AIG Europe (Ireland) Ltd v Faraday Capital Ltd [2007] EWCA Civ 1208 (22 November 2007)

AIG Europe (Ireland) Ltd v Faraday Capital Ltd [2007] EWCA Civ 1208 (22 November 2007)

AIG had knowledge of a loss which might give rise to a claim when notified by Smartforce of the claims following the share price drop after the announcement of restatement of accounts. The notification to reinsurers was required within 30 days of that knowledge, not after settlement. AIG's delayed notification breached the Claims Co-operation Clause, entitling Faraday to judgment.

Citation
[2007] EWCA Civ 1208
Parties
Respondent/claimant: AIG Europe (Ireland) Limited; Appellant/defendant: Faraday Capital Limited
Jurisdiction
England and Wales
Judgment Date
22 November 2007
Procedural Posture
Appeal / Court of Appeal (civil Division) on Appeal From High Court, Commercial Court
Outcome
Appeal allowed. Judgment for the appellant (Faraday Capital Limited).
Legal Topics
Claims Co Operation Clause, Notification of Loss, Directors and Officers Liability Insurance, Reinsurance Notification Requirements
Insurance Law Reinsurance Law Commercial Law Claims Co Operation Clause Notification of Loss Directors and Officers Liability Insurance Reinsurance Notification Requirements

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Parties

AIG Europe (Ireland) Limited

Respondent/claimant

Faraday Capital Limited

Appellant/defendant

Procedural Posture

Appeal / Court of Appeal (civil Division) on Appeal From High Court, Commercial Court

Legal Issues

  1. 1 When does 'knowledge of a loss' arise under a Claims Co-operation Clause in a liability reinsurance policy?
  2. 2 Does 'loss' in the clause require actual loss or can it include alleged loss?
  3. 3 Is notification to reinsurers triggered by knowledge of a loss that may give rise to a claim or only after liability is established?

Ratio Decidendi

AIG had knowledge of a loss which might give rise to a claim when notified by Smartforce of the claims following the share price drop after the announcement of restatement of accounts. The notification to reinsurers was required within 30 days of that knowledge, not after settlement. AIG's delayed notification breached the Claims Co-operation Clause, entitling Faraday to judgment.

Court Disposition

Appeal allowed. Judgment for the appellant (Faraday Capital Limited).

Orders

  • Judgment entered for Faraday Capital Limited.