Successful arbitration against international insurer following insolvency of insured firm

Our commercial dispute resolution team acted for 90 claimants in a complex and hard-fought arbitration against a major international insurer arising from claims under the Third Party (Rights Against Insurers) Act 2010.

The claimants had originally invested in a care home investment scheme after receiving advice from a firm of solicitors. Following findings of negligence, the claimants successfully obtained judgment against the solicitors in the High Court. However, the firm subsequently entered liquidation, leaving the claimants to pursue recovery through the solicitors’ professional indemnity insurance.

Under the Third Party (Rights Against Insurers) Act 2010, the claimants acquired rights to seek an indemnity directly from the insurer. The insurer denied liability, contending that coverage was excluded under a dishonesty exclusion contained in the policy. Given the value of the claims and the number of individuals involved, the dispute required the coordination of 90 claimants while addressing complex issues of insurance law, insolvency and professional negligence.

Working alongside another claimant group represented by separate solicitors, we commenced arbitration proceedings seeking declarations that the insurer was obliged to indemnify the claims. The arbitration was vigorously contested and progressed at pace. Following a final hearing, the tribunal rejected the insurer’s reliance on the dishonesty exclusion and found in favour of the claimants.

The insurer subsequently sought to challenge the tribunal’s decision in the Commercial Court. The challenge was unsuccessful, with the insurer failing to obtain permission to appeal. Having lost on liability, the insurer then sought to reduce its exposure by arguing that a number of the claims should be aggregated, which would have significantly restricted the sums recoverable by affected claimants under the policy.

Our lawyers successfully resisted those arguments at a further hearing. The tribunal then issued an award rejecting the insurer’s aggregation case. The parties later reached agreement regarding costs, which was formalised in a separate award.

The claimants achieved complete success at every stage of the proceedings. As a result, each claimant recovered their losses in full together with interest. The matter demonstrates our team’s specialist expertise in complex arbitration, insurance coverage disputes, insolvency-related claims and appellate proceedings, as well as our ability to manage large-scale claimant actions and deliver exceptional outcomes for clients.