Theoretical
Framework
The
English Supreme Court has helpfully clarified that an analysis of both insuring
and exclusion clauses is required to determine whether insurance coverage
remains valid when assessing concurrent causations. By exploring case law and
precedent in the UK, along with comparative examples from New Zealand and the
USA, and evaluating legislative reforms over the past ten years, it will be
examined whether concurrent causation is as complicated as it first appears, or
if the law does have a systematic process to determine whether the insured
party can claim. The paper will look at the impact that COVID-19 has had on the
speed of handling the claim, as well as on the interpretation of the results.
Then, the seemingly simplistic French legislation and case law will be
compared.
The
Research Problem
The
key issue that this paper seeks to examine is the ‘thorny’ topic of concurrent
causation. The legal position in both English and French law is clear enough
when there is simply one cause of action that may give rise to an insurance
claim. In English law, from the ‘founding mother’ of tortious negligence claims,[1]
to far more recent case law[2]
where there is only one possible tortfeasor, liability does not suffer from a
lack of clarity. It is only where there is multiple or concurrent causation
that legal problems begin to surface for obvious reasons. There are also issues
of ‘material contribution’[3]
to tortuously sustained damage or injury, which runs alongside the issue of
concurrent liability, but for this paper, it will be assumed that such material
contributions are simply a subset of concurrent liability. In the relatively
recent raft of mesothelioma case law, for example,[4]
who should carry the burden of liability where the direct tortfeasor cannot be
established has been far less straightforward.[5]
Notwithstanding the addition to the legislative canon on this matter[6]
in English law, the issue of concurrent causation is still an intractable
problem, especially as Zhao[7]
explains “… In English law, the insurer is not liable for a loss concurrently
caused by proximate causes if one is an insured risk and the other an excluded
risk, but the insurer is liable if the loss is concurrently caused by an
insured risk and an uninsured risk.” The confusion here is palpable.
Liability
Insurance: Contextual and Legal Background
It
has often been argued that liability insurance is ‘…simply a necessary evil in
today’s climate of litigation?’[8] Commentators point the
reader towards the Shavell model, and this paper strongly supports the
assertion that ‘…liability insurance will generally raise welfare because its
risk-spreading gains will likely be larger than its adverse effects on
precautionary activities.’[9]
As such, there is perhaps an obvious overlap between insurance law and the
broader law of tort, especially about the negligence model of duty, breach, and
foreseeable causation. There can be no question that the seminal case of
Donoghue,[10] with
Lord Atkin’s quasi-biblical ‘neighbour principle’, set the parameters for the
concept that damage caused by negligence must be compensated by the tortfeasor
and as such ‘… Tort cases are typically denominated in terms of a victim suing
an injurer …’ but it is also true to suggest that ‘…injurers do not typically
pay the damages (if any) for which they are held liable …’[11]
and as such the relationship between tort law and liability insurance has been
described ‘… using the metaphor of a bipolar star: separate bodies that form a
common gravitational field.’[12]
The law student in a tort
class is often confused by the seemingly convoluted chain of causation in the
case of Baker.[13]
The injured party was first hit by a car, damaging his leg. This facilitated a
change of work, compelling the injured party to take a more sedentary job,
whereby he was then subjected to being shot in the same leg in an armed
robbery, which resulted in amputation. The perpetrators of the robbery were
nowhere to be found, so the full claim was brought against the driver of the
car, who caused the first, and more minor injury. The Court of Appeal held that
the driver should indeed pay for the full loss of the leg, and there is no
question that insurance played a major role here, with Harman LJ sending a
clear warning to drivers to make sure that they were fully covered by the newly
introduced insurance regime. As has been argued, ‘… first-party insurance may work
as an alternative to tort; society needs to worry less about making injurers
pay victims if the latter can collect from their insurers instead.’[14]
Though this is a rather obtuse ruling, this paper would argue that, from a
policy perspective at least, the court was correct in emphasising the need for
insurance, especially as this motor insurance was a relatively new concept at
the time.
However, when concurrent
causation is part of the equation, the problem becomes naturally more acute. As
has been suggested ‘… This doctrine is a new concept to property insurance law,
which seeks to establish liability for losses that would not be covered under a
traditional causation analysis.[15] Brewer argues that ‘… liability
insurance contracts are classified by causation, and contain in their insuring
clauses the words, ‘loss caused by …’ or their equivalent. The phrase is
deceptively simple.[16]
Within it lie a multitude of vexing legal and philosophical problems, not the
least of which is the problem of concurrent causation.’[17]
It is this ‘problem’ that will now be deconstructed to ascertain exactly how ‘vexing’
it seems to be. With solutions inspired by the general theory of liability, it
is clear that we are dealing with a national judiciary that remains, on the
whole, deeply rooted in tradition, contributing to the formation of a legal
structure that goes beyond the mere texts of the law. It is a creative
praetorian judiciary that refuses to be confined to the civil law framework and
its fringes, which reflect shortcomings and an inability to keep pace with the
evolving reality around it.[18]
1.
Research Hypothesis
English common law
appears to be overly complicated concerning the occurrence of concurrent
causation and whether this affects the validity of insurance claims, or whether
one of many concurrent causes falls under a contractual exemption. This also
seems to give an unfair advantage to the insurance companies. There are many
relevant cases in both English and French legal jurisdictions, with many
appropriate discussions of each in the literature. Though it should be noted
from the outset that the French civil code, which only alludes to causality in
a rather subsidiary manner, the general concept of causality is to be found in
the body of French jurisprudence, along with academic discussion of the
relevant literature, and for each jurisdiction. This paper will explore where
the responsibility lies with regard to ensuring the insurer knows any potential
risks and whether the law is skewed in favour of insurance companies. By
comparing English law with the French legislation, this paper will seek to see
if the civil code can offer any helpful insights on possible future reform. It
is perhaps also true to suggest that causation, especially concurrent causation,
is a problematic concept in all legal regimes, not only in Common Law jurisdictions.
2.
Methodology
This paper mainly
benefits from a qualitative methodology, via a historical comparison study and
an analytical deconstruction of the contentious issue of insurance law and
practice in both England and France. The paper primarily investigates case law,
statute, and secondary sources in the form of academic articles, whereby the
work of authors, commentators, and policy experts is deconstructed to form a
response to the research question.
3.
Concurrent Causation – A Definitional Perspective
As Brewer explains in an
American context and albeit in rather complex words, ‘… When an insured cause
joins with one or more additional causes, which may be uninsured or may be
insured under a separate contract, concurrent causation can be said to exist. A
dispute may then arise between the insurance carrier and the insured as to
whether the damage was caused by an insured event or by an event that is either
specifically excluded from coverage or simply not within the scope of the
contract; or in the alternative, a dispute may arise between companies as to
which of two insurance contracts applies’[19]
If for example, a driver crashes his car into a tree due to a fire breaking out
in his dashboard, is the driver likely to be covered by a clause in his
insurance policy relating to fire, or one relating only to collision? As
Harrington argues, also from a United States perspective, ‘…Few issues are more
vexing for adjusters than when a policyholder incurs damage from two or more
causes at the same time and at least one of those causes is excluded from
coverage under the applicable property policy.’[20]
Referring to the aftermath of Hurricane Katrina in the United States in 2005,
Harrington explains that ‘… distressed policyholders learned that structural
damage caused by high winds might not qualify for coverage if flood waters
compounded the damage or if it could not be determined how much of the damage
was caused by wind as opposed to water.’[21]
Concerning English law
and the existing legal framework, Richards[22]
argues that ‘… While matters of concurrent causation have come before the
courts in recent years, the question of how English law should respond to a
loss caused in fact by two perils operating simultaneously but where either
peril was capable of causing the entire loss remains an open question …’ and as
such fraught with uncertainty and legal difficulty and this will be analysed in
due course. Illustrating her point concerning a New Zealand case and United
States case law, respectively, Richards uses the examples of New Zealand Fire
Service Commission v Legg[23]
where fire spread from burning waste from an insured’s farming business and
waste from his landscaping business, the policy covered liability for farming
operations, but not for liability that arose from any unconnected trade or
profession. It was therefore impossible to determine which part of the waste
caused the fire to spread. In Anderson v. Minneapolis[24] there
was a lack of certainty as to the outcome where property damage was caused by a
fire for which the defendant was liable, and where there was also a fire of
unknown origin due to prevailing weather conditions.[25]
As such, it is clear where the confusion and lack of certainty arise, and this
paper argues that this lacuna in the law is far from acceptable. Returning to
English law, Richards refers to the historical legal position set down in
… s.55(1) Marine Insurance Act 1906 that, to recover for a
loss, an assured will need to establish the loss was proximately caused by a
covered peril. Linguistically, the reference to ‘a covered peril’ could be
taken to mean that the role of the courts is to identify a single proximate
cause of the loss.
3.1. English Case Law
In more recent years,
however, the position has changed somewhat with cases such as the ruling of the
English Supreme Court in The B Atlantic[26] in the following terms:
“while the general aim in insurance law is to identify a single real, effective
or proximate cause of any loss, the correct analysis is in some cases that
there are two concurrent causes.” As Richards explains,
… in The B Atlantic, the assured contended that the detention
of the vessel, which occurred after Venezuelan authorities discovered drugs
placed on board by unknown third parties, was a loss caused by a covered peril.
Cover was agreed on the basis of the Institute War and Strikes Clauses
Hulls-Time (1/10/83) and, as such, afforded cover for inter alia detainment,
confiscation and losses caused by persons acting maliciously …
Richards explains that
there were numerous exclusions, including where ‘… detainment occurred “by
reason of infringement of any customs or trading regulations.” ‘The question
then for the English Supreme Court was in relation to the interaction between
the insuring clauses and the exclusions. The Supreme Court accurately, in this
paper’s opinion, elected to follow the 1970s ruling in Wayne Tank,[27]
and held unanimously that the exclusion clause ‘cut back or define[d] the
limits of cover otherwise available’ under the policy. The court gave effect to
‘the natural meaning of the [policy] words in their context’ to determine,
first, whether there was a loss proximately caused by an insured peril and then
to consider whether an exclusion clause reduced the cover. Since, ‘… on the
facts of The B Atlantic, the loss was caused by the detention of the vessel due
to an infringement of customs regulations, the insurer was able to rely on the
exclusion clause to avoid liability’[28] thus, this paper would
suggest, providing a pragmatic solution to what was a ‘knotty’ legal problem.
3.2. The Miss Jay
Jay[29]
Richards describes this
case as ‘…the best-known English example of multiple causes combining to cause
a loss…’ and explains the factual background as follows:
…a yacht on a trial run from Deauville to Hamble sustained
damage to its hull as a result of the combination of the perils of the seas and
defective design of the hull. In essence, the lightweight materials used to
construct the yacht – and for it to sail at speed – were unable to withstand
the short, frequent waves on that crossing. The policy covered losses caused by
external accidental means (accepted as equivalent to perils of the seas) and
excluded losses caused by defective design where that was the sole cause of the
loss. Each cause was necessary to cause the whole loss, but neither was
sufficient to bring about the loss on its own. As a result, the policy did not
provide for the situation where the loss was caused by perils of the seas and
defective design since the latter was, on the facts, uninsured but not
expressly excluded.[30]
Concerning the judgment
in the Court of Appeal, with which this paper generally agrees, according to
Slade LJ, it was held that:
It seems that there may be more than one proximate (in the
sense of effective or direct) cause of a loss. If one of these causes is
insured against under the policy and none of the others is expressly excluded
from the policy, the assured will be entitled to recover. No authority has been
cited to us, which leads me to suppose that this passage incorrectly states the
relevant law relating to marine insurance policies and, in my judgment, it
incorporates the principle applicable to the present case. The crucial point is
that in the contingencies envisaged in the passage, to apply the provisions of
the policy and section 55 of the Act, the loss is treated as proximately caused
by the cause insured against, notwithstanding the presence of a concurrent
cause not covered by the policy.
However, it seems clear
that this may have been a rather simplistic solution to a potentially complex
set of facts, and as such, this ruling faced criticism, especially from leading
insurance law commentator Malcome Clarke, suggesting that,
[I]f a yacht breaks up in moderate seas and the yacht was
negligently designed or constructed, a tort inquiry is likely to point to the
designer or constructor. But, when the question arose in the Miss Jay Jay, in
connection with insurance against perils of the sea, the search for a proximate
cause went no further back than the peril …[31]
As Steward argues, after the Miss Jay Jay, there still needed
to be an analysis of the facts to ‘… determine the proximate cause or causes
[especially where] the assured is privy to the unseaworthiness.’[32]
3.3.
FCA v Arch[33]
In the key recent English
case following and based on the Covid pandemic, the case of Arch Insurance is
perhaps one of the most important cases on concurrent causation in recent years,
especially where there are many identical causes of an insured loss, none of
which are necessary nor sufficient to cause the loss as a whole. In this key
test case, the Supreme Court was required to interpret clauses within various
business interruption policies and other matters of causation. The case hinged
on considerable business interruption losses when it was announced by Boris
Johnson and Rishi Sunak that businesses were legally required to cease trading
in March 2020 following the coronavirus outbreak. In this case, the Supreme
Court examined ‘… a representative sample of policy wordings offered by eight
insurers and was required to determine inter alia the correct interpretation of
‘occurrence’ in the context of disease clauses,’ which provided cover for loss
resulting from the occurrence of Covid within a geographical radius of the
insured premises and “… hybrid clauses, which covered losses caused by the
occurrence of disease and restrictions imposed by a public authority which
prevented access to the insured premises.”[34]
It was also necessary for their Lordships to address whether a singular case of
disease could be regarded as a proximate cause of the loss, notwithstanding the
existence of many other cases of disease outside the radius covered by the
policy.[35]
As explained by Richards,
and with which assertion this paper agrees, perhaps the more interesting point
addressed by the Supreme Court was its ‘… assessment of the causation point;
could an individual occurrence of the virus within the specified radius
constitute a proximate cause under the policy?’[36]
The Supreme Court held that:
There is, in our view, no reason in principle why such an
analysis cannot be applied to multiple causes that act in combination to bring
about a loss. Thus, in the present case, it obviously could not be said that
any individual case of illness resulting from COVID-19, on its own, caused the
UK Government to introduce restrictions which led directly to business
interruption. However, as the court below found, the Government measures were
taken in response to information about all the cases of COVID-19 in the country
as a whole. We agree with the court below that it is realistic to analyse this
situation as one in which all the cases were equal causes of the imposition of
national measures.[37]
As Richards argues, and
with which this author concurs, it seems an eminently sensible and pragmatic
approach following closely in the shadow of relatively recent multiple
causation tort law mesothelioma cases such as Fairchild[38]
and recent statutes.[39]
As Lord Bingham commented in Fairchild, which was thought only to have a narrow
application, it is perhaps ‘unrealistic to suppose that the principle here
affirmed will not over time be the subject of incremental and analogical development
…’[40]
and as such apply to broader issues such as concurrent causation in insurance
claims. However, it cannot be ignored that insurance policy documents are still
contracts, and as such, as Clarke seems to argue quite clearly, the tortious
analogy, it is suggested, is perhaps not the panacea of all evils. As has been
written in a Canadian context,
… Courts and commentators alike often observe that the
interpretation of insurance contracts must start with the intent of the
parties. The rules of interpreting insurance contracts are well settled. Of
paramount importance is the intention of the parties ascertained objectively
from the words selected by the parties to express their legal obligations in
writing …[41]
and if, as is common in
jurisdictions such as California, there are ‘… Anti-concurrent causation
clauses [which] protect insurance companies when both a covered event and an
excluded event simultaneously or in sequence cause damage to a property …’ are
included, then they become contractually binding.[42]
4.
English Law Reforms – 2016 and Beyond; Evolution or Revolution?
It has been argued that
the Insurance Act 2015, which came into force on 12 August 2016, to some extent
at least has clarified some of the issues raised and identified above. It can
be said that the Act places more of a burden on the insured to make a ‘fair
representation’ of any risks that may be a foreseeable basis for a claim,
whether a single risk or, as is relevant to this paper, concurrent or multiple
risks. Once made, though, the Act seems to benefit the insured by removing
uncertainty and ambiguity as to a claim. As Howard[43]
suggests,
… An insured will owe a duty to insurers to make a “fair
presentation” of the risk. For the insured, this means fully disclosing every
material circumstance that the insured either knows or “ought to know,” or
providing sufficient information to put the insurer on notice that it needs to
make further inquiries…
whether single or
multiple risk. This should, in theory, eliminate the need to argue multiple or
concurrent causation, as it would seem logical that only causes identified at
the outset will be subject to an insurance claim. Howard explains that,
… An insured “ought to know” what it would have found out by
a “reasonable search” for information; this is a significant change. Although
an individual or small trader is not likely to have much difficulty in carrying
out a reasonable search, larger and corporate businesses will need to ensure
that they have a structured and trackable system in place for enquiring of all
staff and contractors about information that might need to be disclosed before
taking out or renewing an insurance policy. This is likely to increase the
burden on such businesses.[44]
This paper argues that following
this ‘… shift in English insurance law after the introduction of the Insurance
Act 2015 …’ perceived as being widely ‘pro-insured’, the recent judgment
in B Atlantic in 2019 highlighted above seems to be a ‘helpful
confirmation of the value and importance of exclusions in insurance policies.’[45]
However, even after the introduction of the Act, the judgment in the B Atlantic
was still far from clear. Though ‘… Lord Mance did refer to a possible scenario
in which a certain peril will dominate and exclude from relevance a later
development which, taken by itself, may otherwise be seen as triggering an
exclusion …’ it remains uncertain as to the answer to this question and it ‘… seems
likely, however, that the Court will continue to strive to find a single
proximate cause and will only deem there to have been concurrent causes in the
most extreme examples.’[46] What
does seem clear, even after the introduction of the Act, as stated in the FCA v
Arch case, is that it is ‘always a question of interpretation,’ where there are
two proximate causes, one of which is an insured peril but the other is
excluded, ‘the exclusion will generally prevail.’[47]
It seems that the
… key hurdle for the policyholders was the “but for” test,
which shows, for example, that “but for” the cases of COVID-19 in the vicinity,
they would not have suffered any interruption … Satisfying the “but for” test
is not enough to satisfy proximate causation), but the reasoning of the Supreme
Court depended upon the finding that the insured peril was one of multiple
broadly equal effective/dominant causes.[48]
As such, as the authors
suggest, it is perhaps the ‘raft’ of business interruption case law post-Covid
making its way through the courts rather than the introduction of the
Covid-pre-dated Act, which is likely to pave the way for the development of the
law in this complex and commercially vital area.
4.1. Post-COVID Case
Law
As Fletcher and Kramer
suggest, and this paper would support,
… Causation is a concept of fundamental importance in many
contexts in insurance and can give rise to difficult issues of fact and law.
Correct resolution of these issues depends not only on the general law and the
many decided cases but also, often crucially, on the proper interpretation of
the relevant policy wording and the application of business common sense …
Though the case of Arch
seems, this paper would argue, to have gone some way to clarifying the position
on concurrent causation, ‘… further elucidation is to be expected from the raft
of business interruption cases now making their way through the courts …’ one
of these being the Spire[49]
case. The Court of Appeal usefully set down key points:
·
The usual principles of
contractual construction apply, and such clauses are to be construed in a
balanced way without predisposition to narrow or broad interpretation (per
Andrew Baker LJ, with whom Bean and Underhill LJJ agreed, in paragraph 20. See
also AIG Europe v Woodman [2017] UKSC 18). However, some formulations have been
held to achieve a broad effect, for example, ‘consequent on or attributable to
one source or original cause’ (paragraph 21).
·
There is, in principle,
no distinction between an ‘original’ and an ‘originating’ cause, both of which
connote a considerably looser causal connection than ‘proximate cause’
(paragraph 21 and Beazley Underwriting Ltd v The Travelers Companies
Incorporated [2011] EWHC 1520).
However, although the
original cause does not need to be the sole cause of the insured’s liability
(or loss), it is necessary to find a single unifying factor, and not every “but
for” cause is sufficient to amount to an ‘original cause’ (paragraph 24).[50]
However, s. 11 of the Act
still allows for express exclusions which may seek to exclude one or more
specific causes of loss from being recoverable. As Mekin and Ozlem[51]
explain,
…A key element in the operation of s. 11 is the words added
in December 2014, “other than a term defining the risk as a whole.” Such terms
fall outside s. 11, and it is plain from the Law Commission’s documents that
insurers should be allowed to exclude certain forms of loss entirely …
However, it seems to be
clear that the purpose of s. 11 is to ‘… prevent denial of liability for a loss
of a completely different nature from that contemplated by an exclusion …’ and
what is perhaps noteworthy is that,
… A direct causal link between the breach and ultimate loss
is not required, and the test is not whether the non-compliance caused or
contributed to the loss, but whether non-compliance with the term could have
increased the risk in the circumstances that the loss occurred. It is necessary
to look at the issue broadly and not to consider “the way” in which the loss
occurred.[52]
This paper’s critical
analysis would argue that about concurrent causation liability, ‘… Section 11
in particular was adopted at the last minute and with virtually no parliamentary
discussion. It will take some years and a series of seminal decisions of the
English courts to know exactly what effect these reforms will have.’[53]
Though Merkin and Gürses draw comparisons with New Zealand and Australia, and
other commentators,[54] selecting
China as the comparator, this paper will now seek to compare the approach of
French law.
5.
The French Approach
As Moreteau explains,
French law has developed no system that could properly be
described under the name of proportional liability. Civil Code provisions
regarding civil liability (art. 1382 and following) provide for full
compensation of damage, wherever the basic conditions are met. Court
interpretation of these articles is known to offer a particularly
victim-friendly environment, favouring full compensation (reparation intégrale)
of damage. However, French courts have developed strategies to offer limited
compensation when causation is uncertain and techniques to fully compensate
victims in dubious circumstances.[55]
As the author explains,
… French courts routinely apply the doctrine of loss of a
chance (perte d’une chance) whenever of the opinion that the defendant’s
activity deprived the victim of the opportunity of a favourable event when the
victim can do nothing to remedy the situation …
It is also suggested,
albeit rather sweepingly, that
… The French find it convenient to shift from causation to
damage. Rather than admitting that causation is partial or uncertain and
following a path similar to articles 3:101 to 3:106 of the Principles of
European Tort Law (PETL), French courts regard loss of a chance as a head of
damage that will be fully compensated.[56]
With insurance
specifically, it should be noted that the industry in France is governed and
regulated by the French Prudential Supervisory Authority, which was created by
Order No. 2010-76 of 21 January 2010 and became, by Law No. 2013-672 of 26 July
2013, the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”).
Their ‘mission’ is ‘to ensure the protection of the clients, the insureds, the
adherents (the term used to describe insureds under group insurance contracts)
and beneficiaries of the entities under its supervision, as well as the stability
of the financial system.’[57]
The authors explain that, seemingly contrary to the aim of the Insurance Act
2015 and jurisprudence in English law already illustrated,
… There is a general tendency of French law, as enforced by
courts, to protect consumers and non-professionals, rather than insurers in
general. Insurance contracts are indeed subject to Art. L.132-1 of the Consumer
Code regarding abusive clauses, except when the insurance policy is related to
the professional activity of the insured. According to Art. L.132-1 of the
Consumer Code, contractual clauses shall be interpreted, in the event of doubt,
in the way that is most favourable to the consumer or the non-professional. Besides,
since the adoption of Law No. 2014-344 of 17 March 2014 (Loi Hamon), new
provisions benefiting consumers and non-professionals have been introduced in
the Insurance Code, in particular about pre-contractual information (especially
in case of sales by direct marketing), or the insured’s right of withdrawal in
case of distant selling, or to termination rights for certain types of
insurance contracts.
Concerning the issue of
disclosure, especially of a secondary or concurrent risk, it is perhaps
interesting to note that ‘… When taking the insurance contract, the
policyholder must answer the questions that were phrased by the insurer (Art.
L.113-2 of the Insurance Code). A key document for insurers is therefore the
questionnaire, which is a list of questions that they submit to the
policyholder …’ and that the
… position of French courts is very strict. Indeed, according
to case law, only a false answer to a specific question asked by the insurer
may constitute a false declaration (Ch. Mixte, 7 February 2014, No. 12-85.107;
Civ. 2, 11 June 2015, No. 14-14.336, 978). A simple declaration, which does not
answer any specific question, may not be enough to be considered a false
declaration, even if it is signed by the policyholder. Thus, under French law,
the insured does not have a duty to make spontaneous disclosures to the insurer
when taking the insurance contract.[58]
Returning to Moreteau,[59]
his explanation of French tort law and concurrent causation is perhaps the most
illuminating for this research. The author refers to the recent reform of the ‘delict’
system in French law, both by way of reference to the Terre draft and the
Catala drafts, stating that
… Causation is dealt with in different ways in both projects.
The Catala draft deals with it in two short articles, with no attempt to define
causation or give guidance, but simply insisting that a causal link must be
proved (article 1347). The Terré draft defines causation (article 10),
describing the cause of damage as any fact susceptible of producing it
“according to the ordinary course of things and without which it would not have
occurred.” Article 10 also limits liability to the immediate and direct
consequences of the author’s act. Causation may be established by all means,
which must be understood as including presumptions.[60]
The author, and with specific
relevance to this paper, explains about multiple causations that,
… Proportional liability is on the cutting edge of tort
scholarship. The Principles of European Tort Law have proposed proportional
liability as a response to causal uncertainty, an issue recently revisited by
members of the European Group on Tort Law. In particular, in cases where there
are multiple tortfeasors or uncertainty of causation, various doctrines are
applied, where the causation requirement is attenuated …[61]
Using hunters as his
hypothetical, just as other commentators do with an analysis of English law,
the author explains that,
… If several hunters may have caused the damage, they can be
made liable under one of the following doctrines: fault-based liability (faute commune,
faute collective), if acting as a group and guilty of a collective fault;
custody of the bullets when two guns shot simultaneously and at least two
bullets hit the victim (gerbe unique); or collective or joint custody of the
bullets, also triggering strict liability for the fact of a thing under article
1384 paragraph 1,
demonstrating
that concurrent causation is well-established as a doctrine in French law.
Illustrating this by
reference to a well-publicised French medical case where the actual tortfeasor
was perhaps one of many, the author explains that liability may
… fall under two different provisions of the Principles of
European Tort Law regarding causation. It may be regarded as a situation of
concurrent causes. According to Article 3:102, “In case of multiple activities,
where each of them alone would have caused the damage at the same time, each
activity is regarded as a cause of the victim’s damage.” This leads to
solidarity because we have multiple tortfeasors Article 3:103(2) (alternative
causes) may be a better fit.[62]
The author makes the same
assertion related to French asbestos cases, very similar to those heard in the
English courts, and as such, this paper can draw similarities between both
English and French approaches.
5.1. French
Covid-Business Interruption & Insurance
Cass. civ. 2, 1 December 2022 (n°21-15.392, 21-19.341,
21-19.342 and 21-19.343)
As
reported, in this case, several restaurant owners had taken out ‘multi-risk
professional’ insurance policies with the same insurer, including ‘financial
protection’ and ‘business interruption following administrative closure’ cover.
These restaurant owners were forced by orders and decrees to close their doors
to the public for several periods due to the spread of COVID-19.[63]
They then reported the
loss to their insurer to be compensated for their business interruption losses.
The insurer refused to cover them, citing a clause that
excluded
[...] operating losses when, on the date of the closure
decision, at least one other establishment, whatever its nature and activity,
is subject to an administrative closure measure in the same departmental
territory as that of the insured establishment, for an identical reason.[64]
In four rulings handed
down on 1 December 2022, the French Supreme Court validated the above-mentioned
exclusion of coverage clause, considering that it is formal and limited.[65] The
Paris Court of Appeal[66]
held that
… the clause by which the insurer excludes all coverage
if “the provision of such coverage, the payment of such a claim or the
provision of such assistance would expose the insurer to any sanction,
prohibition or restriction under UN resolutions, laws and regulations enacted
by the EU or any other State imposing economic or commercial sanctions, is an
exclusion clause within the meaning of Article L.113-1 of the French Insurance
Code. Consequently, the Court considers that the above-mentioned clause is not
formal and limited and that it is therefore unenforceable against the insured,
in that it does not allow him to know precisely the extent of the circumstance
that is excluded.
From a contractual
perspective, it is also noted that ‘… Insurance is considered a “contingent
contract” under the French classification of contracts. It implies the
risk must exist to be insurable.’[67] On a final note, if an
action is brought before a French Court,
… there is now a risk that any exclusion clause in the
insurance contract, be it governed by Dutch, German, or English law, for
example, is considered to be valid only if it complies with French law
standards. This is even the case if both the insurer and the policyholder have
their seat in the same (foreign) country. This decision amounts to an excessive
extra-territorial application of French law, which is highly questionable.[68]
6.
London International Exhibition Centre Plc v Royal & Sun Alliance Insurance
Plc & Ors 21st June 2023 – the current position?[69]
‘… On 16 June 2023, the
High Court handed down judgment in the above matter ([2023] EWHC 1481 (Comm)),
which involved members of chambers, Aidan Christie KC, Michael Davie KC, Martyn
Naylor, and Anna Hoffmann. The judgment considered the application of the
analysis by the Supreme Court in the seminal case The FCA v Arch & Others [2021] UKSC
1 (the
“FCA Test Case”) regarding concurrent causation and disease clauses in the
context of policy wordings that were triggered by the disease being at the
premises, rather than within a radius of the insured premises. Jacobs J
concluded that the UKSC’s approach and concurrent causation analysis would also
apply to such at the premises wordings.’
6.1. Legal Context
In the FCA Test Case, the
UKSC held that in the context of radius clauses (which specify coverage for a
specific radius, e.g., 25 miles), covered only to cases of illness resulting
from COVID-19 that occurred within the radius specified in the clause. To show
that COVID-19 was the proximate cause of the BI losses, it was sufficient to
prove that the interruption was a result of government action taken in response
to cases of disease, which included at least one case of COVID-19 within the
radius of the clause.
The critical issue in the
present case was whether clauses that provided insurance cover where it could
be established that COVID-19 was “at the premises” (“ATP clauses”) should also
adopt the “concurrent causation” analysis found to apply to the radius clauses
in the FCA Test Case.
6.2. Factual
Background
The judgment concerned a
number of preliminary issues arising out of claims made in six separate actions
in respect of business interruption losses allegedly suffered by different
policyholders as a result of Covid-19 and related national lockdowns. The
Claimant in the lead action owns and operates the “Excel Centre” and brought
claims against six insurers.
6.3. Judgment
Jacobs J confirmed that
the UKSC causation analysis in the FCA Test Case applied to the ATP clauses
(see [248]). The reasons for the decision were, in summary, as follows:
a.
It was accepted by both sides that
the physical coverage of radius clauses logically encompassed the premises
themselves. There was therefore a clear “geographical link” between a radius
clause and ATP clauses, as the width of the radius was interpreted as starting
from a central point in the premises (see [186] to [189]).
b.
At paragraph [250] of the FCA Test
Case, the UKSC had noted that, in principle, the same causation analysis should
apply to hybrid and prevention of access clauses. This reasoning was adopted
in Corbin & King Ltd and Others v AXA
Insurance UK Plc [2022] EWHC 409 (Comm) by Cockerill
J. These clauses essentially relate to clauses covering occurrences “in the
vicinity of the premises” and do not have a specified physical area of
coverage. They were, therefore, in the Judge’s view, very similar to ATP
clauses in terms of size and geography (see [190] and [191]).
c.
The diseases covered by the ATP
clauses and the radius clauses shared the same proclivity to become widespread
and to call for action not solely responsive to cases within the radius or the
premises. It could therefore be expected by insurers that individual cases of
diseases of those types may combine to cause a loss that would not have
resulted from any individual case alone. Ultimately, therefore, it was not the
existence of the radius which permitted that “wider area authority action”
should be covered, but rather the nature of the diseases (see [202]).
d.
On a proper interpretation of the
clauses, the radius is essentially a line that has been drawn for contractual
certainty and should not, therefore, impact the appropriate approach to
causation (see [205] and [206]).
e.
In the FCA Test Case, the UKSC
considered that a “fundamental objection” to the alternative “but for” and
“weighing up” causation approaches was that they set disease occurring outside
the scope of the cover in competition with those occurring within its scope.
This argument was equally applicable to ATP clauses (see [207] and [208]).
f.
As observed in the FCA Test Case, it
was important for construction to apply an approach that was clear and simple.
The application of the “but for” test would give rise to anomalies that would
be difficult to explain rationally to a reasonable policyholder. In comparison,
the concurrent causation approach was straightforward and provided clarity (see
[210]).
The Judgment also dealt
with the issue of causative potency of individual cases of Covid-19 and
confirmed that cases in March 2020 could not be said to have caused lockdowns
later in the autumn of that year. This confirmed the conclusions reached in the
context of the aggregation question by Butcher J in Stonegate Pub Company Ltd v MS Amlin
Corporate Member Ltd & Ors [2022] EWHC 2548 (Comm).
Jacobs J also agreed with
the arguments presented on behalf of some insurers with policies requiring the
presence of a notifiable disease on the premises that such a trigger could only
have occurred after Covid-19 had been made a notifiable disease in the relevant
part of the UK, e.g. on 5 March 2020 in England (see [273] and [282]).
6.4. Analysis
As the decision may be
appealed, it is not yet possible to determine the true extent of its
significance. Further, at [191], Jacobs J referred to the potential application
of the causation analysis to “vicinity” clauses and noted that this matter was
likely to arise in other preliminary issues before him later this year. It will
therefore be interesting to see how this develops and how broadly the concurrent
causation approach will be applied in future cases.
Further, as observed by
Jacobs J at [204], ATP clauses are, on this analysis, essentially heavily
confined radius clauses, and the narrower the radius, the more difficult it
will be to demonstrate that an occurrence took place within that area.
Therefore, whilst the decision is, at first blush, a win for policyholders with
ATP clauses, they may face evidential challenges further down the line.’[70]
7. Discussion and Analysis
It is hoped that this
paper has successfully defined and outlined the legal framework governing
concurrent causation and insurers’ liability. It has been illustrated that
there are comparisons between the legal framework in English common law and
that practiced in France under the civil code, but also palpable differences
which are to be expected in common law and civil jurisdictions. There has been
a thorough dissection and analysis, especially that of the English common law
position, that regardless of a situation having multiple contributing causes,
only a single proximate cause should be identified for liability. This paper
has demonstrated that the law is far from clear in England and Wales, with at
best a lack of precedent and at worst, conflicting case law, which results in a
lack of clarity as to the legal position in a key area of law and practice.
Even after legislative reforms in 2016, the question that this paper sought to
answer is whether the codification in French law gives greater clarity. This
seems to be answered in the affirmative, but given codification and certainty
in French law, this is not perhaps surprising. Additionally, English common law
shows a bias towards supporting the insurance company, with more responsibility
placed upon the customer to anticipate all of the potential risks that may
damage the item being insured, and which may therefore invalidate the insurance
policy, as well as placing the customer in a precarious position where an unanticipated
risk invalidates their insurance. French civil law is much more supportive of
the insured.
Conclusion
The conclusion of the
paper would be a recommendation for further reform of the English Common Law concerning
concurrent causation. English consumers would benefit from the adoption of
legal principles similar to the French civil code, which removes the complexity
of concurrent causation more and is in line with the consumer-supporting ‘doctrine
of loss of a chance’ and the move from causation to damage, which will be fully
compensated, regardless of cause.
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International 
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