Mic Simmonds (Lloyd’s Syndicate 994) v AJ Gammell (Lloyd’s Syndicate 1021) Queen’s Bench Division (Commercial Court) 14 October 2016

The Court heard an appeal under section 69 of the Arbitration Act 1996 against the arbitrators’ decision on the meaning of losses “arising from one event” in a reinsurance policy. The arbitrators held (by 2:1) that the 9/11 attacks constituted a single event for the purpose of the aggregation clause of the policy. The Court dismissed the appeal and held that the arbitrators had not erred in applying the correct test.

The factual background

This case was an appeal against an arbitration award dated 21 December 2015 (the “Arbitration Award“). The Appellant reinsurers appealed on the proper construction of “arising from one event” in the aggregation clause of the policy.

The Respondent reinsured (Syndicate 102) participated in various layers of an excess liability insurance program, insuring the Port of New York (PONY) for the period 27 October 1998 – 27 October 2001, during which the 9/11 attacks occurred. The reinsurance contract provided a limit of $1.5 million (excess of $1 million) “each and every loss” and loss was defined as “loss… or a series thereof arising from one event”.

PONY has been the subject of multiple claims from employees following the 9/11 attacks, regarding:

  • worker compensation claims – claims by workers struck by, or who became trapped under, debris; and
  • respiratory claims – claims for damages for negligence by about 10,000 firemen, policemen, clean-up and construction workers and volunteers engaged in the rescue and clean-up operations, arguing that PONY had negligently exposed them to personal injury by reason of its failure to provide adequate protective equipment, such as respirators, or to provide adequate training.

The arbitrators found that the 9/11 attacks constituted “one event” for the purposes of the aggregation clause and not a “state of affairs”. Further, the arbitrators held that regardless of any negligence on the part of PONY, the 9/11 attacks were a significant cause of the respiratory claims with a clear and obvious causal link, even though the attacks may not be the proximate cause of the respiratory claims.

Appeal decision

The Appellants argued that the arbitrators had erred in law and failed to apply the relevant test correctly.

The test for “arising out of a single event”

The Court cited Rix LJ in Scott v Copenhagen Reinsurance Co UK Ltd2 as setting out the key case for deciding whether a loss can be said to arise out of one event. The test in Scott has four analytical elements:

  • something that could be called an event;
  • the function of that event as being prior to the aggregated losses;
  • a causative link between losses and event, undefined other than being looser than proximate cause; and
  • he absence of remoteness.

Had the majority Arbitrators applied the test correctly?

The Arbitration Award cited various parts of Rix LJ’s judgment in Scott. Cooke J held that the arbitrators had understood the test and it was clear that they had looked for, and found, that the 9/11 attacks were a significant cause of the claims; the arbitrators were looking for a significant causative link, not the proximate cause.

Cooke J also held that the determination of the strength of the causal link fell into the category of assessment/decision making that arbitrators, exercising their judgment, are required to make and involves no error of law where the correct test is applied. Once an event had been identified which was not simply a “state of affairs”, such as the 9/11 attacks, the only issue which mattered was the question of sufficient causal connection with the losses in question.

The (majority) arbitrators ultimately found the causal link between the respiratory claims and the attacks to be clear and obvious. Cooke J held that the decision could not be described as perverse, or as one which no reasonable arbitrator, properly directing himself, could reach. They applied the correct test and came to a sensible conclusion, and there was no basis for a challenge on appeal. The appeal accordingly failed.


The judgment provides a useful summary of the case law on establishing whether or not there is a causative link between losses and an event, and emphasises that, for the purposes of deciding whether something “arises from” a single event, one must establish a “significant” causative link. This is wider and looser than the proximate cause. It is also interesting to contrast this case with Aioi Nissay Dowa Insurance Co Ltd v Heraldglen Ltd3, in which case the arbitrators found that the 9/11 attacks were two events, not one. The judgment also provides helpful judicial guidance on a point which is often decided in confidential arbitration rather than in court.