Reed Smith Client Alerts

As an update to our earlier article (available at, we set out below the declarations made following the High Court’s judgment in FCA v Arch and others (the Judgment). The court has now, having heard the parties’ submissions at the consequentials hearing on 2 October 2020, issued its declarations in the test case.

The FCA, six (of the total eight) insurers and one action group have also been granted their ‘leapfrog’ certificates to appeal to the highest court in the land, the UK Supreme Court (UKSC). The FCA, the Hiscox Action Group and the six insurers have set out their grounds of appeal and, in this alert, we analyse some of these grounds. Zurich and Ecclesiastical have decided not to appeal in light of their comparatively positive results in the High Court.

Read on below to find out more and stay tuned for further updates as this important test case progresses.

The Declarations

The court has now declared how and the extent to which the business interruption (BI) policies in the representative sample of policies that were before the High Court, respond to BI losses arising from COVID-19.

A declaration, here in the form of a specific court order, is confirmation by the court of a particular state of affairs. Whilst it does not order (or require) the parties to take any particular action, its official weight will provide much sought-after clarity and certainty to the policy wordings that were part of the case (which will extend to other policyholders with similar wordings). The declarations essentially give effect to the findings in the Judgment.

Whilst the declarations specifically respond to each of the insurers’ policies, confirming specific points in relation to each of the individual policy wordings, they also include helpful, broader clarification on the following key issues:

(a) the occurrence of COVID-19;

(b) the evidential requirements to demonstrate the prevalence of COVID-19;

(c) the scope of ‘UK government’; and

(d) the application of trends clauses.

Whilst the declarations are specific to the policy wordings that were the subject of the case, it may be that helpful analogies can be made in relation to policy wordings from other insurers.