The Supreme Court’s decision in International Energy Group Limited v Zurich PLC (2015)

Asbestos Justice has noted the highest Court in the land’s eagerly awaited decision in the above case, which was handed down on 20th May 2015. This case involved a long winded dispute between Defendant employers and their insurers in relation to who should pay compensation in a mesothelioma claim.

David Allan QC and Simon Kilvington of Byrom Street Chambers, Manchester, intervened in the litigation to assist in protecting the rights of asbestos disease sufferers on behalf of the Asbestos Victim Support Groups’ Forum UK.

In the original action, the mesothelioma claimant had worked for International Energy Group Limited (IEGL) for 27 years and suffered regular exposure to asbestos. Sadly, this led to him developing incurable mesothelioma, from which he later passed away.

Zurich provided cover for just over 22% of the mesothelioma sufferer’s total period of exposure to asbestos with IEGL and another insurer provided additional coverage for 2 of the 27 years. IEGL settled the mesothelioma claim and looked to recover the settlement amount from Zurich as the insurers. They argued what has become an established argument, since the famous decision in Fairchild, that the legal test for causation in a mesothelioma claim is to establish a “material contribution to the risk” of developing the incurable disease.

Rather ambitiously, Zurich offered IEGL only a proportion of the mesothelioma claim settlement sum based on their 6 year period of cover out of the 27 year total. Whilst they agreed that their cover had to deal with the claim in its entirety under s.3 of the Compensation Act 2006 they also opined that in equity, the court should recognise a right of recoupment to address what they saw as the unfairness caused by the Act.

As specialist Claimant asbestos disease solicitors, we argue that sufferers should always be entitled to 100% recovery of compensation in a mesothelioma claim providing it is shown that the exposure materially contributed to the risk of the development of the condition. Expert medical evidence generally confirms that asbestos exposure which equates to anything above 1% of the sufferer’s overall period of exposure to asbestos will amount to a “material contribution to the risk”.

Further issues were encountered in the IEGL litigation due to the fact that the original claim was a mesothelioma claim brought in Guernsey. As a result, Zurich, as with other Defendant parties argued that the House of Lords’ (now the Supreme Court) decision in Barker v Corus, remained good law. This sought to treat mesothelioma as a divisible condition in law. This case was relied upon as the Compensation Act was a British statute and had no application to Guernsey. Using this, Zurich argued that their insurance coverage would only cover part of the mesothelioma claim amount.

Arguments were made by IEGL to the effect that Barker, no longer had any legal standing in the light of the EL trigger litigation cases. The Court of Appeal seemed to have sympathy with such arguments and held that Zurich should be found liable for 100% of the mesothelioma compensation.

Supreme Court’s Decision

Certainty in Mesothelioma Claims

By the narrowest majority of 4 to 3 the court in IEGL found in favour of the view that sufferers should be able to recover 100% of the compensation in their mesothelioma claims.

The majority of the Lords concluded that any insurer on risk for any period of tortious exposure (this would be the figure in excess of 1% referred to in the above) must meet 100% of the mesothelioma compensation.

This decision is warmly welcomed by Asbestos Justice, other specialist claimant asbestos disease solicitors and the sufferers of asbestos related conditions. The decision now provides certainty to sufferers, confirming that they can recover their mesothelioma compensation in full.

One caveat to the decision is that the insurers would be able to exercise a right of recoupment against a solvent employer, as Zurich had argued for in the IEGL litigation, but this would not affect the right to 100% mesothelioma compensation for victims and their families.

The minority in the case disagreed with the decision made by the majority arguing that, based on a simple interpretation of the contract, Zurich had never agreed to take on the full risk, but only the dates governed by their 6 year insurance policy. If this had been the majority view then mesothelioma sufferers would only be able to recover a percentage of their compensation based upon the amount of insurance coverage located. This would have been a catastrophic decision, resulting in widespread shortfalls of mesothelioma compensation being paid. No doubt Parliament would have had to intervene to rectify the potential major injustice had this been the case.

Less Clarity for Lung Cancer Actions

Rather surprisingly, the Supreme Court in the IEGL litigation also found that the decision in Barker v Corus remains good law and was not “consigned to history” by the EL trigger litigation as many eminent experts in the field of asbestos disease litigation had argued.

This part of the decision will not affect mesothelioma claims pursued in the UK where protection is afforded to ensure 100% compensation under s.3 of the Compensation Act 2006, however, it may have ramifications for asbestos related lung cancer claims where the same statutory protection ensuring 100% asbestos claim compensation is not currently available.

If liability is imposed on a Fairchild basis as it was in the decision of Heneghan (discussed in our December 2014 news update), lung cancer sufferers may only be able to recover a percentage of their compensation based on the amount of insurance coverage located.

As we have explained in previous updates , the insurance industry may jump upon this aspect of the decision in the IEGL litigation to argue that they will only be liable to pay lung cancer compensation on an apportioned basis, especially if the insurer’s level of cover amounted to less than 50% of the total period of exposure.

However, Lung Cancer sufferers who are able to establish that an offending Defendant was liable for over 50% of their negligent asbestos exposure should stand a strong prospect of recovering 100% of their asbestos related lung cancer compensation from that party on the basis that they will have proved their case on the balance of probabilities.

As we know, Heneghan is to be fast-tracked to the Court of Appeal and we await the decision of the higher court with real interest. Perhaps the certainty on compensation recovery provided for mesothelioma claims thanks to the IEGL litigation, may be just around the corner for lung cancer claims.

If you, a family member or colleague are concerned over asbestos exposure, contact Asbestos Justice on 0800 038 6767 for expert legal advice.

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