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FCA business interruption test case – Consequential hearing

The key issues raised and the outcome of the parties’ applications for permission to appeal and for permission to ‘leap frog’ to the Supreme Court.

The FCA’s Business Interruption Test Case continued today (Friday 2 October) with the consequentials hearing heard (remotely) before Lord Justice Flaux and Mr Justice Butcher.

The parties main focus at the hearing was  to seek declarations from the court to give effect to the findings in the judgment.  Consideration was also given to the parties’ applications for permission to appeal to the Court of Appeal and for ‘leapfrog’ certificates for the parties to apply directly to the Supreme Court for permission to appeal.


It was clear from both written and oral submissions from all parties that a great deal of discussion had taken place prior to the hearing to attempt to narrow the issues and to agree a draft order which would accurately reflect the court’s findings in its judgment. The declarations will be recorded in full in the court’s final order which will be published on the FCA’s website once finalised.

The main areas of dispute between the parties were the proper analysis of the court’s findings on the application of trends clauses, and the correct wording for declarations as to evidence which could be used by policyholders to prove prevalence of Covid-19 in a relevant area.

The importance of the declarations was repeatedly emphasised during submissions with a recognition that they will be a key instrument for future use by the Financial Ombudsman Service and other adjudicators who will be tasked with applying the court’s judgment to deal with claims and complaints and to determine whether a policy covers business interruption losses resulting from the pandemic and the government’s response to reduce the spread of the virus.

Applications for permission to appeal and ‘leapfrog’ certificates

What is also now evident is that those declarations may well become subject to appeals to either the Court of Appeal or the Supreme Court. The FCA, the interveners, and six of the insurers successfully applied for ‘leapfrog’ certificates to proceed directly to the Supreme Court for permission to appeal with the court having no hesitation in deciding that the points of law for appeal were of sufficient and significant importance to do so. Alternatively, each of the applicants were also granted permission to appeal to the Court of Appeal. Applications were ultimately not pursued by Ecclesiastical or Zurich.

One of the twists and turns of the day was a late application by a non-named insurer, QIC Europe Limited to join the proceedings and a certificate to apply for permission to appeal to the Supreme Court. The application was made on the basis that one of the RSA lead policy wordings is widely used which could have implications for many insurers, including the applicant, and there was a concern that RSA would not run an appeal. The court was not minded to grant the application and expressed the view that any non-named insurers had the opportunity to intervene in June, or to request to be a named insurer, and should have sought to intervene at that time. The court was not convinced that there had been a change of circumstances and considered that it should have been recognised that there was always a possibility that the parties to proceedings would come to an agreement or settlement before or after judgment was handed down. However, it is open to non-parties to apply to the Supreme Court for permission to intervene.

Next steps

The declarations will be confirmed by the way of a court order, which will be published on the FCA’s website. The parties will now seek to finalise their grounds of appeal and will need to seek permission from the Supreme Court. We wait with interest to see which grounds are ultimately run by the parties, given the broad arguments included across the applications.

We will provide a further update in respect of the declarations and any grounds of appeal pursued as matters progress. It is fair to say that tonight, a lot remains uncertain and no doubt insurers and policyholders alike will welcome further clarification on these issues in the coming days.

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