We reported earlier this month on the wide-ranging implications of the Supreme Court's judgment in the FCA's Test Case on non-damage business interruption (BI) cover for losses arising from the COVID-19 pandemic (The Financial Conduct Authority v Arch Insurance (UK) Ltd and Others [2021] UKCS 1).

In terms of the impact on property, this is a significant decision for both landlords and tenants, where premises were forced to shut under the Government's instructions to businesses to close and stay at home and following the introduction of social distancing instructions, issued in March 2020.

The key takeaway points from Supreme Court's decision are:

  • Insurers may have to review and revisit many claims from landlords and tenants, which had previously been rejected.
  • Landlords may be concerned about whether the decision might trigger a re-visit of the rent cesser clause in a lease and there are clear synergies here between BI and rent cesser provisions in terms of their nature and scope.
  • The judgment gives useful guidance on partial closures, particularly that "inability to use" can refer to a discrete part of the business which again may impact in relation to wider arguments, potentially in relation to rent cesser clauses.

For more detail on all aspects of the Supreme Court's decision, see our previous article here.

For further information on this topic please contact Emma Pinkerton or Sarah Moore at CMS Cameron McKenna Nabarro Olswang LLP by telephone (+44 114 279 4000) or email ([email protected] or [email protected]). The CMS Cameron McKenna Nabarro Olswang LLP website can be accessed at cms.law?.

This update has been reproduced in its original format from Lexology – www.Lexology.com.