On February 20th, the House of Lords issued its judgment in the long-awaited HIH Casualty and General Insurance Limited v. Chase Manhattan Bank film financing litigation (otherwise known as The "Phoenix" film finance case). Many thanks to my colleague John Hall at the London firm of CMS Cameron McKenna, who was acting for the bulk of the insurers in this litigation, for providing the following synopsis of this important decision and its implications and for graciously permitting me to circulate it (with minor edits) to my many friends in the insurance and reinsurance industry who may find it of interest:
The House of Lords opinion was solely concerned with preliminary issues concerning the interpretation of the policy wording and, in particular, Chase's contention that, by virtue of the wording, Insurers were unable to avoid/rescind the insurance contracts, whatever non-disclosure/misrepresentation may have occurred. The Lords' findings in this respect are of seminal importance to the film finance litigation in the UK and may be of some interest to those practitioners involved in similar litigation in the USA where, at the moment, the Courts are interpreting the policy wording in a different way. As you will see, on the facts in Phoenix (in which there are no allegations of misrepresentation/non-disclosure against Chase), the Lords disagreed with Chase's contentions and have concluded that Insurers can avoid/rescind on grounds of fraudulent misrepresentation or fraudulent non-disclosure by Heaths, as agents for Chase. Insurers are also entitled to damages on largely similar grounds, albeit that, as you will appreciate, if there is an entitlement to avoid, no claim for damages will be necessary. I hope the findings will be of interest. There will, I know, be a lot of US lawyers reading the judgment, since I suspect that it may have wider application in due course than merely film finance. HIH Casualty and General Insurance Limited v. Chase Manhattan Bank,  UKHL 6,  All ER (D) 272 (Feb).