INSURANCE — Reinsurance — Construction — Same or equivalent wording in reinsurance and underlying insurance — Whether having same meaning in both contracts

Wasa International Insurance Co Ltd v Lexington Insurance Co; AGF Insurance Ltd v Same [2008] EWCA Civ 150; WLR (D) 69

CA: Pill, Sedley and Longmore LJJ: 29 February 2008

Where the wording in a contract of reinsurance was the same as or equivalent to that in the underlying contract of insurance, the two contracts should be given the same construction unless there were clear indications to the contrary.

The Court of Appeal so held in a reserved judgment, allowing an appeal by the defendant, Lexington Insurance Co, from a decision of Simon J to uphold the contention of the claimants, Wasa International Insurance Co Ltd and AGF Insurance Ltd, that as a matter of English law they were not liable as reinsurers for the cost of remedying damage to property for which the defendant, as insurer under a contract governed by the law of Pennsylvania, had been found liable by the Supreme Court of Washington.

LONGMORE LJ said that, since the same period of cover was in issue in the original insurance and in the reinsurance, the period of cover should receive the same interpretation in both contracts in the absence of clear indications to the contrary.

SEDLEY LJ and PILL LJ delivered concurring judgments.

Appearances: Christpher Butcher QC (Chadbourne & Parke) for the defendant; Alistair Schaff QC and Sioban Healy (Addleshaw Goddard) for the first claimant; Neil Carver QC and Stephen Midwinter (Charles Russell) for the second claimant.

Reported by: BO Agyeman, barrister