Eagle Star Insurance Company Ltd. v Cresswell & Ors [2004] EWCA Civ 602 (14 May 2004)

Eagle Star Insurance Company Ltd. v Cresswell & Ors [2004] EWCA Civ 602 (14 May 2004)

The Claims Co-operation Clause (in fact a claims control clause) allocated to reinsurers the right to control negotiations and settlement of claims. The clause's language—'will not be liable to pay any claim not controlled as set out above'—is clear and operates as a condition precedent to liability. As reinsurers did not control the negotiation or settlement of the Varian claim, and absent waiver or estoppel, they are not liable to indemnify Eagle Star. The 'follow the settlements' clause does not override this requirement, as the typed clauses prevail and specifically require reinsurers' control or consent for liability to arise.

Citation
[2004] EWCA Civ 602
Parties
Claimant/respondent: Eagle Star Insurance Company Limited; Defendants/appellants: J N Cresswell & Others
Jurisdiction
England and Wales
Judgment Date
14 May 2004
Procedural Posture
Appeal From Queen's Bench Division (commercial Court) / Appeal – Judgment on Preliminary Issues
Outcome
Appeal allowed
Legal Topics
Claims Co Operation Clauses, Claims Control Clauses, Follow the Settlements Clauses, Condition Precedent, Policy Construction
Insurance Law Reinsurance Law Contract Law Claims Co Operation Clauses Claims Control Clauses Follow the Settlements Clauses Condition Precedent Policy Construction

Case Brief

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Parties

Eagle Star Insurance Company Limited

Claimant/respondent

J N Cresswell & Others

Defendants/appellants

Procedural Posture

Appeal From Queen's Bench Division (commercial Court) / Appeal – Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether compliance with sub-paragraph (b) of the Claims Co-operation Clause is a condition precedent to liability under the reinsurance policy
  2. 2 Whether reinsurers are bound to indemnify the claimant under the 'follow the settlements' clause despite breach of the Claims Co-operation Clause

Ratio Decidendi

The Claims Co-operation Clause (in fact a claims control clause) allocated to reinsurers the right to control negotiations and settlement of claims. The clause's language—'will not be liable to pay any claim not controlled as set out above'—is clear and operates as a condition precedent to liability. As reinsurers did not control the negotiation or settlement of the Varian claim, and absent waiver or estoppel, they are not liable to indemnify Eagle Star. The 'follow the settlements' clause does not override this requirement, as the typed clauses prevail and specifically require reinsurers' control or consent for liability to arise.

Court Disposition

Appeal allowed

Orders

  • Preliminary issue 3 answered: Unless some reason is shown for excusing the agreed fact that reinsurers did not control the negotiations or settlement, sub-paragraph (b) amounts to an exclusion of liability to indemnify Eagle Star.
  • Preliminary issue 4 answered: Reinsurers are not bound to follow the Varian settlement, as they did not consent to it and did not control its negotiation or agreement.