Scott v Copenhagen Reinsurance Company (UK) Ltd [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Langley J,Schiemann,Rix,Keene L JJ |
| Judgment Date | 16 May 2003 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 16 May 2003 |
Queen's Bench Division (Commercial Court)
Court of Appeal (Civil Division).
Langley J; Schiemann, Rix and Keene L JJ.
Stewart Boyd QC, Colin Wynter and Shaen Catherwood (instructed by CMS Cameron McKenna) for the appellant.
Dominic Kendrick QC, Adam Fenton and Caroline Laband (instructed by Holman, Fenwick & Willan) for the respondent.
The following cases were referred to in the judgments:
Assicurazioni Generali SpA v Arab Insurance Group[2003] 2 CLC 242.
Axa Reinsurance (UK) plc v Field[1996] CLC 1169; [1996] 1 WLR 1026.
Caudle v Sharp[1994] CLC 216; [1995] CLC 642 (CA).
Cory (John) & Sons v BurrELR(1883) 8 App Cas 393.
Empress Car Co (Abertillery) Ltd v National Rivers AuthorityELR[1999] 2 AC 22.
Fooks v SmithELR[1924] 2 KB 508.
Holmes v PayneELR[1930] 2 KB 301.
Integrated Container Service Inc v British Traders Insurance Co LtdUNK[1984] 1 Ll Rep 154.
Knight v FaithENR(1850) 15 QB 649; 117 ER 605.
Kuwait Airways Corp v Kuwait Insurance Co SAKUNK[1996] 1 Ll Rep 664 (Rix J); [1999] CLC 934 (HL).
Mann v Lexington Insurance Co[2000] CLC 1409.
Moore v EvansELR[1917] 1 KB 458 (CA); [1918] AC 185 (HL).
Panamanian Oriental Steamship Corporation v Wright (The Anita)UNK[1970] 2 Ll Rep 365; [1971] 1 WLR 882 (CA).
Polurrian Steamship Co Ltd v YoungELR[1915] 1 KB 922.
Royal Boskalis Westminster NV v Mountain[1997] LRLR 523.
Webster v General Accident Fire and Life Assurance Corporation LtdELR[1953] 1 QB 520.
Insurance Reinsurance Losses arising from one event Iraqi invasion of Kuwait Seizure of Kuwaiti aircraft and spares at international airport Subsequent destruction of BA aircraft stranded at airport Whether loss of BA aircraft arose out of same event as loss of Kuwaiti aircraft.
This was an appeal from a decision of Langley J that the loss of aircraft and spares seized when Iraq invaded Kuwait on 2 August 1990 and captured Kuwait International Airport were losses arising from one event but that the subsequent loss of a single BA aircraft destroyed by coalition bombing did not arise out of the same event.
On 2 August 1990 Iraq invaded Kuwait. By mid-morning Iraq's forces were in complete control of Kuwait International Airport and all the aircraft on the ground there. Kuwait's civil air fleet was owned by Kuwait Airways Corporation (KAC). It had 15 aircraft at the airport, and these and the fleet's spares were a prime target of Iraq's premeditated policy of plunder. Also at the airport was a British Airways (BA) Boeing 747 (and a few other foreign aircraft). The presence of the BA Boeing was unscheduled: it was in transit, and its late arrival meant that its departure failed by a mere half-hour or so to leave before the closure of the airport which the invasion occasioned. The KAC aircraft and spares were flown to Iraq as soon as the logistics of that operation allowed and in due course incorporated into the Iraqi fleet. The BA aircraft remained at Kuwait. It was still there on the outbreak of war between Iraq and the coalition forces (Operation Desert Storm) on 16 January 1991. It was destroyed by allied bombing by, on or around 27 February 1991.
The claimant syndicates covered directly or indirectly the insurers/reinsurers of KAC's primary insurance and reinsurance as well as BA's insurance contracts. The syndicates obtained whole account excess of loss reinsurance from a number of reinsurers represented by the defendant. The contract of reinsurance was contained in a slip policy incorporating the joint excess loss committee (JELC) clauses 1.1.90. The reinsurance covered losses occurring during 12 months at 1 April 1990 and the aggregation provisions defined loss as all those losses arising from one event. Langley J held that the KAC aircraft and spares had all been lost on 2 August 1990 and that those were all losses arising from one event, namely Iraq's invasion of Kuwait and capture of the airport. The judge also held that the loss of the BA aircraft did not arise out of the same event. He did not define that event save possibly by reference to the cause of its loss, which he said was the actual destruction of the aircraft or the war or perhaps the inevitability of war (para 73). The syndicates appealed arguing that the loss of the BA aircraft was to be aggregated with the losses of the KAC aircraft and spares since they did arise from one event. The syndicates did not submit, as they had before the judge, that the BA aircraft became an actual total loss immediately on 2 August 1990 in exactly the same way as the KAC aircraft and spares were then lost to Iraq's policy of plunder. Their appeal was based on their so-called alternative case, which was that even though a total loss of the BA aircraft could not be established until after a reasonable wait and see period, once proved it related back to the original event of the invasion and capture of the airport and was properly to be adjudged as having also arisen from the same one event as the KAC fleet losses.
Held, dismissing the appeal:
1. The underlying concept of aggregation was that of a single unifying event. It followed that if the only suggested unifying factor was something which could not properly be called an event, then aggregation could not occur. It also followed that if a discrete factor was suggested (as in this case the inevitability of war was posed as a possible candidate) which could not properly be called an event, then that might suggest that some other factor should be looked for as the event out of which the relevant loss arose for the purpose of testing whether or not it arose out of the same event as other losses.
2. The causative link inherent in the words arising from, when coupled with the expression one event, should be regarded as a relatively strong and significant link. A plurality of losses was to be regarded as a single aggregated loss if they could be sufficiently linked to a single unifying event by being causally connected with it. The aggregating function of such a clause was antagonistic to a weak or loose causal relationship between losses and the required unifying single event.
3. It could not be said that the loss of the BA aircraft arose from the same event as the loss of the KAC fleet, so as to require the aggregation of those losses, when their respective losses arose in different circumstances and at different times and for different reasons, as explained in the detailed findings of the trial judge.
4. The judge did not in terms state what the event was from which the loss of the BA aircraft arose, only that it did not arise from the same event as the loss of the KAC fleet. That was the question which he had to decide, for the purpose of the aggregation clause. He did not have to decide from what other event the loss of the BA aircraft arose: and it did not inevitably have to arise from any event as distinct from some cause. The absence of a clear and reasoned finding as to what that other event was, and as to its causal relevance to loss, did not mean that the inference should be drawn that the loss arose from the same event that had caused the original deprivation of possession.
5. The date of the aircraft's loss did not relate back to the date of BA's first deprivation of possession on 2 August 1990 (although the unity of date of loss was not by itself decisive). If the aircraft was lost by destruction, it was lost between 13 and 26 February 1991. If on the other hand the aircraft was lost by reason of deprivation of possession, then on the facts it was not so lost until 1991 at the earliest. (Moore v EvansELR[1917] 1 KB 458 (CA); [1918] AC 185 (HL)considered.)
6. It was appropriate to use the test of the unities of time, place, cause and intent when searching for the single unifying event. In the present case there was unity of place only. There was no unity of time, only an identical starting point for enquiry. There was no unity of purpose or intent or of cause.
(11 July 2002)
Langley J:
1. These proceedings are a further round in the insurance disputes arising out of the Iraqi invasion and capture of Kuwait International Airport in 1990. To quote the opening statement of the Defendant:
Very considerable monies and claims are currently locked in the system in the London XL market relating to the loss of Kuwaiti aircraft (and spares) and one BA aircraft, while issues of aggregation remain unresolved. There have been various attempts at market resolution to avoid any need for litigation, but these have not borne fruit. In consequence a friendly action has been commenced to resolve the issues for the XL market. The named defendant, Copenhagen Re, has itself only modest sums at stake in the dispute, but has agreed to act as named defendant to represent the XL retrocessionaires market. In fact, of course, many individual companies will have interests on both sides of the fence, as retrocedents and also as retrocessionaires under different XL contracts, and where their best interests lie is not always clear
2. Aggregation is indeed a concept which while it may assist a reinsured to pierce the limits of an XL layer may also operate so as to exhaust a layer and so damage his interests.
3. When Iraq captured the airport on August 2, 1990 15 aircraft owned by Kuwait Airways Corporation (KAC) and a Boeing 747 owned by British Airways (BA) were on the ground at the airport. There was also a considerable quantity (exceeding US $150 million in value) of aircraft spares belonging to KAC in various buildings at or within the perimeters of the airport. The aggregation issues relate to these aircraft and spares. The Claimant says they are all to be aggregated as one loss, arising from one event, in effect the invasion and capture of the airport. The Defendant says the loss of each aircraft arose from a separate event and...
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