (“the Manager”) to be indemnified by its Second Excess layer professional indemnity insurers in a case before the Commercial Court.

The insurers had relied, first, on a Retroactive Date Clause which provided that there was no indemnity for “any claim and or claims arising from or in any way involving any act, error or omission committed or alleged to have been committed prior to 5th June 2009”. Mr Justice Cooke held that the “acts” referred to in this clause were acts within the definition of “Wrongful Act” as referred to in the principal insuring clause, and that the words “in any way involving” meant “indirectly caused by” (rather than the wider meaning contended for by insurers). On this basis, the insurers’ case failed on the facts.

The second issue concerned when a claim had first been made against the Manager, under a clause which defined a claim as a “written demand for monetary damages or non-pecuniary relief”. The Court held that under this definition, a claim had not been made by virtue of a letter which asserted that a third party had a “strong claim” but did not make an actual demand for payment.

The final issue concerned the relationship between a “continuity of cover” clause (Clause 5j), intended to provide cover in respect of claims which should have been notified under earlier policy years, and a clause imposing a condition precedent that claims be notified as soon as reasonably practical (Clause 14). The Court robustly held that the notification requirement did not apply to the cover under the continuity of cover clause. This appears to be the first case in which the interrelationship of these types of clauses has been considered.

The Manager was therefore successful on all three issues. The case was also notable for the speed with which it was conducted and concluded. The action was begun by the Manager on 23 December 2015 by the issue of a Part 8 claim form, and expedited by order of Knowles J. The final hearing took place on 25 January 2016 and judgment was handed down on 29 January 2016 – please click here to view.

Date added: January 29th, 2016


Area of Expertise

Commercial Litigation
Insurance & Reinsurance