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Published 2 February 2021
The Court of Appeal has held that the meaning of “court” in the context of Third Parties (Rights against Insurers) Act 2010 (“the Act”) includes an Employment Tribunal (“Tribunal”). This means that tribunals have jurisdiction to hear a claim brought by a third party against an insurer under the Act.
Third parties rights against insurers
The Act removes the need for multiple sets of proceedings by allowing a third party to issue proceedings directly against a liability insurer where the insured is or becomes insolvent, and to resolve all issues (including the insured’s liability) within those proceedings. By removing the need for the third party to sue the insured, the Act eliminates the hurdle of restoring a corporate insured to the register of companies where it has been struck off.
The Act also improves a third party’s access to information about the insurance policy, allowing them at an early stage to obtain information about the rights transferred in order to enable an informed decision to be taken about whether or not to commence or continue litigation. The Act also widens the category of people who can be asked for the information and places time limits on their response.
Irwell Insurance Co Ltd v Watson and others  EWCA Civ 67
This case related to an employee, Mr Watson, resigning from his position with his employer, Hemingway Design Limited (Hemingway”). Hemingway held an insurance policy with Irwell Insurance which covered liability for claims brought against it at tribunal. In April 2017 Mr Watson brought a claim against Hemingway for unfair constructive dismissal and disability discrimination. Shortly after, Hemingway entered into creditors’ voluntary liquidation. Mr Watson then applied to join Irwell Insurance to the employment proceedings pursuant to the Act.
In the first instance, the tribunal judged that it did not have jurisdiction to hear the claim as the issues related to a contract of insurance and there was no contractual or employment relationship in existence between the parties. Mr Watson appealed to the Employment Appeal Tribunal (“EAT”) which allowed the appeal. The EAT held that under the 2010 Act, the employer’s rights under the insurance policy were transferred to Mr Watson which, in turn, allowed him to sue Irwell Insurance without bringing separate proceedings. The EAT decided that a tribunal was a “court” under the 2010 Act and so it had jurisdiction to declare Irwell Insurance as being liable to Mr Watson.
Irwell Insurance appealed to Court of Appeal. The Court dismissed the appeal and confirmed the EAT’s decision that a Tribunal was a “court” within the meaning of the Act. It held that if the third party was prevented from bringing proceedings against the insurer, it would invalidate the purpose of the Act in avoiding the need for two sets of proceedings. The Court also held that Tribunals are regularly asked to deal with questions of law spanning a range of topics and this might include insurance law questions. In doing so, the Court of Appeal rejected Irwell Insurance’s submissions that Parliament had never intended for the Tribunal to deal with such insurance cases.
The decision in Irwell confirms that insurers can be named as respondents in employment proceedings. Some practical considerations are:
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