Analog Devices BV & Ors v Zurich Insurance Company & Anor [2005] IESC 12 (16 March 2005)

Analog Devices BV & Ors v Zurich Insurance Company & Anor [2005] IESC 12 (16 March 2005)

Maintenance errors are not covered by 'faulty workmanship' or 'error in processing/manufacturing' exclusions; pollution/contamination exclusions apply only to environmental damage, not internal business incidents. Ambiguities in exclusion clauses are resolved against the insurer. The insurers failed to clearly exclude liability for maintenance errors, so the losses are covered by the policies.

Citation
[2005] IESC 12
Parties
Plaintiffs/respondents: Analog Devices B.V., Analog Devices Ireland Ltd., Analog Devices Research and Development Ltd., Analog Devices Inc.; Defendants/appellants: Zurich Insurance Company, American Guarantee and Liability Insurance Company
Jurisdiction
Ireland
Judgment Date
16 March 2005
Procedural Posture
Insurance Contract Dispute / Appeal From High Court to Supreme Court
Outcome
appeal dismissed; High Court order affirmed
Legal Topics
Interpretation of Insurance Policies, Exclusion Clauses, Contra Proferentem, Pollution Exclusion, Faulty Workmanship Exclusion
Insurance Law Contract Law Interpretation of Insurance Policies Exclusion Clauses Contra Proferentem Pollution Exclusion Faulty Workmanship Exclusion

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Parties

Analog Devices B.V., Analog Devices Ireland Ltd., Analog Devices Research and Development Ltd., Analog Devices Inc.

Plaintiffs/respondents

Zurich Insurance Company, American Guarantee and Liability Insurance Company

Defendants/appellants

Procedural Posture

Insurance Contract Dispute / Appeal From High Court to Supreme Court

Legal Issues

  1. 1 Whether exclusion clauses in insurance policies apply to losses caused by maintenance errors
  2. 2 Whether 'faulty workmanship' and 'error in processing or manufacturing' exclusions cover maintenance errors
  3. 3 Whether pollution/contamination exclusions apply to internal business incidents rather than environmental damage

Ratio Decidendi

Maintenance errors are not covered by 'faulty workmanship' or 'error in processing/manufacturing' exclusions; pollution/contamination exclusions apply only to environmental damage, not internal business incidents. Ambiguities in exclusion clauses are resolved against the insurer. The insurers failed to clearly exclude liability for maintenance errors, so the losses are covered by the policies.

Court Disposition

appeal dismissed; High Court order affirmed

Orders

  • Insurers are jointly and severally liable to indemnify respondents for losses sustained due to maintenance error under both local and global policies.