The English High Court has, for the first time, tackled the question whether the terrorist attacks on the World Trade Centre arose from one or two events, for the purposes of aggregating property damage, personal injury, liability and other losses arising from the attacks. Whilst this debate is not new to London market reinsurers/reinsureds, these disputes have, until now, been dealt with by way of confidential arbitration and the decisions have not been publically available. This judgment may assist parties still seeking a resolution of this issue.
Heraldglen Limited and Advent Capital (No. 3) Limited brought arbitration proceedings against AIOI to decide, amongst other things, whether the losses sustained under their inwards contracts arising out of the 9/11 terrorist attacks on the WTC were caused by one or more occurrences or series of occurrences “arising out of one event” for the purposes of aggregation under their outwards contracts with AIOI. The arbitrators, applying the Dawson’s Field unities test, found in Heraldglen/Advent’s favour that the losses were caused by two events (being two successful hijackings of two aircraft). AIOI appealed that decision under s.69 of the Arbitration Act 1993 (an error of law). Mr Justice Field firmly rejected AIOI’s appeal, upholding and endorsing the Award of Ian Hunter QC, David Peachey and Richard Outhwaite.
AIOI contended that the arbitrators had focused wrongly on, and were influenced wrongly by, their conclusion as to the number of loss events arising out of the hijackings of all four flights on 9/11, instead of confining their analysis to whether the attacks on the Twin Towers constituted one event. This was rejected by Mr Justice Field, together with a number of other specific criticisms of the Award on the facts. One of the central thrusts of AIOI’s appeal was that, when considering the unities test, the arbitrators failed to have sufficient regard to the intent driving the hijacks and the crashes. Mr Justice Field rejected the submission that the arbitrators should have concluded that the hijacking of the two planes and deliberate use of them as missiles to crash into the WTC were a series of occurrences arising out of one event as they were indisputably incidents of a terrorist organisation directed at the WTC.
This decision is of wider significance outside the aviation reinsurance market as it reaffirms the unities test and shows that permission to appeal arbitration awards is sometimes granted by the English courts, despite their reputation for being difficult to appeal.
For a full copy of the judgment, please click here:
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