INSURANCE firms are arguing many compensation claims from businesses crippled by coronavirus are void claiming that lockdown measures were not mandatory.

Some insist that lockdown measures did not legally prevent people from accessing shops and businesses, and so are not covered for business interruption.

Gavin Kealey QC who is representing leading insurers Ecclesiastical and MS Amlin in a major test case argued that the UK was not a totalitarian state and that Boris Johnson's advice for staying at home did not need to be taken, so there was no legal access restriction.

It comes as thousands of businesses and organisations including churches are seeking clarity in the High Court this week on the legal basis of insurance over for loss caused by a global pandemic.

A test case brought by the Financial Conduct Authority (FCA) is examining the wording of policies on business interruption cover.

The landmark case will have wide ranging ramifications. Over 350,000 mostly small businesses have policies with wording similar to those being argued over in the High Court. If the insurance companies lose, the bill could run into billions of pounds.

The FCA has argued that when insuring their businesses people should not be susceptible to the insurer’s “picking and choosing” which elements to cover and which to exclude.

It argues that the pandemic and the government’s reaction to it should be treated as a single cause of lost income, and should trigger payments on insurance policies.


The FCA insists that announcements relating to social-distancing, self-isolation, lockdown and restricted travel and activities, staying at home and home-working made on March 16 and "on many occasions subsequently" meant prevention of access to premises for businesses.

Transcripts of the hearing seen by the Herald reveal that Mr Kealey claimed that Boris Johnson's lockdown announcements were advice, had no statutory basis and that it did not legally prevent access to premises.

He agreed with Jonathan Gaisman QC, for the insurers Hiscox that there was no prevention of access to premises in so far as the lockdown regulations meant that customers were not allowed to go there.

Speaking on sixth day of the case, he said: "We take into account in making these submissions, my Lords, that none of the government advice was mandatory or compulsory."

He referred to the opinions of former senior judge Lord Sumption who said: "... in his press conference Boris Johnson purported to place most citizens under virtual house arrest through the terms of a press conference and a statement on the government website said to have ’immediate effect ’. These pronouncements are no doubt valuable as 'advice', even 'strong advice’. But under our constitution neither has the slightest legal effect without statutory authority ."

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Mr Kealey added: "My Lords, we say, therefore, for access to be prevented by any action of any authority... that means any action, generally speaking, having the force of law. So nothing done by any authority by way of advice, instructions or announcement legally prevented access to any premises."

He went on: "It is worth just remarking that Boris Johnson is not Maximilien Robespierre or George Danton [influential figures of the French Revolution], he is not the president of the Committee of Public Safety, we don’t live in a dictatorship or a totalitarian regime.


"The idea that Boris Johnson...can issue an instruction without any legal validity or force, and that is translated as a legal prohibition or a prohibition by someone with authority, has only to be stated, we say, to be rejected.

"Now, the fact that some members of the citizenry of this country, if one wants to borrow from the French Revolution, might have been taken in and might have chosen to live by the Prime Ministerial announcements or guidance rather than by the regulations is neither here nor there.

"There was government guidance that went beyond the government regulations, and the latter are binding and the former are not. It is as simple as that."

Mr Gaisman earlier said that the effects of people voluntarily staying away from businesses cannot be covered by Hiscox’s policies. He referred to the FCA's suggestion that the government guidance was mandatory as "Orwellian".

Hiscox has argued from the start that its policies are designed to cover property damage, and do not respond to pandemics.

The FCA, however, contests the insurers' legal interpretation of the government's announcements relating to lockdown saying: "The public would understand these all to be things that had to be done or complied with.... They were not ‘voluntary’.

In a statement to the hearing it goes on: "They would not be expected to and would not work out the legal basis for the Government’s pronouncements and whether there were legal grounds for a police or other sanction for non-compliance.

"If they did happen to know that there was no sanction for non-compliance, they would equally know that in the event of non-compliance, the Government would seek to ensure compliance by one means or another.


"The stay-at-home instruction given on March 16 amounted to the imposition of restrictions [and]inability of use. The Government expressly instructed customers not to go to pubs, restaurants, cinemas and so on because they were not essential trips: those businesses’ premises could not be used for their activities after their customers had been instructed not to attend.

"It used the word ‘advice’ but also explained repeatedly what the Government was 'asking' people to do and explained what they 'should' do and what the Government would 'no longer be supporting'.

These statements were received by the populace as instructions and acted on as instructions. They were restrictions imposed. They were not voluntary (the opposite of imposed)."

Ecclesiastical describes its own exclusion clause on “closure or restriction in the use of business premises due to the order of a competent local authority because of an occurrence of an infectious disease” as “clear and unambiguous”.

Wimbledon is set to have a pay-out estimated at around £114m following its decision to cancel its tennis championships.

That is because the All England Lawn Tennis Club (AELTC) purchased pandemic insurance for the last 17 years, making it one of the few sporting events that was prepared for Covid-19.


The eight-day case has concluded, although lawyers do not expect a ruling until September at the earliest.

There could be an appeal to the Supreme Court that would delay the date when any successful policyholders could finally be paid.