Abrasive material

Later this year, possibly next month, a highly significant judgment is set to be handed down. Known as the employers' liability (EL) trigger litigation, six cases were heard in the summer to determine the basis on which an insurer becomes liable for mesothelioma claims. These test cases represent the most recent development in a string of judgments which demonstrate how the systems of law in the UK are gradually catching up with the complex and potentially lethal issue of exposure to asbestos.

A brief history of asbestos

The fire- and friction-resistant properties of asbestos—and its unpleasant side effects on human beings—have been known about for centuries. Marco Polo allegedly encountered it in the form of woven materials known as “dragon cloth” in Central Asia. The versatility, durability and sheer availability of the mineral made it the material of choice in many processes and industries across the world.

Yet it was not until the 20th century that the full effects of asbestos on the human body were both appreciated and legally regulated. A series of legislative measures across Europe and the US in the first quarter of the last century recognised that excessive amounts of asbestos dust harmed workers and, in varying degrees, governments required employers to take measures to limit their workers' exposure to it.

The Second World War and the shipbuilding boom that followed opened up a vast array of construction workers to the use of asbestos; the building trade, boilermakers and heavy industry fell on asbestos as the new wonder material. Precautionary measures took second place to the pressure to deliver post-war recovery. Asbestos use peaked in the US, then the wave of asbestos use rolled further east: to the UK, Continental Europe, and Japan. With the advent of Ralph Nader and the consumer rights movement in the US in the 60s and 70s, the law began to turn against manufacturers and employers, and away from the traditional fatalist view that workplaces were inherently dangerous places. Asbestos-related liability made the quantum leap from workers' compensation to products liability. The “epidemic” became truly “airborne”. The genie was out of the bottle. Plaintiff lawyers seized the opportunity and ran with it.

Few asbestos manufacturers have survived the liability whirlwind that followed. Secondary users of asbestos fell to the next wave of insolvencies. Even incidental, white-collar users such as municipalities, schools, hospitals and homeowners have woken up to the insidious killer in their walls and flooring.

The cases

Mesothelioma is a vicious form of cancer, usually brought about by exposure to asbestos, and takes around 30 years from first exposure to develop. It is expected to cost the insurance industry many millions over the coming years as more cases come to light.

US courts, mindful of the unusual etiology of diseases resulting from exposure to asbestos, addressed the theories of liability in tort in the 1970s. Having come up with increasingly varied concepts of “trigger” such as exposure (to the material), manifestation (of a disease), and injury in fact (regardless of the onset of symptoms), the judges turned to the insurance policies that were in place at the time of each of these occasions, and looked for coverage. The wildly varying terminology used by insurers in their policies to identify the “thing” that they agreed to cover led to a bloodbath among insurers. The “exposure” faction sought to unload responsibility onto the “manifestation” years, and an unholy hunting party of plaintiff s' lawyers and coverage specialists roamed the corridors of law in search of wider and deeper targets of indemnity. Now, in the EL trigger cases, insurance coverage in the UK context has come under close judicial scrutiny for the first time—only 30 years after the US wrestled the same issues to an uneasy stalemate. At the tort level, major developments occurred in Fairchild v Glenhaven Funeral Services Ltd and others [2002] All ER (D) 139 (Jun). The House of Lords abolished the need for proof of causation in mesothelioma cases. When their lordships later sought, in Barker v Corus plc [2006] All ER (D) 23 (May), to explain that they hadn't quite intended to go as far as people thought they had gone in Fairchild, and that proportionality still applied, the UK government was forced to respond by reinstating the new rule in Fairchild by statute. In the more recent case of pleural plaques, Johnston v NEI International Combustion Ltd [2007] 4 All ER 1047, judges see-sawed their way through the English appellate system to a denial of the claimant's right to make a claim for “asymptomatic injury”. Once again, government—both north and south of the border—is now under pressure to legislate to reverse the ruling in favour of a remedy for the “worried well” claimant. Battle has been well and truly joined at Holyrood.

Back in London, however, the focus is back on claims brought against employers by employees, typically covered in the UK by EL policies. Employees may work for several employers during their careers, any of which could have subjected them to exposure to asbestos. There is fierce legal debate among the several insurers of those employers to clarify the appropriate “trigger” for mesothelioma coverage—the point from which the appropriate indemnifying insurer can be identified.

Questions at issue

The courts must decide at what point the injury which is mesothelioma “arises”: is it at the point where a victim is exposed to asbestos, when no perceptible damage is evident, or at the point when cellular mutation—the onset of disease—actually “begins” in fact, or when it becomes symptomatically manifest?

The picture is made even more complex by the fact that some EL insurers are now insolvent. These insurers are dependent on government compensation schemes and reinsurers for funds, and so need to be certain what their liabilities are.

The Fairchild decision, the Compensation Act 2006, and the proposed Scottish reform of the law on pleural plaques all demonstrate that asbestos is an extraordinarily potent catalyst for the evolution of the law.

This is a struggle between those who assert that rules of humanity, commonsense and commerciality should prevail, and those who insist on the application of long-standing legal rules and canons of construction of contracts. The House of Lords has shown itself willing to chuck the rule-book out of the window in the case of mesothelioma, to make all potential “bad guys” liable, without the normal requirement of evidence of causation. Westminster has backed that decision by legislation, and is considering further legislation to deal with other asbestos conditions such as pleural plaques. It is more than likely that the EL issues will go to the House of Lords. The question will then be whether their lordships will be as ready to alter the law of contract as fundamentally as they did in Fairchild for the law of tort.

The future

The demographic curve of manifestation of asbestos-related diseases in the UK is significantly behind that of the US. The big questions are: how far behind? And for how long and to what height might the claims curve develop? The UK nonlife actuarial profession looked at that in detail in its Definitive Guide to UK Asbestos in July 2004. The reconvened working party reported to the profession's annual convention in Sorrento last month The report and current trends will merit close study by insurers, particularly in the light of the imminent judgment.
 

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