Supreme Court Judgment in Business Interruption Insurance Appeal
The Supreme Court has handed down an important judgment for the insurance industry in Gatwick Investment Limited & Ors v Liberty Mutual Insurance Europe SE [2026] UKSC 14.
The issue was whether furlough payments paid by the UK Government under the Coronavirus Jobs Retention Scheme fell to be deducted from the amounts otherwise payable by insurers to insureds for business interruption losses suffered as a result of the Covid-19 pandemic. Approximately £1bn has been deducted by insurers from claims paid to policyholders on the basis that furlough payments reduce the losses suffered.
The Supreme Court, upholding the judgments of Jacobs J and the Court of Appeal (and an earlier judgment of Butcher J in Stonegate Pub Co v MS Amlin [2022] EWHC 2548 (Comm)), held that furlough payments fell to be deducted. The Court’s judgment clarifies a number of issues of general principle, including the correct approach to construction of indemnity policies, and what rules determine when credits reduce loss claimable under such policies.
The Court accepted the insurers’ case that the payments engaged the savings clauses: the furlough payments caused the insureds’ wage costs to ‘cease’ or ‘reduce’ and the payments were ‘in consequence of’ the insured peril, and rejected policyholders’ arguments that furlough payments were collateral or res inter alios acta.
The full judgment can be found here.
Adam Kramer KC, William Day and Amelia-Rose Edwards acted for the lead appellant, Bath Racecourse, instructed by Aaron Le Marquer and James Breese of Stewarts. Adam and Will also appeared in the Courts below and in Stonegate.
