Aioi Nissay Dowa Ins. Co. Ltd. v. Heraldglen Ltd. and Advent Capital (No. 3) Lts.  EWHC 165 (Comm).
The English High Court of Justice, Queen's Bench Division (Commercial Court) has handed down a decision affirming an arbitral award holding that the September 11, 2001 attack on the World Trade Center arose out of two occurrences rather than one for purposes of applying policy limits and deductibles.
The reinsurer issued four excess-of-loss reinsurance agreements to the cedents for all business classified as aviation business. The contracts provided coverage in varying amounts for "each and every loss" in excess of $100,000, with the phrase "each and every loss" defined to mean "each and every loss or accident or occurrence or series thereof arising out of one event." In the underlying arbitration, the parties disputed whether the two separate planes that crashed into the World Trade Center should be viewed as one occurrence or two. The cedents had settled their inward claims on the basis that the World Trade Center attack consisted of two separate occurrences, a position on which it then based its outward claim to the reinsurer.
The arbitration panel based its conclusion that the World Trade Center attack constituted two separate occurrences on the "unities" doctrine, discussed in Kuwait Airways Corp. v. Kuwait Ins. Co. SAK  1 Lloyd's Rep 664. Using this doctrine, the arbitrators evaluated the unities as to (1) the circumstances and purposes of the persons responsible for the attack; (2) the cause of the event; (3) the timing of the event; and, (4) the location of the event. The arbitrators considered the various aspects of the coordinated attack and concluded that despite the nexus in the origins of the planning of the hijackings, the separate sequence of events that led to the separate loss and damage caused by each hijacked plane constituted two separate occurrences rather than one. The panel viewed this as a "common sense result," concluding that "an independent objective observer watching each of the hijackings and then death and personal injury on board would have concluded that there were two separate hijackings."
Despite the reinsurer's attempt to overturn the arbitration award, the court rejected the reinsurer's challenge to the panel's findings, concluding that the arbitrators had properly considered the various factors in the unities doctrine. It noted that the arbitrators had considered the fact that the World Trade Center attack originated from one overall terrorism plan, but that this fact alone was not determinative of the outcome of the unities analysis. While acknowledging the common planning and execution of each hijacking, the court did not find fault in the arbitrators' conclusion that this common plan did not override the conclusion that the two separate hijackings caused separate loss and damage. The arbitration award was therefor left to stand and the appeal dismissed.