The French multinational insurance company AXA has agreed to pay some of its coronavirus-related business interruption insurance claims after losing a court battle with the owner of four Paris restaurants.

business owner empty restaurant 375x210 Business interruption ruling in France could have global repercussionsAXA initially vowed to appeal the Paris court’s May 22 ruling ordering it to pay the economic losses sustained by Stephane Manigold, whose restaurants in the French capital have been hammered by the government-ordered shutdowns to slow the spread of coronavirus.

“Global resonance”

Many analysts say the Paris court’s decision could bode well for other businesses around the globe struggling to stay solvent until business returns to normal.

Mr. Manigold told reporters that his team has received calls from the U.S., U.K., Spain, and South Africa since his court victory asking for more details about his contract with AXA and the court’s ruling.

“This decision in Paris has a global resonance,” he said, according to Reuters.

Like many business owners in the U.S., Mr. Manigold sued his insurer after it denied his claims for economic losses brought about by the coronavirus pandemic and the subsequent government-mandated shutdowns.

Contractual ambiguity

AXA had argued that its business interruption policies did not cover pandemic-related health crises. A week after the ruling, the company’s CEO, Thomas Buberl, said AXA would meet the majority of the claims from restaurant owners whose insurance contracts “contained some ambiguity,” according to Reuters. The company indicated it will still continue to fight other claims.

In the U.K., the French court’s ruling prompted regulators to seek clarification from courts as to whether insurers should be forced to pay business interruption claims brought on by the coronavirus pandemic.

Experts say there are some legal parallels between Mr. Manigold’s case and similar complaints brought the owners of restaurants, bars, and nightclubs in the U.S., U.K., and numerous other nations.

In any case, the outcome of the case is likely to reignite the debate in countries where such claims are in dispute. In the U.S., the U.S. Chamber of Commerce has sided with the insurance industry to fight business interruption claims related to the pandemic. They called proposed legislation in several states to require payouts on such claims “unconstitutional.”

According to S&P Global Market Intelligence, lawyers representing U.S. policyholders also see ambiguity in contract language and “expect courts to look favorably on their arguments that lean on traditional interpretations of exclusions and claims.”

S&P points out that many claims could be successfully argued that business interruption was caused by actual physical damage and/or government orders to suspend operations.

State laws and rights

There are also valid arguments refuting the U.S. Chamber of Commerce’s stance that laws forcing pandemic-related payouts are unconstitutional. State laws, for instance, could legally mandate the payment of such claims.

A previous Supreme Court ruling found that “[t]he States must possess broad power to adopt general regulatory measures without being concerned the private contracts will be impaired, or even destroyed, as a result.” Another of the high court’s rulings determined that the power of the states to ban or impair some contracts “must be accommodated to the inherent police power of the State ‘to safeguard the vital interests of its people.’’’

Beasley Allen is actively pursuing cases with clients whose insurance companies denied their business interruption claims. Dee Miles, Head of our Consumer Fraud Section, Rachel Boyd and Paul Evans are spearheading this litigation for our firm. They would like to talk to you about any potential claims.

Contact us for a free consultation regarding your business interruption insurance claims.

Additional sources:
NU Property Casualty

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