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Gavin Kealey QC quoted in The Financial Times and by Law 360 in the FCA “Business Interruption” Supreme Court Appeal

23rd Nov 2020

Gavin Kealey QC has been quoted in The Financial Times and by Law 360 while acting for insurers in the Financial Conduct Authority (Appellant) v. Arch Insurance (UK) Ltd. and others (Respondents), case number UKSC 2020/0177 appeal that was heard in The Supreme Court from 16th November 2020 for four days.

Mathew Vincent of The Financial Times reported “”Gavin Kealey, QC, representing MS Amlin, told the court that policies were only designed to cover cases of contagious diseases within a specific geographic radius, and wider causes of loss were not relevant. “My illness is not your illness, my pathogen is not your pathogen. Distinctions are required to be drawn . . . that dispatches the FCA argument of indivisibility. [The idea] that there is one indivisible cause of business interruption losses and . . . cases beyond a25-mile radius are somehow harvested does not work as a matter of logic,” Mr Kealey said. He said losses may have been caused by wider national government responses, but these were not covered. Mr Kealey also argued that how much a business had lost could only be worked out by assuming the “insured peril” in the policy had not occurred. If that insured peril was defined merely as disease within a small radius, then claims would have to be reduced by a wider trend of falling revenues, owing to national lockdown. He cited the precedent of Orient Express Hotel in New Orleans, which had its claim limited by a judgment in 2010 to property damage caused by two hurricanes not to wider losses from the resulting disruption to tourism. The ruling in that case was determined by two of the judges hearing the appeal. “Some disease outside [the policy radius] is an irrelevance,” he told them.””

Law 360 focused on Mr. Kealey’s submission that the main issue on appeal, the application of the Orient-Express Hotels Ltd. v. Assicurazioni Generali SpA 2010 Commercial Court judgment which deals with the “but for” legal test, required more time to examine than allowed for in this appeal.  “There could hardly be a more dangerous invitation for the highest court of the land in an expedited hearing … to go off and discard the ‘but for’ test in a proximate cause insurance case,” said Gavin Kealey QC, counsel for MS Amlin. “If your lordships had really wanted to do that, you should have given me two more days of legal argument.”

Lord Justice Reed promised an early decision, although he would not commit to their Lordships producing a judgment this side of the New Year.

MS Amlin are represented by Gavin Kealey QC, Andrew Wales QC, Sushma Ananda and Henry Moore, all of 7KBW, instructed by DAC Beachcroft.

The full Financial Times article can be read here, and the Law 360 article read here.