Covid-19 BI Update: Access Granted To Corbin & King And Deduction Of Furlough From Claims

• Published date: 09 June 2022
• Subject Matter: Litigation, Mediation & Arbitration, Coronavirus (COVID-19), Arbitration & Dispute Resolution, Government Measures, Insurance Claims
• Law Firm: Fenchurch Law
• Author: Mr Aaron Le Marquer

". the decision of the Supreme Court has moved the goalposts and the argument which has emerged is materially different."

Mrs Justice Cockerill, Corbin & King v Axa [2022] EWHC 409 (Comm)

Two further policyholder-friendly judgments last week continued the trend of extending the scope of coverage available for COVID-19 BI losses under non-damage extensions. This time the focus falls on (i) prevention of access wordings; (ii) aggregation of losses at multiple premises; and (iii) deduction of furlough and other government support payments.

1. Prevention of Access - Access Granted!

In our September 2021 Update ''Denial of Access - Access Granted", we set out Lord Mance's reasoning in the China Taiping Arbitration, noting that it set out a clear pathway to coverage for policyholders with Prevention of Access and similar wordings, whose claims had been declined following the Divisional Court judgment in the FCA test case.

In a judgment handed down on Friday in Corbin & King v Axa, Mrs Justice Cockerill endorsed that approach and signalled a wholesale reversal of the coverage position under such wordings.

Recap

The FCA test case examined coverage under a number of non-damage Prevention of Access or Denial of Access clauses. At first instance, the Divisional Court found that the majority of such clauses provided a "narrow, localised form of cover" which did not respond to the broader circumstances of the pandemic. The basis for this conclusion was encapsulated at paragraph 467 of the Divisional Court judgment (repeated in similar terms elsewhere in relation to different wordings):

"There could only be cover under this wording if the insured could also demonstrate that it was an emergency by reason of COVID-19 in the vicinity, in that sense of the neighbourhood, of the insured premises, as opposed to the country as a whole, which led to the actions or advice of the government. [.] it is highly unlikely that that could be demonstrated in any particular case[3]."

Many policyholders were disappointed at the FCA's decision not to appeal that aspect of the Divisional Court judgment, and have subsequently argued that the Supreme Court's ultimate conclusions on causation rendered the Divisional Court's ruling an unsound authority for declining coverage under such clauses.

The China Taiping Arbitration

The point was subsequently argued on behalf of policyholders in the China Taiping Arbitration, decided by Lord Mance in a published award. Although the China Taiping policyholders' claim ultimately fell...