The Supreme Court yesterday handed down judgment in six related employers' liability cases collectively referred to as the 'Employers Liability Trigger Litigation'. Today's decision is in relation to nine appeals to the Supreme Court arising out of six separate actions. They arise from the deaths from mesothelioma of employees who inhaled asbestos fibres during employment. In each case the employees’ personal representatives, or the employers liable to them, seek to recover loss from the employers’ insurers under policies of employers’ liability ("EL") insurance covering periods from the late 1940s to 1998.
The case concerned:
- The proper approach to the construction of the EL policies concerned and, in particular, to the words "disease contracted" and "injury sustained"; and
- whether the broader test of causation in mesothelioma cases established in Fairchild v Glenhaven Funeral Services Ltd (2002), and which only requires sufferers to establish that an employer materially contributed to the risk of mesothelioma rather than caused mesothelioma, also aplies when construing the relevant EL policies.
The answer to these questions is critical in determining whether insurers, private companies or the public sector are liable for mesothelioma claims arising from asbestos exposure and, indeed, whether some mesothelioma sufferers will be left without recourse to compensation completely.
By a majority of 4-1, with Lord Phillips dissenting on the second issue, the Supreme Court ruled that:-
- A disease is said to have been "sustained" or "contracted" within the meaning of the policy wordings in the period when it was caused or initiated even if that disease does not manifest itself until decades later. This gives effect to the wider commercial purpose of EL cover.
- The broader test of causation established in Fairchild also applies to the construction of the corresponding EL policies as, to do otherwise, would create a disconnect between the employer's negligence and the EL policy intended to insure employers against such negligence.
The Supreme Court decision provides much needed clarity on a case which has been running since 2006 and which, consequently, has delayed the settlement of thousands of mesothelioma claims. The result of the Supreme Court's ruling is that negligent exposure of an employee to asbestos during a policy period is sufficient to trigger the insurer's obligation to indemnify the employer. This was the practice universally adopted by insurers prior to the EL Trigger Litigation and so the Supreme Court's judgment effectively confirms the historical practices of the insurance industry and reinstates the previous status quo.
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