In a recent case1 the English court has confirmed that in order to add an insurer as co-defendant under section 2 of the Third Parties (Rights against Insurers) Act 20102 (the Act), the claimant need not prove the insured was liable for and insured for the claim, since the Act provides a mechanism for establishing such liability after joinder.
The defendant in this case was allegedly responsible for defects in the design and construction of a warehouse floor, and had gone into administration after proceedings against it were commenced. The applicant applied to join the defendant’s liability insurer as co-defendant following the statutory transfer of rights under the Act.The policy itself contained provisions for resolution of any disputes in the French Courts and/or arbitration.
The insurer argued that there was no cover due to the breach of a policy condition and that the English court had no jurisdiction over coverage disputes, which had to be determined in France or in arbitration.
The application to join the insurer was upheld. In order to determine the insurers’ liability the applicant must prove the defendant was liable, and that it was insured for that liability. The Act provided a mechanism for doing this in due course, but it was not necessary to establish this in order to successfully join the insurer as co-defendant.
Apart from cases covered by the Act, it is generally not possible in the UK for a third party to sue a defendant’s liability insurer directly. However, in a separate recent case which has significant implications for P&I Clubs and other liability insurers, the European Court of Justice has allowed a third party claimant to bring its action directly against the insured defendant’s insurer in the Danish Court (where such direct actions are ordinarily permitted), notwithstanding that the insurance policy taken out by the defendant was governed by English law and subject to the exclusive jurisdiction of the courts of England and Wales. For more information please read our Briefing here.