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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Astrazeneca Insurance Company Ltd v XL Insurance (Bermuda) Ltd & Anor [2013] EWCA Civ 1660 (20 December 2013) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2013/1660.html Cite as: [2013] EWCA Civ 1660 |
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ON APPEAL FROM QUEENS BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE FLAUX
2011 FOLIO 1047
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE BRIGGS
and
LORD JUSTICE CHRISTOPHER CLARKE
____________________
AstraZeneca Insurance Company Ltd |
Appellant |
|
- and - |
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XL Insurance (Bermuda) Ltd ACE Bermuda Insurance Ltd. |
Respondents |
____________________
Mr David Edwards QC and Mr David Scorey (instructed by Clyde & Co) for the Respondent
____________________
Crown Copyright ©
LORD JUSTICE CHRISTOPHER CLARKE:
"6 …………From 1997, AZ manufactured, marketed and sold in the United States and Canada through the US and Canadian companies in the Group, a second generation atypical antipsychotic drug under the name "Seroquel" which was approved by the United States Food and Drug Administration ("the FDA") on 26 September 1997. At all material times, the label for Seroquel approved by the FDA contained information about weight gain and diabetes.
7 On 28 August 2003 a putative class action (Zehel-Miller) was filed against AZPLP in Florida in which the plaintiffs alleged (i) that Seroquel caused personal injury; (ii) that Seroquel was defective; and (iii) that there had been a failure by AZPLP to provide adequate warning. The Complaint in that action was first notified to the claimant on or about 11 September 2003. By a letter dated 1 December 2003, AZPLP issued the claimants with a Notice of Integrated Occurrence pursuant to Article V of the Policy.
8 Since that action was commenced, numerous plaintiffs in the United States and Canada have brought proceedings or joined lawsuits against AZ alleging that Seroquel has caused them personal injury. As at 31 October 2012, the claimant has settled claims presented by AZ for legal costs incurred in defending the claims and for settlements made in respect of the claims made against AZ of some £83.5 million excess of £365 million. It would appear that in only one of the cases has the matter been litigated through to a full trial and that resulted in a verdict for the defence. Other claims have been dismissed summarily.
9 The vast preponderance of what AZ has paid out represents legal costs incurred in defending the claims, US$786 million, as against US$63.7 million paid out in settlements (representing on average, including settlements agreed in principle, about US$20,000 per plaintiff). The claimant insurer has indemnified AZPLP and AZC in respect of the legal costs incurred in defending the claims (referred to as "Defense Costs" in the Policy …."). It has also indemnified those insureds in respect of about 50% of settlement sums paid, but declined to indemnify in respect of the other 50% on various grounds, such as that the claims relate to injuries caused by Seroquel sold after the date of the Notice of Integrated Occurrence. The claimant claims in the present proceedings that it is entitled to be indemnified by the defendants pursuant to the reinsurance contracts, in respect of all sums it has paid in respect of settlements and Defense Costs, within the relevant layer. The defendants deny any such entitlement to an indemnity."
"3…… The Bermuda Form was introduced by insurance companies, primarily in the first instance the present defendants, XL and ACE, when the US casualty insurance market collapsed in 1985. The intention of XL and ACE and of the corporate entities responsible for their initial capitalisation was to achieve a form of policy which would meet the needs for liability insurance of such substantial corporations, specifically those which faced large product liability exposures in the United States, whilst providing "a balanced policy form, aiming to hold the ring fairly between the interests of policyholders and the interests of investors, as the same industrial corporations were in both roles"[1].
4 The resolution of disputes under an unamended Bermuda Form Policy is usually by London arbitration before three arbitrators, but on the basis that the contract of insurance or reinsurance is expressly governed by New York law. By this form of dispute resolution, major US companies and their liability insurers and reinsurers are able to have their policy disputes determined outside the United States and without the risk of jury trial, but pursuant to a system of state law for the determination of insurance disputes recognised to be more developed and neutral than that of other states in the United States[2]. A substantial number of Bermuda Form arbitrations have taken place in London over the years, but because the insurances or reinsurances in question are governed by New York law, no questions of construction of the Bermuda Form have come before the English Courts on appeal under section 69 of the Arbitration Act 1996 (although this court is the supervisory court under that Act)."
"i) Does the Insured's entitlement to indemnity under the Policy against sums which it pays in settlement of claims, depend on whether the Insured would, on a balance of probabilities, have been liable for the claims in question, assuming a correct application of the law governing the claims to the evidence as properly analysed, so that the Insurer would always be entitled to refuse to approve settlement (or, 'would not be bound to approve settlement', being the formulation suggested by the Reinsurers) when the Insured does not assert (or, 'assert and prove', being the formulation suggested by the Claimant) that it would, on a balance of probabilities, have been liable for the claims in question?
ii) Other than in cases where the Insured's relevant liability is established by judgment of a court of competent jurisdiction, does the Insured's entitlement to indemnity under the Policy in respect of Defense Costs depend on whether the Insured would, on a balance of probabilities, have been liable for the claims in question, assuming a correct application of the law governing the claims to the evidence as properly analysed?"
The terms of the Policy
Particular features of the Policy
"Except as provided in paragraph (3) below, where an Occurrence exists and a series of and/or several actual or alleged Personal Injuries….occur which are attributable directly, indirectly or allegedly to the same actual or alleged event condition, cause, defect, hazard and/or failure to warn of such, all such actual or alleged Personal Injuries ... shall be added together and treated as encompassed by one Occurrence irrespective of the period … or area over which the actual or alleged Personal Injuries … occur or the number of such actual or alleged Personal Injuries ... provided however that any actual or alleged Personal Injury … which is Expected or Intended by any Insured shall not be included in any Occurrence."
Issue 1
"1. The insured must establish that it has suffered a loss which is covered by one of the perils insured against: West Wake; Post Office v Norwich Union [1967] 2 QB 363; Bradley v Eagle Star Insurance Co Ltd [1989] AC 957; Horbury Building Systems Ltd v Hampden Insurance NV [2004] 2 CLC 453, 464;
2. That may be done by showing a judgment or an arbitration award against the insured or an agreement to pay;
3. The loss must be within the scope of the cover provided by the policy;
4. As a matter of practicality, the judgment, award, or agreement may settle the question as to whether the loss is covered by the policy because the insurers will accept it as showing a basis of liability which is within the scope of the cover;
5. But neither the judgment nor the agreement are determinative of whether or not the loss is covered by the policy (assuming that the insurer is not a party to either and that there is no agreement by the insurer to be bound).
6. It is, therefore, open to the insurers to dispute that the insured was in fact liable, or that it was liable on the basis specified in the judgment; or to show that the true basis of his liability fell within an exception;
7. Thus, an insured against whom a claim is made in negligence, which is the subject of a judgment, may find that his insurer seeks to show that in reality the claim was for fraud or for something else which was not covered, or excluded by, the policy: MDIS Ltd v Swinbank;
8. Similarly, an insured who is held liable in fraud (which the policy does not cover) may be able to establish, in a dispute with his insurers, that, whatever the judge found, he was not in fact fraudulent, but only negligent and that he was entitled to cover under the policy on that account."
As is apparent from that summary the insured must establish both a loss and a liability. The former will be established by a judgment against him or a settlement: Post Office v Norwich Union [1967] 2 QB 363; Bradley v Eagle Star [1989] AC 957; but the latter may not.
The meaning of the Policy
"to indemnify the Insured for Ultimate Net Loss the Insured pays by reason of liability imposed by law for Damages on account of Personal Injury".
Both the wording quoted, taken as a whole, and the defined terms of "Ultimate Net Loss" and "Damages", on a natural reading relate to actual liability. As to the former, the indemnity is for Ultimate Net Loss paid by reason of liability imposed by law for Damages. Nothing in that phraseology is apt to indicate that the indemnity is against anything other than actual liability which the relevant law imposes or that there is to be any departure from the usual English law position. The Insured cannot properly be said to pay by reason of liability imposed by law unless an actual liability at law causes it to make the payment. The Policy uses the expression "alleged liability" often but not in Article I.
AZICO's submissions
"the Insured's liability covered hereunder shall have been fixed and rendered certain either by final judgment against the Insured after actual trial or by settlement approved in writing by the Company, and the Insured shall have paid such liability."
If there was a final judgment against the Insured or (as here) a settlement approved in writing by the Company "the Insured's liability covered hereunder" is treated as fixed and rendered certain. In other words, as between the insured and the insurer, actual liability is established and determined.
Discussion
Occurrences
Considerations said to support the primary argument
"liability for Damages on account of (1) libel, slander or defamation [and various matters] committed or alleged to have been committed in any advertisement, publicity article, broadcast or telecast and arising out of the Insured's advertising activities…"
This was said to indicate that the Policy provided cover for alleged Advertising Liability, which supported the suggestion that it provided cover for alleged Personal Injuries as well.
"Subject to Condition L, Coverage A of this Policy may be extended at the expiration of each Annual Period for another Annual Period, subject only to agreement between the Company and the Named Insured as to the applicable premium and such other terms and conditions as the Company and the Named Insured may mutually deem appropriate. Coverage A shall expire at the end of an Annual Period if not extended (or upon cancellation thereof). Where Coverage A (or Coverage B) is cancelled or not extended, such cancellation or non-extension shall not affect the rights of the Insured as respects any Occurrence or Integrated Occurrence of which notice was given in accordance with the provisions of this Policy prior to such cancellation or non-extension and shall not limit whatever rights the Insured otherwise would have under this Policy as respects actual or alleged Personal Injury, Property Damage or Advertising Liability included in such Occurrence or Integrated Occurrence taking place subsequent to such cancellation or non-extension."
The Loss Payable clause
"The Company may examine the underlying facts giving rise to a judgment against or settlement by the Insured to determine if, and to what extent, the basis for the Insured's liability under such judgment or settlement is covered by this Policy".
"so that the Insurer would always be entitled to refuse to approve settlement (or, 'would not be bound to approve settlement', being the formulation suggested by the Reinsurers) when the Insured does not assert (or, 'assert and prove', being the formulation suggested by the Claimant) that it would, on a balance of probabilities, have been liable for the claims in question"
"The fact that the policies are reinsurance policies and that the reassured have paid under the policies which they have issued does not in my judgment operate to enable them to substantiate their claims against the company. It is well settled that, subject to any provisions to the contrary in the reinsurance policy, the reassured, in order to recover from their underwriters, must prove the loss in the same manner as the original assured must have proved it against them, and the reinsurers can raise all defences which are open to the reinsured against the original insured. This is equally true whether the reinsured had or had not paid their assured, in as much as it would be inequitable for them to renounce any of their defences so as to prejudice the reinsurers."
Issue 2 Defense Costs
"Contractual provisions for the payment of Defence Costs vary. Some state that the insurers are not under any obligation to fund Defence Costs and that the assured is entitled to a reimbursement of Defence Costs only if the assured is ultimately found to be liable on grounds which fall within the scope of the policy, in particular the assured as not dishonest".
Reference is made to two US authorities. At para 20-048 there is the following paragraph:
"It is possible to draft wording which confines recovery of Defence Costs to cases in which the assured is actually liable to the third party so that there is a substantive claim against the insurers, although that type of wording is relatively rare in liability insurance".
General considerations
LORD JUSTICE BRIGGS
LORD JUSTICE MOORE-BICK
APPENDIX
"NOTICE
THE COMPANY DOES NOT HAVE ANY DUTY TO DEFEND. DEFENSE COSTS COVERED BY THIS POLICY ARE INCLUDED WITHIN AND ARE NOT IN ADDITION TO THE LIMITS OF LIABILITY OF THIS POLICY.
INSURING AGREEMENTS
I COVERAGE
Zeneca Insurance Company (the "Company") shall, subject to the limitations, terms, conditions and exclusions below, indemnify the Insured for Ultimate Net Loss the Insured pays by reason of liability:
(a) imposed by law, or
(b) of a person or party who is not an Insured assumed by the Insured under contract or agreement,
for Damages on account of:
(i) Personal Injury
(ii) Property Damage
(iii) Advertising Liability
encompassed by an Occurrence, provided:
COVERAGE A: notice of the Occurrence shall have been first given by the Insured in an Annual Period during the Policy Period in accordance with Article V of this Policy,
or
COVERAGE B: notice of the Occurrence shall have been first given during the Discovery Period in accordance with Article V of this Policy, but only if the Discovery Period option has been elected in accordance with the provisions of this Policy.
III DEFINITIONS
A. "Advertising Liability" means liability for Damages on account of:
(1) libel, slander or defamation,
(2) any infringement of copyright or of title or of slogan,
(3) piracy or misappropriation of ideas under an implied contract, or
(4) any invasion of right of privacy,
committed or alleged to have been committed in any advertisement, publicity article, broadcast or telecast and arising out of the Insured's advertising activities.
G. "Damages" means all forms of compensatory damages, monetary damages and statutory damages, punitive or exemplary damages and costs of compliance with equitable relief, other than governmental (civil or criminal) fines or penalties, which the Insured shall be obligated to pay by reason of judgment or settlement for liability on account of Personal Injury, Property Damage and/or Advertising Liability covered by this Policy, and shall include Defense Costs.
H. "Defense Costs" means reasonable legal costs and other expenses incurred by or on behalf of the Insured in connection with the defense of any actual or anticipated Claim, including attorneys' fees and disbursements, law costs, premiums on attachment or appeal bonds, pre-judgment and post-judgment interest, expenses for experts and for investigation, adjustment, appraisal and settlement, excluding the salaries, wages and benefits of the Insured's employees and the Insured's administrative expenses.
R. "Integrated Occurrence" means an Occurrence encompassing actual or alleged Personal Injury, Property Damage and/or Advertising Liability to two or more persons or properties which commences over a period longer than thirty (30) consecutive days which is attributable directly, indirectly or allegedly to the same actual or alleged event, condition, cause, defect, hazard and/or failure to warn of such; provided, however, that such Occurrence must be identified in a notice pursuant to Section C of Article V as an "Integrated Occurrence" and is subject to all provisions of paragraphs (1) and (2) of Definition V.
V. (1) An "Occurrence" exists if, and only if:
(a) except with respect to actual or alleged Personal Injury or Property Damage arising from the Insured's Products, there is an event or continuous, intermittent or repeated exposure to conditions which event or conditions commence on or subsequent to the Inception Date, or the Retroactive Coverage Date, if applicable, and before the Termination Date of Coverage A, and which cause actual or alleged Personal Injury, Property Damage or Advertising Liability;
(b) actual or alleged Personal Injury to any individual person, or actual or alleged Property Damage to any specific property, arising from the Insured's Products takes place on or subsequent to the Inception Date, or the Retroactive Coverage Date, if applicable, and before the Termination Date of Coverage A.
(2) Except as provided in paragraph (3) below, where an Occurrence exists and a series of and/or several actual or alleged Personal Injuries, Property Damages and/or Advertising Liabilities occur which are attributable directly, indirectly or allegedly to the same actual or alleged event, condition, cause, defect, hazard and/or failure to warn of such, all such actual or alleged Personal Injuries, Property Damages and/or Advertising Liabilities shall be added together and treated as encompassed by one Occurrence irrespective of the period (but without limiting the effect of Exclusion IV.A) or area over which the actual or alleged Personal Injuries, Property Damages and/or Advertising Liabilities occur or the number of such actual or alleged Personal Injuries, Property Damages and/or Advertising Liabilities; provided, however, that any actual or alleged Personal Injury, Property Damage or Advertising Liability which is Expected or Intended by any Insured shall not be included in any Occurrence. So far as Personal Injuries, Property Damages and/or Advertising Liabilities resulting or alleged to result from the design, formulation, manufacture, distribution, use, operation, maintenance and/or repair of an Insured's Product, and/or the failure to warn as to the use, operation, maintenance and/or repair of an Insured's Product, the term "the same actual or alleged event, condition, cause, defect, hazard and/or failure to warn of such" means any such design, formulation, manufacture, distribution, use, operation, maintenance, repair and/or failure to warn, as the case may be, as to which such losses, injuries or damages are directly, indirectly or allegedly attributable. As respects Advertising Liability, multiple or repeated broadcasts or publications of the same or similar materials shall constitute "the same actual or alleged event, condition, cause or defect."
(3) Notwithstanding paragraphs (1) and (2) above, if an Occurrence is not identified in the notice thereof as an "Integrated Occurrence," then actual or alleged Personal Injury to each person, Property Damage to each piece of property and/or Advertising Liability which commences at any time shall be deemed to be encompassed within a separate Occurrence from which Personal Injury to any other person, Property Damage to any other piece of property and/or Advertising Liability which commences more than thirty (30) days prior or later thereto is encompassed.
W. "Personal Injury" means Bodily Injury, mental injury, mental anguish, shock, sickness, disease, disability, false arrest, false imprisonment, wrongful eviction, detention, malicious prosecution, discrimination, humiliation, and libel, slander or defamation of character or invasion of rights of privacy.
Z. "Product Pollution Liability" means liability or alleged liability for Personal Injury or Property Damage arising out of the end-use of the Insured's Products, if such use occurs after possession of such goods or products has been relinquished to others by the Insured or by others trading under its name and if such use occurs away from premises owned, rented or controlled by the Insured; such goods or products shall be deemed to include any container thereof other than an Automobile, Watercraft or Aircraft.
AA. "Property Damage" means:
(1) physical damage to or destruction of tangible property, including the loss of use thereof at any time resulting therefrom;
(2) loss of use of tangible property which has not been physically damaged or destroyed arising from physical damage to or destruction of other tangible property; or
(3) losses consequent upon evacuation arising from actual or threatened Bodily Injury or destruction of tangible property.
AD. "Ultimate Net Loss" means the total sum which the Insured shall become obligated to pay for Damages on account of Personal Injury, Property Damage and/or Advertising Liability which is, and/or but for the amount thereof would be, covered under this Policy less any salvages or recoveries.
IV EXCLUSIONS
This policy does not apply to actual or alleged:
A. PRIOR TO INCEPTION OR RETROACTIVE COVERAGE DATE
Personal Injury to any individual person, Property Damage to any specific property or Advertising Liability which takes place prior to the Inception Date or, if applicable, the Retroactive Coverage Date.
F. ADVERTISING
Advertising Liability arising out of:
(1) breach of contract, but this paragraph (1) shall not exclude liability for unauthorized misappropriation of advertising ideas based upon breach or alleged breach of an implied contract;
(2) infringement of registered trademarks, service marks or trade name by use thereof, but this paragraph (2) shall not apply to titles or slogans;
(3) the failure of goods, products or services to conform with advertised quality or performance;
(4) the wrong description of the price of goods, products or services; or
(5) advertising activities on behalf of a party other than an Insured by an Insured engaged in the business of advertising.
I. AIRCRAFT
Liability arising out of the design, manufacture, construction, maintenance, service, use or operation of any Aircraft or any component part of or equipment thereof or any other Aircraft navigational or related equipment or service, including, without limitation, liability arising from a crash or hijacking; provided, however, that this Exclusion I shall not apply to any liability or alleged liability in respect of:
(1) Aircraft fuelling and related operations with respect to Personal Injury or Property Damage occurring at the time of such operations, i.e., while the Aircraft involved is on the ground and motionless;
……
K. POLLUTION
(1) (a) liability for Personal Injury, Property Damage or Advertising Liability arising out of the Discharge of Pollutants into or upon land or real estate, the atmosphere, or any watercourse or body of water whether above or below ground or otherwise into the environment; or
(b) liability, loss, cost or expense of any Insured or others arising out of any direction or request, whether governmental or otherwise, that any Insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants.
This Exclusion K applies whether or not such Discharge of such Pollutants:
(i) results from the Insured's activities or the activities of any other person or entity;
(ii) is sudden, gradual, accidental, unexpected or unintended; or
(iii) arises out of or relates to industrial operations or the Waste or by-products thereof.
(2) Paragraph (1) of this Exclusion K does not apply to:
(a) Product Pollution Liability; or
(b) (i) liability of the Insured for Personal Injury or Property Damage caused by an intentional Discharge of Pollutants solely for the purpose of mitigating or avoiding Personal Injury or Property Damage which would be covered by this Policy; or
(ii) liability of the Insured for Personal Injury or Property Damage caused by a Discharge of Pollutants which is not Expected or Intended, but only if the Insured becomes aware of the commencement of such Discharge within seven (7) days of such commencement;
provided that the Insured gives the Company written notice in accordance with Section D of Article V of this Policy of such commencement of the Discharge under subparagraphs (2)(b)(i) or (ii) of this Exclusion K within forty (40) days of such commencement. Such notice must be provided irrespective of whether notice as soon as practicable otherwise would be required pursuant to Section A of Article V of this Policy.
V NOTICE OF OCCURRENCE
A. NOTICE AS SOON AS PRACTICABLE
If any Executive Officer shall become aware of an Occurrence likely to involve this Policy, the Named Insured shall, as a condition precedent to the rights of any Insured under this Policy, give written notice thereof to the Company in the manner provided in Section D of this Article V.
Such notice shall be given as soon as practicable and, in any event, during the Policy Period or the Discovery Period, if applicable, and in accordance with Paragraph 2(b) of Exclusion K, if applicable. Failure to provide written notice as prescribed above shall result in a forfeiture of any rights to coverage hereunder in respect of such Occurrence.
B. PERMISSIVE NOTICE
Any Insured may at any time during the Policy Period or Discovery Period give notice of an Occurrence to the Company in the manner provided in Section D of this Article V.
C. PERMISSIVE NOTICE OF INTEGRATED OCCURRENCE
The Insured may at its option give written notice to the Company of any Occurrence as an "Integrated Occurrence" by designating it as such and giving such notice in the manner provided in Section D of this Article V. Once the Insured gives Notice of Integrated Occurrence, all Personal Injury or Property Damage that falls within the Integrated Occurrence (as provided in the terms, conditions and exclusions of this Policy) shall be treated as such for all purposes under this Policy irrespective of whether this Policy has been terminated after the Insured has given Notice of Integrated Occurrence. The limit of liability applicable to such Integrated Occurrence shall be the limit described in Article II of this Policy.
VI CONDITIONS
C. CROSS LIABILITY
In the event of a Claim being made by reason of Personal Injury suffered by an employee of one Insured hereunder for which another Insured hereunder is or may be liable, this Policy shall cover such Insured against whom such a Claim is made or may be made in the same manner as if separate policies had been issued to each Insured hereunder.
Nothing contained herein shall operate to increase the Company's limits of liability as set forth in Item 2 of the Declarations.
D. ASSISTANCE AND COOPERATION
(1) The Company shall not be called upon to assume charge of the settlement or defense of any Claim made or suit brought or proceeding instituted against an Insured, but the Company shall have the right and shall be given the opportunity to associate with the Insured or the Insured's underlying insurers or both in the defense and control of any Claim, suit or proceeding relative to any Occurrence where the Claim or suit involves, or appears reasonably likely to involve, the Company, in which event the Insured and the Company shall cooperate in all things in the defense of such Claim.
(2) The Insured shall furnish promptly all information reasonably requested by the Company with respect to any Occurrence, both with respect to any Claim against the Insured and pertaining to coverage under this Policy.
(3) If liabilities, losses, costs and/or expenses are in part covered by this Policy and in part not covered by this Policy, the Insured and Company shall use their best efforts to agree upon a fair and proper allocation thereof between covered and uncovered amounts, and the Insured shall cooperate with such efforts by providing all pertinent information with respect thereto.
(4) Those expenses incurred by the Company on its own behalf in connection with claims representation pursuant to this Condition D shall be at its own expense and shall not be part of Ultimate Net Loss.
E. APPEALS
In the event the Insured or the Insured's underlying insurers elect not to appeal a judgment in excess of the retention or the underlying limits, as the case may be, the Company may elect to make such appeal at its own cost and expense and shall be liable for the taxable costs and disbursements of such appeal and post-judgment interest on the judgment appealed from accruing during such an appeal. In no event, however, shall liability of the Company for Ultimate Net Loss exceed the applicable limit of liability plus the costs and expenses of such appeal.
F. LOSS PAYABLE
Liability under this Policy with respect to any Occurrence shall not attach unless and until:
(1) the Insured's underlying insurer(s) or the Insured shall have paid the greater of the amount of any applicable underlying limits or the applicable retention set forth in Item 2(a) of the Declarations; and
(2) the Insured's liability covered hereunder shall have been fixed and rendered certain either by final judgment against the Insured after actual trial or by settlement approved in writing by the Company, and the Insured shall have paid such liability.
Any consideration paid by the Insured or the Insured's underlying insurers other than in legal currency shall be valued at the lower of cost or market, and any element of the Insured's profit or other benefit to the Insured shall be deducted in determining the value of such consideration. The Company may examine the underlying facts giving rise to a judgment against or settlement by the Insured to determine if, and to what extent, the basis for the Insured's liability under such judgment or settlement is covered by this Policy.
The Insured shall make a definite demand for payment for any amount of the Ultimate Net Loss for which the Company may be liable under this Policy within twelve (12) months after the Insured shall have paid such amount. If any subsequent payments shall be made by the Insured on account of the same Occurrence or Claim, additional demands for payment shall be made similarly from time to time. Such losses shall be due and payable by the Company thirty (30) days after they are respectively paid by the Insured, demanded and proven in conformity with this Policy.
AMENDMENT OF ARTICLE VI. CONDITION O. ENDORSEMENT [14]
It is hereby agreed that Article VI. Condition O. is deleted and replaced by the following:
O. LAW OF CONSTRUCTION AND INTERPRETATION
This Policy, and any dispute, controversy or claim arising out of or relating to this Policy, shall be governed by and construed in accordance with the internal laws of England and Wales, except insofar as:
(1) such laws may prohibit payment in respect of punitive damages hereunder;
(2) the law of another jurisdiction must apply pursuant to any directive of the Council of the European Community relating to non-life insurance
(3) such laws are inconsistent with any provision of this Policy;
provided, however, that the provisions, stipulations, exclusions and conditions of this Policy are to be construed in an even-handed fashion as between the Insured and the Company; without limitation, where the language of this Policy is deemed to be ambiguous or otherwise unclear, the issue shall be resolved in the manner most consistent with the relevant provisions, stipulations, exclusions and conditions (without regard to authorship of the language, without any presumption or arbitrary interpretation or construction in favor of either the Insured or the Company or reference to the "reasonable expectations" of either thereof or to contra proferentem and without reference to parole or other extrinsic evidence).
Note 1 I use the American spelling, as in the Policy. [Back]