Litigation privilege
The Claimant was Axa Seguros SA De CV, an insurance company. It reinsured its participation in an insurance policy covering all risks of physical damage to a “Toll Road Network concession”. The original insured was a company called Banobras. 70% of the Banobras risk was placed with the Defendant reinsurers. A hurricane caused significant damage to one of the insured highways and the Claimant paid out to Banobras. The Claimant then claimed an indemnity from the Defendant as due under the reinsurance contract. The Defendant refused to pay out.
To aid the litigation the Claimant wished to inspect the reports and associated documents written in connection with an earlier investigation of the now damaged highway as well as the communications between the investigator and the Defendant. The Defendant did not wish for the Claimant to be given the right to inspect the documents as they claimed that the material was covered by litigation privilege.
The Court held that the reports and other material were not covered by litigation privilege. Litigation privilege exists only when material is produced when litigation is reasonably in prospect and the sole and dominant purpose of the material’s production is obtaining advice or evidence in relation to litigation. On the facts neither requirement of litigation privilege was satisfied. The reports and communications had been made during an investigation of the highway in advance of litigation and before litigation was contemplated.
Link: Axa Seguros SA De CV v Allianz Insurance Plc [2011] EWHC 268 (Comm)
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