The tragic events of 11 September have given rise to some extremely complex legal issues. The complexities of these issues and the staggering sums of money involved have inevitably led to the commencement of litigation and arbitration between insureds, insurers and reinsurers.
Soon after the events of 11 September, legislation was passed in the US in an attempt to seize jurisdiction over any cases involving the attacks on the World Trade Center (WTC). The Air Transportation Safety System and Stabilisation Act (ATSSSA) granted to the US District Court for the Southern District of New York (SDNY) “original and exclusive jurisdiction over all actions brought for any claim (including any claim for loss of property, personal injury or death) resulting from, or relating to, the terrorist-related attacks of September 11 2001.”
PROPERTY INSURANCE DISPUTES
There are 11 of these claims currently pending, all in relation to the WTC.
SR International v WTC Properties, Silverstein etc
The primary issues in this matter concern the number of occurrences under Swiss Re's coverage. There are two possible wordings that may apply to the Swiss Re policy. One is the Willis Property 2000 form: “'Occurrence' shall mean all losses or damages that are attributable directly or indirectly to one cause or to one series of similar causes. All such losses will be added together and the total amount of such losses will be treated as one occurrence, irrespective of the period or time or area over which such losses occur.”
Swiss Re is seeking a declaration that the above wording applies and that the attack on the WTC constitutes one occurrence. This would mean that the company was only liable to pay one claim up to a limit of $3.5bn (£2.44bn).
Silverstein argues that the Travelers policy form applies, which does not define occurrence, and that there was more than one occurrence, giving rise to more than one claim. Silverstein is seeking an on account payment for the one occurrence and a declaration that there was more than one occurrence.
WTC Properties v Ace and XL Insurance
This case has been settled by Ace and XL Insurance agreeing to pay Silverstein some $365m (£254m). This settlement was apparently on the basis that Silverstein accepted that Ace and XL expressly agreed to use Willis Property 2000, and therefore the Willis definition of occurrence applies.
WTC Properties, Silverstein v Travelers Indemnity Company
Travelers issued various layers of insurance cover, up to $211m (£147m). Since the Travelers' policy has no definition of occurrence, the main issue for determination will be the number of occurrences. WTC Properties has filed a motion for summary judgment as to the number of occurrences and discovery is currently in progress.
Federal Insurance Company (FIC) v WTC Properties
FIC issued $254m (£177m) of excess coverage and again the main issues here are whether the Willis Property 2000 or Travelers' form applies and how many occurrences there were.
Employers Insurance of Wausau (EIW) v WTC Properties
EIW issued coverage on terms providing for the Willis Property form to apply, apparently as supplemented by the Willis/Wausau binder or the Travelers' policy. The applicable terms and the number of occurrences are also the main issues for determination in this case.
Allianz Insurance (AIC) v WTC Properties
AIC issued $355m (£247m) in excess property coverage. The main issue is the number of occurrences under the AIC excess policy form, which provides: “The word 'occurrence' shall mean any one loss, disaster or casualty, or series of losses, disasters or casualties arising out of one event. When the word applies to loss or losses from the perils of… riot… civil commotion and vandalism and malicious mischief, one event shall be construed to be all losses arising within a continuous period of 72 hours.”
Zurich American Insurance v Westfield
Westfield was a lessee of retail space underneath the twin towers. The question here is whether Westfield is entitled to coverage under a property insurance policy separate from the specific WTC insurance programme. This separate policy was purportedly negotiated after Westfield obtained its lease from WTC.
It has been reported that the parties in this matter have agreed to discontinue litigation and submit these issues to arbitration.
GMAC Commercial Mortgage Corporation v various WTC LLCs
A loan agreement was entered into by GMAC with the WTC LLCs in the sum of $563m (£392m). The loan was secured by a mortgage on the WTC LLCs' leasehold interests in the WTC properties. At issue here are the limitations on the obligation of the plaintiff to distribute funds to WTC LLCs, the plaintiff's right to insurance proceeds and whether the ATSSSA precludes litigation in New York State courts.
Zurich American Insurance v ABM Industries
This case deals with the applicable business interruption coverage limit, ABM's provision of maintenance services to 1,2,4,5 and 7 WTC and other nearby buildings, the blanket limit in the policy of $127m (£88.5m) for “any one occurrence” and the policy contingent BI sub-limit of $10m (£6.97m) per occurrence.
Pine Street Mews v One Beacon Insurance
In dispute is the insurer's obligation to pay the alleged property damage and business interruption losses, resulting from 11 September, of a business providing short-term housing to corporate clients and employees and consultants in downtown New York.
International Fine Arts etc v ASU International
The plaintiffs are claiming under their insurance policy because their events were cancelled as a result of the requisition of the Seventh Regiment Armoury of the New York National Guard due to the attacks of 11 September.
Proceedings have also been brought in London in this matter and one of the issues is the jurisdiction of the Commercial Court and the application of ATSSSA.
LIFE INSURANCE DISPUTES
There are four life insurance lawsuits pending in the US District Court SDNY.
Combined Insurance Company (CICA) v certain Underwriters at Lloyd's
Do reinsurers have to reimburse CICA the accidental death benefits it paid to Aon (of which CICA was a subsidiary at the time) under the terrorism hazard provisions of a group business travel policy? Benefits were paid by CICA to employees and beneficiaries of Aon employees injured or killed in the Aon offices at WTC on 11 September.
There is also a prior action pending in the UK courts (Lloyd's Syndicate 501
CICA). The issue is which action should be given precedence. The argument against the US courts claiming jurisdiction on the basis of ATSSSA is that the UK action was filed first and the UK is, arguably, the most appropriate forum for determination of the issues.
Canada Life Assurance v Zurich Re,
Canada Life Assurance v CCR
Both of these actions concern the reinsurers' obligation to post a letter of credit to secure obligations to a reinsured for health, life and workers compensation payments made in relation to the events of 11 September.
American Home Assurance v American National Insurance
The issues involved in this action include whether the life insurer has a right to reimbursement from its reinsurer, whether ATSSSA supersedes the arbitration clause in the reinsurance treaty, and whether pre-answer security for the sum at issue must be posted by the defendant reinsurer.
Matthew Line is a non-practising barrister in Berwin Leighton Paisner's reinsurance/ insurance department