Casualty

In this chapter of our Annual Insurance Review 2022, we look at the main developments in 2021 and expected issues in 2022 for casualty.

Key developments in 2021

We continued to see an upsurge in actions for collective redress and environmental litigation.  These two trends appear to be intertwined, with multinational companies facing group litigation for pollution or climate change related acts or omissions.  

We are increasingly seeing foreign litigants pursuing group litigation in the English courts against English domiciled parent companies of foreign subsidiaries.  The long-awaited Okpabi decision was handed down in February 2021, concerning pollution claims brought by Nigerian villagers against Royal Dutch Shell ("RDS").  The Supreme Court held that the there was a real issue to be tried as to whether RDS's corporate structure allowed for delegation of authority in relation to safety issues and environmentally responsible operations.  

In the Municipio de Marina -v- BHP case, the Court of Appeal granted permission for some 200,000 Brazilian claimants (concerning the Fundao dam disaster in 2015) to appeal a strike out of group litigation against BHP in the English courts.  The High Court had dismissed the proceedings as an abuse of process, on the basis that parallel claims in the Brazilian courts and voluminous documentation (making the case unmanageable) should preclude litigation in this jurisdiction.  The Court of Appeal will hear the substantive appeal during 2022.

These Okpabi and BHP cases followed the 2019 Vedanta -v-Lungowe case, in which the court held that Zambian claimants should be allowed to bring group litigation concerning alleged pollution by Vedanta's subsidiary, on the basis that i) there were real prospects of establishing parent company control over the subsidiary's practices and a duty of care owed to third parties ii) there was a substantial risk of the claimants not accessing substantial justice in Zambia, due to their impoverished status, the lack of legal aid funding and suitably experienced legal teams within the jurisdiction.  

There is an increasing wave of organophosphate claims (concerning pesticides and herbicides).  In the US, multi-district litigation concerning herbicides, glyphosate (RoundUp) and paraquat (now banned and alleged to cause diseases such as Parkinson's, respiratory problems and increased risk of cancers), continues.  At the end of 2020 claims were also commenced by agricultural communities in relation to the pesticide, chlorpyrifos (widely expected to be the next toxic tort).  

What to look out for in 2022

The Vedanta, Okpabi and BHP decisions will have significant implications for the liability insurers of multinational companies and pave the way for more group litigation to be brought in the English courts (particularly in relation to environmental issues).  We also await the outcome of the next stage of appeal in the BHP case during 2022, which ultimately will likely go all the way to the Supreme Court 

We will continue to see environmental litigation both in relation to historic pollution and climate change and against corporates and governments concerning emissions commitments.  There is likely to be more litigation concerning forever chemicals (PFAs), with the textiles, cosmetics and other manufacturing industries under increased pressure to abandon the use of these substances.  In addition, we can expect an uptick in actions brought in relation to microplastics.  

For liability insurers, these trends present novel coverage issues concerning date of injury, fortuity/ expected/intended and whether CGL or absolute pollution exclusions should apply.   

Download our full Annual Insurance Review 2022 for more insights.