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The English Supreme Court examines issues of causation

Written by Nigel Brook and Davinder Chhatwal - first published in Asia Insurance Review

Under English law, to succeed under an indemnity (such as a (re)insurance contract) a claimant must be prove (i) something has happened which triggers the indemnity (in the insurance context, a peril insured against); (ii) the claimant has incurred a loss; and (iii) there is a sufficient causative link between the trigger and the loss. In relation to causation, the English courts have long held that the breach must be an "effective" or "proximate" cause of the loss – though the parties can contract for a looser requirement. Does the decision in the Petroleo Brasileiro S.A v E.N.E. Kos 1 Ltd charterparty dispute introduce a new test for causation generally? If there is a new test, what are the implications for (re)insurers?

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