In reaching a decision regarding the sanctions clause in a policy, the UK High Court made a number of useful comments on how a policy is interpreted:
- When a dictionary definition is relied on (in this case for the meaning of ‘expose’) it is a useful starting point but is not necessarily determinative of the meaning which the clause as a whole, read in its context, would convey to a reasonable person. One can be ‘exposed’ to a sanction or ‘exposed’ to the risk of being sanctioned so clear wording is needed.
- Clear words were therefore required to establish a common intention between insurer and insured that the insurer need not pay an otherwise valid claim. In this case the insurer had to show that there was a payment prohibited as a matter of law, not merely a risk that the payment might incur a sanction.
- Where two experts gave differing evidence regarding the meaning of US laws, it was for the court to decide between the conflicting testimony. Although a court’s decision as to foreign law is a finding of fact, it is a finding of fact of a peculiar kind, namely one in respect of which, where appropriate, the court is entitled to exercise its own judgment.