The Federal Mogul Asbestos Personal Injury Trust v Federal-Mogul Ltd & Ors
2014
COMMERCIAL COURT
United Kingdom
CORAM
- MR JUSTICE EDER
Areas of Law
- Contract Law
- Insurance Law
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
The case involved a dispute between a Trust and reinsurers over asbestos-related injury claims against T&N. The Trust sought declarations on claims handling and settlement obligations, arguing that the Trust Distribution Procedures should be used for settlements. The court ruled that the Trust did not have standing to seek declarations regarding claims handling under the ALP and that reinsurers could require claims to be proven in the US tort system. The court also held that specific payment methods used in settlements did constitute payment in fact under the ALP.
Judgment
Mr Justice Eder:
I. Introduction
The claimant in these proceedings is a Trust (the “Trust”) established in circumstances described more fully below by an order of the US Bankruptcy Court on 8 November 2007 and in accordance with the terms of a Joint Plan of Re-Organisation (specifically the Fourth Joint Plan of Re-organization for Debtors and Debtors in Possession (as Modified)) (the “Plan”) and a Trust Agreement.
Pursuant to the Plan, the Trust is, in effect, authorised to bring claims on behalf of a very large number of individuals in the US who have allegedly suffered injury as a result of exposure to asbestos and asbestos related products supplied and/or distributed over a lengthy period by the first defendant (“T&N”) and its subsidiaries (the “Asbestos Claims”). For convenience and unless otherwise stated, references to T&N in this Judgment include T&N’s subsidiaries.
The second defendant (“Curzon”) was and is T&N’s captive insurer under the terms of an Asbestos Liability Policy (“ALP”). In summary, the ALP provided cover of £500 million in excess of £690 million with effect from 1 July 1996 against T&N’s liabilities for personal injury claims caused by asbestos anywhere in the world arising from their activities prior to the policy inception date. In its turn, Curzon ceded its liabilities under the ALP in equal shares to the 3 rd , 4 th and 5 th Defendants (respectively “Centre Re”, an Irish subsidiary of Zurich Re, “Munich Re” and “EIRC”, a Barbadian subsidiary of Swiss Re – collectively referred to as the “Reinsurers”) under a Reinsurance Agreement (the “Reinsurance”) although, as referred to below, EIRC’s share was subsequently reduced by virtue of a settlement made in the context of separate Court proceedings. The ALP and the Reinsurance are often referred to as the “Hercules Programme”.
In very broad terms, the main issues concern the ability of the Trust to obtain certain declarations with regard to the obligations of the Reinsurers relating to the handling and settlement of any Asbestos Claims which the Trust wishes to advance against T&N. In essence, the Trust says that pursuant to the Plan, it has itself established an appropriate mechanism for valuing individual Asbestos Claims in accordance with what are called Trust Distribution Procedures (“TDPs”); that the TDP value ascribed to individual Asbestos Claims is considerably lower than the likely settlement or award value for such claims if litigated in the US tort system, cer