In brief:
- In Bath Racecourse Company Ltd & Ors v Liberty Mutual Insurance Europe SE & Ors [2025] EWHC 1870 (Comm), the High Court has provided further guidance on COVID-19 business interruption ("BI") insurance issues, particularly in relation to the meaning of a "competent authority" and the operation of limits for "any one loss".
- The decision will be welcomed by policyholders whose activities are subject to the rules of private regulatory bodies, as well as those who own or operate multiple premises.
- However, notwithstanding the "never-ending procession of such issues coming before the English court", questions on the operation of BI policies in the context of COVID-19 remain – particularly with the news that the Supreme Court will hear an appeal on whether credit should be given by policyholders for furlough payments.
The 22 claimants operated racecourses, greyhound tracks, golf clubs, hotels and a pub at various locations in England and Wales. After measures were put in place across the UK as a result of the COVID-19 pandemic, they claimed for BI losses under a "Denial of Access" extension of their composite "Material Damage and Business Interruption" policy. The defendant insurers accepted that there was some coverage for the BI losses; however, various disputes arose in relation to the construction of the policy.
The High Court was asked to determine three key issues:
1. Were the actions of the British Horseracing Authority (BHA) and the Greyhound Board of Great Britain (GBGB), actions of "competent authorities" for the purposes of cover?
The "Denial of Access" extension covered, among other things, claims "resulting from interruption of or interference with The Business carried on by The Insured at The Premises in consequence of…action by the Police Authority and/or the Government or any local Government body or any other competent authority following danger or disturbance within a one mile radius of The Premises which shall prevent or hinder use of The Premises or Access thereto."
The High Court concluded that "authority", in combination with "competent" referred to a body (or person) with power and a role in the relevant context, which goes beyond that of ordinary citizens and, unless the context demanded, it did not necessarily imply "an organ of the state". The actions of private regulatory bodies like the BHA and GBGB, could, therefore, be considered actions of a "competent authority" for the purposes of cover.
2. How did the limit of indemnity for "any one loss" operate?
Insurers' liability in respect of claims under the "Denial of Access" extension was limited by reference to "any one loss" in the policy. Following the Court of Appeal's decision in Gatwick Investment Ltd v Liberty Mutual Insurance Europe SE (2025), and given the composite nature of the policy, there was no dispute that the limit applied per claimant. However, further questions arose as to the practical operation of the "any one loss" limit.
The High Court held that a separate loss calculation should be carried out for each "relevant measure or action", meaning actions which imposed or materially increased restrictions on the claimants' use of their facilities. The test was whether there was further prevention or restriction of use compared to the action that came immediately before it. For example, a racecourse moving from tier 3 to tier 4 would qualify as a "relevant measure or action", whereas the resumption of races taking place only behind closed doors with no live spectators would not.
In addition, a separate loss calculation should be carried out for each facility (ie racecourse, golf course, or hotel) owned or operated by the claimants, as those facilities were divided up for the purposes of the different indemnity periods and different aggregate limits in the policy.
3. Did an arbitration clause apply to determination of the quantum of the claimants' claims?
The policy also contained a commonly found clause in property insurance policies, which provided for disputes "as to the amount to be paid … (liability being otherwise admitted)" to be referred to arbitration. The Insurers therefore contended that this meant that, once issues of liability, construction and/or law were resolved, the arbitration agreement applied to the determination of quantum.
The judge disagreed. In his view, the arbitration agreement only operated if, at the point at which the claim was brought, the precondition that liability had been admitted had been fulfilled. If, as here, the precondition had not been fulfilled, there was no obligation to arbitrate, and the obligation would not "spring into life at some later stage" simply because the insurer made a further admission or an issue was resolved by the court.
Conclusion
The High Court's decision provides further helpful guidance on the interpretation of BI policies in the context of COVID-19 claims, clarifying that (subject to the applicable policy wording) private regulatory bodies may constitute competent authorities, and that "any one loss" limits will operate by reference to each relevant measure or action, and for each facility owned or operated by the insured. The decision also confirms that a clause providing for quantum disputes to be referred to arbitration does not mean that, once liability is determined, separate arbitration proceedings must be commenced.
However, as the judge stated, "…it feels as if there has been a never-ending procession of such issues coming before the English court…". While that procession may be slowing, the news that the Supreme Court will hear an appeal on whether credit should be given by policyholders for furlough payments demonstrates that it is not yet at an end.
Given the ongoing legal developments, and as the expiry of the limitation period approaches, policyholders should revisit their policies to see whether previously rejected claims may now respond.