Colin Edelman QC succeeds in the Court of Appeal

Colin Edelman QC was recently successful in the Court of Appeal on behalf of respondents W.R. Berkley Insurance (Europe) Limited & Aspen Insurance UK Ltd. Colin was instructed by Clyde & Co. The case involves a dispute between Teal Assurance Company Ltd (a captive insurer) and its reinsurers, W.R. Berkley Insurance (Europe) Limited & Aspen Insurance UK Ltd, regarding the construction of insurance and reinsurance contracts providing 'top and drop' cover.

The appeal concerned the effect of a standard market clause for excess layer insurance which requires the liability of the underlying insures to have been discharged or established in full before the next layer will pay. Teal sought to argue that the effect of the clause was that it and the insured could choose the order in which losses fell to be presented to and paid by the insurance tower and thereby get round a territorial exclusion applicable to some of the losses which appeared only in the top layer reinsured by the respondent reinsurers.

The Court of Appeal dismissed the appeal by Teal, [2011] EWCA Civ 1570, holding that the judge at first instance had correctly determined that the clause on which Teal relied did not affect the order in which losses erode a tower of insurance contracts, which is to be determined by reference to when the insured’s liability was established and ascertained rather than when the insurer indemnified the insured. The Judgment may be accessed here.

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