The Supreme Court has published its decision in the case of AXA General Insurance Limited and others v The Lord Advocate and Others [2011] UKSC 46 in which AXA and other insurers (the Insurers) appealed against the decision of the Inner House of the Court of Session regarding the legality of the Damages (Asbestos-Related Conditions) (Scotland) Act 2009 (the 2009 Act) (please see our previous blog here for further information on that decision).

The 2009 Act was passed to reverse the decision of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39 which ruled that asymptomatic pleural plaques were not actionable. The 2009 Act provides that the asymptomatic conditions pleural plaques, pleural thickening and asbestosis are compensatable in Scotland. The Insurers challenged the legality of the 2009 Act by making two arguments: firstly, that the 2009 Act was incompatible with Article 1 of Protocol 1 to the European Convention of Human Rights (ECHR) which provides a protection of property and as a result the 2009 Act fell outside the competence of the Scottish Parliament; secondly, that the 2009 Act was open to judicial review under common law as it was an unreasonable, irrational and an arbitrary exercise of the legislative authority conferred on the Scottish Parliament by the Scotland Act 1998. Lord Hope, in the lead judgement, dismissed the appeal on both grounds. The Supreme Court therefore rejected the Insurers’ appeal, and the 2009 Act will remain in place.

This case has been watched closely by the insurance and reinsurance industry in the hope that its liability for such claims will finally be resolved. The Insurers’ last option now is to appeal the Supreme Court’s decision to the European Court of Human Rights in Strasburg. In the event that they do so, this case will continue to be closely watched by the whole market.