1. Introduction

The appellate case of London International Exhibition Centre PLC v Allianz Insurance PLC & Ors ([2024] EWCA Civ 1026) addresses critical issues surrounding business interruption (BI) insurance losses caused by the COVID-19 pandemic. This case emerges from preliminary determinations made by Mr. Justice Jacobs concerning six expedited test cases involving different policyholders whose premises were subject to closure due to COVID-19-related government action. Central to these appeals are questions of causation within 'at the premises' insurance clauses, distinguishing them from the 'radius' clauses analyzed in the Supreme Court's decision in Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1.

The policyholders, ranging from large entities like the ExCeL Centre to small businesses such as restaurants and nightclubs, seek indemnity for BI losses due to premises closures mandated by governmental authorities in response to COVID-19 outbreaks occurring directly at their locations.

2. Summary of the Judgment

The Court of Appeal upheld Mr. Justice Jacobs' decision that under 'at the premises' clauses, the necessary causal link between the occurrence of COVID-19 at the insured premises and the BI losses due to government-mandated closures is satisfied through a concurrent causation analysis. This approach aligns with the Supreme Court's reasoning in FCA v Arch Insurance, emphasizing that individual cases of disease within a policy scope (such as radius or at-premises) are sufficient, when combined with widespread occurrences, to justify business interruptions without requiring each instance to be a distinct cause.

Additionally, the court addressed specific policy wording issues, notably the interpretation of "Medical Officer of Health" and the coverage for notifiable diseases, ultimately dismissing all appeals and cross-appeals, thereby reinforcing the insurer's liability under the established concurrent causation framework.

3. Analysis

3.1 Precedents Cited

The judgment heavily references the Supreme Court's decision in FCA v Arch Insurance (UK) Ltd [2021] UKSC 1, which clarified the interpretation of 'radius' clauses in BI insurance policies. The Supreme Court established that in cases where numerous concurrent occurrences (e.g., thousands of COVID-19 cases) contribute to governmental actions affecting business operations, it is sufficient to establish indemnity without isolating individual causes. This precedent was pivotal in applying a similar reasoning to the 'at the premises' clauses in the current case.

Other notable references include R (Finch on behalf of the Weald Action Group) v Surrey County Council [2024] UKSC 20 and Financial Conduct Authority v Arch Insurance, which collectively underpin the court's approach to causation beyond the traditional 'but for' test.

3.2 Legal Reasoning

The court's legal reasoning centers on the principle that BI insurance policies must be interpreted based on the parties' intended commercial outcomes rather than rigid causal analyses. The 'at the premises' clauses, much like 'radius' clauses, should be understood to cover losses resulting from widespread governmental responses to contagious diseases, even when individual disease occurrences at specific premises are part of a broader epidemic context.

Mr. Justice Jacobs applied the Supreme Court's concurrent causation approach, determining that governmental actions (e.g., lockdowns) responding to global or national outbreaks include responses to individual premises without necessitating explicit causation by each separate occurrence. This interpretation aligns with the policies' commercial intent to provide clear and uncomplicated indemnity pathways for policyholders during widespread crises.

3.3 Impact

The decision significantly impacts how BI insurance claims related to pandemics are assessed, particularly reinforcing that 'at the premises' clauses provide adequate coverage for losses arising from governmental restrictions linked to disease outbreaks directly occurring at insured locations. This may lead to broader interpretations of BI insurance coverage in future cases involving mass health emergencies, potentially providing greater security to businesses against pandemic-induced operational disruptions.

Furthermore, the affirmation of concurrent causation over the 'but for' test in such contexts could simplify claim processes and reduce litigation complexity by focusing on the collective impact of disease occurrences rather than the burden of proving individual causative links.

4. Complex Concepts Simplified

4.1 Concurrent Causation

Concurrent causation refers to instances where multiple independent events or factors contribute to a single outcome. In the context of BI insurance, it means that a business interruption can be covered even if multiple COVID-19 cases across various premises collectively influence governmental decisions to impose business restrictions.

4.2 'But For' Test

The 'but for' test of causation requires that the loss would not have occurred "but for" the insured event. However, in cases of widespread concurrent causes, this test becomes impractical and overly burdensome, as it is nearly impossible to isolate and prove the indispensability of each individual cause.

4.3 'At the Premises' vs. 'Radius' Clauses

'At the premises' clauses provide insurance coverage based on events occurring directly at the insured location, while 'radius' clauses extend coverage to occurrences within a specified distance surrounding the premises. Both types of clauses seek to protect against BI due to local disease outbreaks, but the legal interpretations of causation differ slightly based on their geographical scope.

5. Conclusion

The Court of Appeal's decision in London International Exhibition Centre PLC v Allianz Insurance PLC & Ors reinforces the viability and fairness of concurrent causation in interpreting BI insurance within the unique landscape of a global pandemic. By aligning 'at the premises' clauses with the concurrent causation framework established for 'radius' clauses, the court ensures that policyholders receive justified indemnity without the prohibitive complexities of proving individual causative events. This judgment not only upholds the commercial intent of insurance contracts but also sets a clear precedent for handling future BI claims arising from widespread health emergencies.