"Pay To Be Paid" Clause In Liability Insurance Policy Tested

Decision: MS Amlin Marine NV v King Trader Ltd & Others [2024] EWHC 1813 (Comm)

Introduction

In July 2024, the English High Court handed down a judgment on whether or not the insurers under a charterer's liability policy were obliged to indemnify third parties, where the insured went insolvent and had not paid the underlying claim to the third parties. While holding that insurers were not obliged to pay the claim under the policy, the court expressed its views on the interpretation of policies and reconciled its interpretation of the policy with the provisions of the Third Party's (Rights against Insurers) Act of 2010 (the 2010 Act) which deals with the effect of "paid to be paid" clauses.