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Long Tail Asbestos Losses – Where Does Corporate Liability Lie?

Long tail losses arising out of asbestos exposure are immense and judges are often obliged to delve far back into corporate history in order to discern where liabilities rightfully fall. That was certainly so in one case concerning an electricity industry worker who died from cancer almost 50 years after he was exposed.

The man worked in the turbines division of a large electricity supplier between 1965 and 1967. He was diagnosed with malignant mesothelioma in 2013 and his lawyers negotiated a settlement of his claim. After it admitted liability, the supplier paid a total of £850,652 in damages and costs before the man died.

A number of changes in corporate structure over the years had begun in 1967 with the supplier becoming part of a larger group. The group’s turbines business was transferred in 1970 to another electricity company. The latter had agreed to provide an indemnity in respect of past liabilities.

In reliance on that indemnity, the group sought to recoup its loss from the company. The latter resisted the claim, however, on the basis that the man had never been employed by the supplier and that liability had thus wrongly been conceded.

In upholding the group’s claim, however, the Court attached substantial weight to the man’s own view that the supplier had been his employer during the relevant period. Although there were contra-indications and areas of uncertainty, the Court was satisfied that he was probably right about that. The supplier had thus correctly admitted liability and the indemnity applied.

The English Electric Company Limited v Alstom UK. Case Number: LM-2014-000068