Knowledge Counsel London
"…a policy which is concerned with the economic effects of insured perils on the policyholder’s business. As such, one would expect a clause addressing savings to the business to be concerned with the economic effect of the saving in question."
INSURANCE – COVID-19
The Supreme Court has clarified one of the long running questions arising from the Covid-19 pandemic and the myriad insurance claims for business interruption that arose as a result. The UK Government’s Coronavirus Job Retention Scheme allowed employers to furlough staff and claim the wage payments during the furlough period from the scheme. The Supreme Court confirmed that such furlough payments were to be deducted from any claim under the business interruption policy as savings made by the business as a result of the insured peril. The decision turned on whether the clause focussed on savings made as a matter of fact or reduction in liability as a matter of law. The relevant question was whether they were reduced as a matter of fact and the court found that they were – the furlough payments effectively paid the relevant employees’ wages/expenses. This interpretation fits with the overall purpose of the savings clause to prevent over-indemnification of the assured and was more commercial. It was irrelevant whether the assured paid the wages and then was reimbursed, or the obligation to pay was waived or paid on the assured’s behalf. The economic result for the assured was the same.
ARBITRATION
The Commercial Court has allowed a challenge to an ICC arbitration award on the basis that there had been serious irregularities resulting in substantial injustice as required by section 68 of the Arbitration Act 1996. The Tribunal had made an award finding Indus liable for Echjay’s claims and awarding damages and injunctive relief. The dispute related to an agreement for the supply of engineering components by Echjay to Indus. The court held that the Tribunal had failed to deal with all the issues put to it. In deciding that Indus was liable for damages for breach of a non-compete clause, the Tribunal had not considered whether Echjay had capacity to provide certain components at all or within a certain period. The matter was remitted to the Tribunal for their decision.
Indus Powertech Inc v Echjay Industries Private Ltd [2026] EWHC 827 (Comm), 10 April 2026
JURISDICTION
The Court of Appeal has upheld a High Court decision that bringing proceedings in Moscow was not a breach of the arbitration clause in the facility agreement. The claimant Cypriot company was borrower under the facility agreement, which was governed by English law and subject to arbitration in Vienna. There was also a mortgage agreement relating to Russian properties that was governed by Russian law and Russian court jurisdiction. Proceedings were commenced in Russia to enforce the mortgage agreements and the claimant challenged jurisdiction on the basis that the banks should have first commenced Vienna arbitration and obtained an award that there had been an event of default. The English court highlighted that there was very little connection with the English court jurisdiction and that it was not clear that the correct approach was to apply English law principles as the claimant invited it to do. But the court concluded, applying that approach, that bringing proceedings in Moscow was not a breach of the arbitration clause in the facility agreement.
FH Holding Moscow Ltd v AO Unicredit Bank and another [2026] EWCA Civ 468, 17 April 2026
CONTRACT INTERPRETATION
In the context of a share sale of a company, the Commercial Court held that an Equity Term Sheet agreed between the buyer and various management, directors and officers of the company (the “Claimants”) did contain binding obligations. The agreement involved the allocation of shares in the new Holdco to the Claimants. The buyer failed to establish the Holdco to hold the shares in the company upon acquisition and they were held directly by the buyer. The term sheet contained wording that indicated it was binding but could be superseded by a definitive agreement. There were binding obligations on the buyer to arrange an appropriate corporate structure and issue equity to the various Claimants. The buyer was therefore in repudiatory breach of those obligations by ceasing negotiations on the relevant documents and terminating employment/engagement of the Claimants.
Hoffman and another v Finalto Group Ltd and another [2026] EWHC 921 (Comm), 21 April 2026
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