London FI Market Succeeds In Contract Case

Twenty seven insurance companies and Lloyd's syndicates (most based in the UK and key players in the financial institution's market) have successfully defended proceedings commenced by Towry Law plc and others (Towry Law) in the Supreme Court of NSW. The case concerned the construction of a financial institution's policy issued to Towry Law's parent company for the period 1999 to 2003 - the policy was written under a Jumbo lineslip.

The parent company acquired Towry Law during the policy period on 3 August 2001. Towry Law sought indemnity under the professional indemnity section of the policy for over AUD100 million paid to investors under a Hong Kong compensation scheme as a result of alleged mis-selling by Towry Law of a number of funds to its clients. Underwriters denied indemnity to Towry Law on the basis of a retroactive date which applied under the policy to subsidiaries acquired during the policy period (the retroactive date being the date of acquisition). The