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WASA International Insurance Company Ltd v Lexington Insurance Company & Ors [2008] EWCA Civ 150 (29 February 2008)
Location: Case TypesInsurance    
Posted by: Law Brief Publishing 29/02/2008 00:00
Settlements: Lexington insured the property of Alcoa. The period of insurance cover ran from 1st July 1977 to 1st July 1980. Lexington purchased facultative reinsurance with Wasa and AGF for the same years and limit of liability on the assumption that it was “back-to-back” cover. Alcoa subsequently sought to recover remedial clean up costs from Lexington. The US Court held that Lexington was liable for these costs, irrespective of whether the damage was sustained before, during or after the inception date. Lexington settled with Alcoa on this basis and sought to recover under the reinsurance cover treaty. Reinsurers declined to pay on the basis that the reinsurance policy was governed by English law and accordingly they could only be liable for the costs of remedying damage to property which actually occurred during the three year period of cover. The Court of Appeal decided that the key question was not so much whether the parties intended the cover to be “back-to-back” (whatever that might mean) but whether the parties intended that wording to have the same meaning in both contracts. Where the policies provided cover for property for the same period it was natural to infer that the parties intended the wording to have the same meaning in each contract. The same or equivalent wording in the insurance and reinsurance should generally be given the same construction unless there were clear indications to the contrary and that accordingly Lexington could recover from reinsurers.
Court: Court Of Appeal (Civil Division) (England and Wales)
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