The insured under a warranty and indemnity policy alleged that the exclusion of a breach of anti-bribery and anti-corruption laws would result in a total exclusion of liability for a loss arising from the covered bribery and corruption warranty and that it should not be literally enforced. The court held that the exclusion did not mean that no loss arising out of a breach of a warranty would ever be covered by the policy, and that there was no error in the drafting.
The court referred to a previous decision regarding insurance policy exclusions. The true effect of any relevant exclusion is ascertained by reading together the statement of cover and the exclusion in the policy in the context of the contract of insurance as a whole and consistent with upholding the contract. The literal meaning of a provision in a contract can only be corrected if it is clear both that a mistake has been made and what the intended provision was meant to say. It must be shown that it is clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant.
The insured contended that the bribery and corruption exclusion for “liability or actual or alleged non-compliance by any member of the target group … in respect of anti-bribery and anti-corruption laws” should be corrected to change “or” into “for” and only exclude liability “for actual or alleged non-compliance”.
The court held there was no inconsistency between the two provisions. The proposed change would bring within the scope of the losses for which the underwriters were liable, any diminution in share value attributable to an allegation of non-compliance with anti-bribery laws even if the allegation was never proved nor even investigated. That could not have been the intention of this specifically negotiated clause. Whilst accepting that the definition was not a masterpiece of drafting, the court could not accept that it covered liability even for alleged non-compliance. The court was not persuaded there had been a clear drafting error.
[Project Angel Bidco Limited (in administration) v Axis Managing Agency Limited and Others [2023] EWHC 2649 (Comm)]