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Aggregation clause in Minimum Terms and Conditions

29.07.2016 |Insurance & Reinsurance

Simon Cooper

Simon Cooper Partner

Each year the Law Society makes rules under s.37 of the Solicitors Act 1974 requiring solicitors to arrange insurance with ‘Qualifying Insurers’. Such policies must comply with the Minimum Terms and Conditions of Professional Indemnity Insurance for Solicitors and Registered European Lawyers in England and Wales (the MTC). The MTC are, in effect, incorporated into the policies issued by the Qualifying Insurers. The dispute in AIG Europe Limited v OC320301 LLP  led to the first judicial consideration of the proper construction of the aggregation clause in the MTC. 

The aggregation clause provided that all claims arising from “one act or omission”, “one series of related acts or omissions”, “the same act or omission in a series of related matters or transactions” or “similar acts or omissions in a series of related matters or transactions” were to be regarded as one claim. 

The Court of Appeal considered the meaning of the term “series”. In combination with the term “related”, it held, it was clear that there had to be a connection between the transactions. The question was how that connection was to be established and what degree of connection was required. Overturning the first instance decision, it held that the true construction of the words “in a series of related matters or transactions” was that the matters or transactions had to have an intrinsic relationship with each other, rather than just an external common factor (such as the transactions being conducted by the same solicitor or relating to the same geographical area). The Court of Appeal remitted the entire case to the Commercial Court for re-trial, noting that it was in no position to make any findings of fact because it had not had detailed submissions on the transactions giving rise to the claim. The aggregation clause would have to be construed in the context of those findings of fact. 

Article authors:

Simon Cooper

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