A case management conference (CMC) before Mr Justice Butcher was held on 16 June to deal with a number of procedural matters in relation to the future conduct of the Financial Conduct Authority's COVID-19 business interruption insurance test case.

The judge ruled that the case satisfied the qualifying criteria for it to be heard under the Financial Markets Test Case Scheme, namely that it raises issues of general importance in relation to which immediately relevant authoritative English law guidance is needed. The scheme enables a qualifying claim to be determined without the need for a present cause of action between the parties to the proceedings. The judge must be satisfied that the arguments of all those with opposing interests in relation to the issues in question will be properly put before the court by those represented.

It was confirmed that Butcher J and Court of Appeal Judge Lord Justice Flaux would sit together to hear the trial of this matter, scheduled to start on 20 July and to last eight days. Both Flaux LJ and Butcher J were leading advocates in insurance cases before moving to the bench.

The eight insurers are represented by seven different barrister teams. The judge and the FCA emphasised that the insurers should work together as much as possible, but it was clear that the insurers are not able to speak as one on all matters.

There is no agreement, at least at this stage, about the extent to which factual or expert evidence will be required to determine the issues and how its relevance would be addressed. The insurers are considering what factual evidence might be required, with different insurers suggesting a range of matters on which they may wish to submit evidence. For example, unless certain facts are agreed, Hiscox will be seeking to adduce evidence about Sweden's response to COVID-19. It says the evidence will be relevant to the question of whether at least some of the financial losses in the UK would have been suffered even without the restrictions imposed by the UK government in response to the virus. It seems that the insurers may seek to adduce evidence regarding previous pandemics, principally Hong Kong flu, but also others such as Zika virus and Ebola. The judge said that to guard against the risk that the trial could be disrupted by irrelevant evidence, the court will retain the power to give or refuse permission for evidence to be adduced.

The FCA's pleaded case relies upon an analysis (the Cambridge Analysis) of the spread and incidence of COVID-19 infection in specified areas of the UK. The insurers' position is that limits should be placed on what this analysis establishes. This matter will be considered further at the next CMC, but the judge made clear that the timetable cannot accommodate expert evidence on this matter.

The judge raised a concern about the questions the court is being asked to answer. He said that, as currently formulated, a number of them cannot be answered as they are too general and do not admit of definite answers. The judge commented on the limits of the guidance that the court can or is prepared to give. The FCA will no doubt refine the questions in consultation with the insurers when the list of issues for determination is prepared. However, the judge's comments highlight the challenges that the FCA's initiative faces in seeking to obtain certainty on the key questions.

With a little over a month to go before the trial, a number of important matters regarding evidence and the scope of what the court can determine remain to be agreed or determined. In addition, it is possible that further insurers or wordings may be added to the case and that other parties may seek to intervene.

The insurers are due to serve their defences by 23 June and a further CMC will be held on 26 June.

Originally published June 22, 2020.

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