15 years later, 9/11 still causing insurance disputes
/Simmonds v Gammell [2016] EWHC 2515.
The Port of New York (PONY) owned the land on which the old World Trade Centre had stood. Following the 9/11 attacks, PONY undertook a massive clear-up operation, during which some 10,000 employees were exposed to toxic chemicals or otherwise suffered harm. Many of these employees brought workers’ compensation or respiratory claims against PONY, which its insurer settled on the basis that they all arose from one event. The insurer then sought recovery from its reinsurer on the same basis.
The reinsurance contract provided that the insurer would be indemnified for losses “arising out of one event.” The insurer argued that the attacks on 9/11 constituted such an event. The reinsurer argued to the contrary that the “event” in question was not the attacks themselves, but rather PONY’s continuous failure, in the months and years that followed, to provide its workers with adequate protective equipment like respiratory gear. Thus, it argued, the various claims were not capable of being aggregated together as “arising from” the terrorist attacks.
After an arbitration in which an award was made in favour of the insurer, the reinsurer brought proceedings in the High Court in London. The Court undertook a detailed review of how earlier authorities had defined a single “event.” In Axa v Field [1996] 1 WLR 1027, it was said to be “something which happens at a particular time, at a particular place, in a particular way.” In Caudle v Sharp [1995] LRLR 433 there was said to be three requirements for an “event,” namely that there should be a common factor properly describable as an “event,” that the event satisfies the test of causation, and that it is not too remote for the purposes of the insurance.
The Court paid particular attention to Scott v Copenhagen Reinsurance Co UK Ltd [2003] Lloyd’s Rep 696, which set out four elements necessary to show that losses arose from one event:
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
The absence of remoteness.
The principle that emerged was that several losses can be aggregated together if it can be said that a single unitary event is causally connected with all of them. On applying this principle to the present facts, the Court held that the terrorist attacks on 9/11 did constitute such an event. The reinsurer’s appeal was dismissed.
It was acknowledged that PONY’s negligence in failing to provide adequate protection for its workers was a proximate cause of its own liability. In the Court’s view, however, this “did not assist” in determining whether the attacks also had a significant causal connection to the claims made. It held that the question of whether the relevant losses arose from “one event” for the purpose of the insurance “can only be answered by finding and considering all the relevant facts carefully and then conducting an exercise of judgment.” The Court took no issue with the judgment exercised by the arbitrators, who had concluded that had there been no attacks on the World Trade Centre, the relevant rescue and clear-up operations would not have occurred, and the workers who brought the claims against PONY would not have suffered the harm on which their claims were based. Thus, despite PONY’s negligence, the Court found that the terrorist attacks were sufficiently causative of its liability to justify aggregating the claims under the wording of the reinsurance contract.
