International Energy Group Ltd v Zurich Insurance Plc UK

At common law, mesothelioma liability is based on negligent exposure to asbestos which materially increases the risk of disease. Where the Compensation Act 2006 does not apply, liability is assessed by reference to the defendant’s relative contribution to the total exposure. Duration is the appropriate measure where exposure intensity is uniform. Each insurer’s liability under an annual policy is therefore limited to the proportion corresponding to its period on risk. The policy does not create a right of equitable contribution from the insured for periods that were uninsured or self-insured.

The claimant, responsible for Guernsey Gas Light Company Ltd’s liabilities, sought indemnity under employers’ liability policies issued by Midland Assurance Ltd, whose liabilities had passed to the defendant. An employee had been exposed to asbestos throughout 27 years of employment and contracted mesothelioma. The parties agreed that exposure was uniform in frequency and intensity. The issue was whether the insurer was liable for the whole settlement or only the proportion corresponding to its six-year policy period. The Compensation Act 2006 did not apply in Guernsey.

1. The claim for the full indemnity was dismissed. The insurer’s liability was limited to the time-on-risk proportion of the insured’s outlay.

2. The common-law liability identified in Fairchild v Glenhaven Funeral Services Ltd and refined in Barker v Corus UK Ltd is a special form of tortious liability. It arises where negligent exposure to asbestos materially increases the risk of mesothelioma. It is not based on a fiction that the defendant caused the disease in the conventional sense.

3. Under Barker v Corus UK Ltd, the defendant is liable for the proportion of the total damage corresponding to the risk created by its exposure. The assessment ordinarily depends on the relative duration and intensity of exposure, together with any relevant differences in asbestos type or other risk factors. Where intensity is uniform, duration is the appropriate measure.

4. Sienkiewicz v Greif (UK) Ltd and Williams v University of Birmingham confirmed that the Fairchild/Barker basis remains a common-law basis of liability, including in a single-employer or single-defendant case. The Compensation Act 2006 changes the consequences and measure of liability where it applies, but does not alter the underlying common-law basis.

5. The statutory regime would impose liability for the whole damage jointly and severally, but it did not apply to Guernsey. The common-law allocation in Barker v Corus UK Ltd therefore governed the claim.

6. The insurer’s alternative claim for equitable contribution from the insured failed. Double insurance concerns contribution between insurers covering the same risk and does not permit an insurer to recover from its insured for periods without insurance. English law recognises no separate concept of self-insurance capable of producing such a contribution.