Eagle Star Insurance Company Ltd. v J.N. Cresswell & Ors

Eagle Star Insurance Company Ltd. v J.N. Cresswell & Ors

Subparagraph (b) of the Claims Co-operation Clause does not constitute a condition precedent to the reinsurers' liability. The clause gives the reinsurers the right to take control of negotiations and settlement, but does not impose a positive obligation on the reinsured nor clearly state it is a condition precedent. The parties knew how to create a condition precedent and did not do so here. The follow the settlements clause remains operative unless the reinsurers exercise their right to control, in which case settlements outside their control are not binding. The overall structure of the policy makes commercial sense and does not support the reinsurers' construction.

Parties
Claimant: Eagle Star Insurance Company Limited; Defendant: J. N. Cresswell & Others
Jurisdiction
England and Wales
Judgment Date
10 October 2003
Procedural Posture
Commercial Insurance/reinsurance Dispute / Trial of Preliminary Issues
Outcome
Declaration that subparagraph (b) of the Claims Co-operation Clause is not a condition precedent to liability under the reinsurance policies.
Legal Topics
Claims Co Operation Clause, Condition Precedent, Follow the Settlements Clause, Policy Interpretation
Insurance Law Reinsurance Law Contract Law Claims Co Operation Clause Condition Precedent Follow the Settlements Clause Policy Interpretation

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Parties

Eagle Star Insurance Company Limited

Claimant

J. N. Cresswell & Others

Defendant

Procedural Posture

Commercial Insurance/reinsurance Dispute / Trial of Preliminary Issues

Legal Issues

  1. 1 Whether subparagraph (b) of the Claims Co-operation Clause constitutes a condition precedent to the reinsurers' liability
  2. 2 Proper construction of the Claims Co-operation Clause and its interaction with the follow the settlements clause
  3. 3 Entitlement to indemnity and recovery of legal costs under the reinsurance policies

Ratio Decidendi

Subparagraph (b) of the Claims Co-operation Clause does not constitute a condition precedent to the reinsurers' liability. The clause gives the reinsurers the right to take control of negotiations and settlement, but does not impose a positive obligation on the reinsured nor clearly state it is a condition precedent. The parties knew how to create a condition precedent and did not do so here. The follow the settlements clause remains operative unless the reinsurers exercise their right to control, in which case settlements outside their control are not binding. The overall structure of the policy makes commercial sense and does not support the reinsurers' construction.

Court Disposition

Declaration that subparagraph (b) of the Claims Co-operation Clause is not a condition precedent to liability under the reinsurance policies.