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Warranty and Indemnity Insurance: The Court of Appeal offers Guidance on the Interpretation of Policies and Exclusions

On 2 May 2024 the Court of Appeal handed down judgment in the case of Project Angel Bidco Ltd (In Administration) v Axis Managing Agency Ltd [2024] EWCA Civ 446. The case arose from an insurance coverage dispute arising from the interpretation of a warranty and indemnity insurance policy issued with respect to the acquisition of a construction business. The main issue was the proper interpretation of an “ABC Liability” exclusion that related to non-compliance with anti-bribery and anti-corruption laws. The Respondent Insurers contended that the exclusion should be read as it was written, such that excluded the claim advanced by the Appellant insured. On a preliminary issue HHJ Pelling KC decided in favour of this interpretation. Below and on appeal the Insured contended that there was a contradiction between the exclusion and the rest of the Policy that required it to be “corrected by construction”.

Lord Justice Lewison gave the majority judgment, with whom Lord Justice Arnold agreed. Lord Justice Phillips gave a dissenting judgment. Lewison LJ found in favour of the insurers in a detailed judgment that provided essential guidance as to how to interpret exclusions in insurance policies and how the Courts will resolve alleged inconsistencies in both the language used and the contract as a whole. This is significant for the warranty and indemnity market as it deals with the usual structure of such policies. It is also of wider significance for contractual disputes generally.

The judgment can be found here.

Ben Quiney KC and Caroline McColgan of Crown Office Chambers were instructed by Kirsty Hick and Amanda Fosu of DAC Beachcroft for the successful insurers.

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