The issue in this case concerned the proper interpretation of the Riot (Damages) Act 1886 (the Act) and its application to the 2011 London riots. The High Court initially ruled that the Act provided compensation only for physical damage and not for consequential losses, but the Court of Appeal reversed that judgment, as discussed in our briefing of June 20141. However the Supreme Court has now unanimously allowed Mitsui Sumitomo’s appeal.

The question before the Supreme Court was whether, in addition to compensation for physical damage to a building, the claimants were also entitled to compensation for consequential losses, for example, lost profits arising out of business interruption.

The Supreme Court held that the words of the Act must be construed in the light of its legislative history. As a result, there was no entitlement to consequential losses on the basis that, under the Act, there was no intention to equate compensation to damages or to provide compensation beyond physical damage to property. The Act sets out a self-contained statutory compensation scheme which does not extend to cover consequential losses.