DIFC Court of Appeal hands down judgment in first Covid-19 business interruption case

Posted: 04/07/2024

Charles Dougherty KC and Timothy Killen successful in DIFC Court of Appeal COVID-19 Business Interruption Insurance Dispute: Lals Holdings Limited & Others v Emirates Insurance Company (PSC) & Another [2024] DIFC CA 002 (2nd July 2024)

The DIFC Court of Appeal has handed down an important judgment in the first COVID-19 business interruption coverage dispute to come before the DIFC Courts.

On a trial of preliminary issues the judge at first instance (Sir Peter Gross) found for the policyholders that each of the three substantive coverage provisions in issue could, subject to proof, provide cover for COVID-19 related business interruption loss. The insurer appealed on the grounds that to provide cover under both a “loss of attraction” clause and a “closure” clause was uncommercial and – with reference to the Australian Federal Court decision in Marrickville v Swiss Re – caused “incoherence and incongruence”. Insurers also argued that the closure clause was “more specific” than the “more general” loss of attraction clause, and in such circumstances the loss of attraction clause should be read down so as not to provide cover for COVID-19 loss.

The Court disagreed, and dismissed the appeal finding that there was nothing uncommercial let alone absurd in two insuring clauses providing an indemnity in response to the same set of circumstances. The Court also found that in this case one clause could not be said to be “more specific” than the other, and so the suggestion that one ought to give way to the other was rejected.

The judgment also contains a detailed discussion of topics likely to be of wider interest to parties litigating in the DIFC Courts, including:

  • The approach of the DIFC Courts to questions of contractual interpretation (including the status of common law authorities to such questions); and
  • The nature of an appeal and the standard of appellate review in the DIFC Courts (and in particular the nature of an appeal on a point of contractual interpretation).

Charles Dougherty KC and Timothy Killen acted for the successful policyholders at both first instance and on appeal.

Lucas Fear-Segal (led by Neil Hext KC) appeared for the second defendant brokers at first instance (who played no part in the appeal).

The Judgment of the Court of Appeal is available here

The Judgment of the Court of First Instance is available here


Charles Dougherty KC

Call: 1997 Silk: 2013

Timothy Killen

Call: 2010


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