AIG Europe (Ireland) Ltd v Faraday Capital Ltd

AIG Europe (Ireland) Ltd v Faraday Capital Ltd

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

Parties
Respondent/claimant: AIG Europe (Ireland) Limited; Appellant/defendant: Faraday Capital Limited
Jurisdiction
England and Wales
Judgment Date
22 November 2007
Procedural Posture
Civil Appeal (reinsurance/insurance) / Appeal From High Court Judgment
Outcome
Appeal allowed. Judgment for the appellant (Faraday).
Legal Topics
Claims Co Operation Clause, Notification of Loss, Directors and Officers Liability, Interpretation of Insurance Contracts
Insurance Law Reinsurance Law Contract Law Claims Co Operation Clause Notification of Loss Directors and Officers Liability Interpretation of Insurance Contracts

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Parties

AIG Europe (Ireland) Limited

Respondent/claimant

Faraday Capital Limited

Appellant/defendant

Procedural Posture

Civil Appeal (reinsurance/insurance) / Appeal From High Court Judgment

Legal Issues

  1. 1 When does 'knowledge of loss' arise under a Claims Co-operation Clause in liability reinsurance?
  2. 2 Does 'loss' in the clause require actual loss or can it include alleged loss?
  3. 3 Is notification to reinsurers triggered by the insured's notification to the insurer or only upon settlement/admission of liability?

Ratio Decidendi

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

Court Disposition

Appeal allowed. Judgment for the appellant (Faraday).

Orders

  • Judgment entered for Faraday Capital Limited.