Billions hang in the balance in Covid-19 business interruption litigation: how can policyholders protect themselves?

The litigation brought by Bath Racecourse Company Ltd & Ors against Liberty Mutual Insurance Europe and other insurers is proving to be very significant for policyholders.

The case has involved two key pieces of litigation involving separate preliminary issues which have hit the headlines this month.

The case issues

The Bath Racecourse claimants comprise twenty companies in the Arena Racing Group which owned or operated racecourses and related facilities such as greyhound tracks, golf courses, hotels and a pub, at twenty-one locations in England and Wales and two group companies operating across the group without their own locations. The main insurer defendant is Liberty Mutual. It, together with Allianz and Aviva, insured the Bath Racecourse claimants under various commercial combined wordings.

The litigation concerns business interruption (BI) losses stated to be more than £80 million arising from the Covid-19 pandemic.

The first key issue being considered in the litigation is whether the defendant insurers are able to deduct the Government Furlough payments made to policyholders during the pandemic from the relevant business interruption policy settlements. The Court of Appeal found against the policyholders on this issue in February 2025 (see judgment here) and on 1 July 2025 the Supreme Court granted the appellant policyholders permission to appeal against that decision. This issue is estimated to be worth billions and the Supreme Court judgement will no doubt eagerly be awaited by policyholders and insurers alike.

The second series of issues involving the Bath Racecourse claimants was determined by the Commercial Court on 22 July 2025. The Bath Racecourse claimants’ policies each had BI cover, with an extension for denial of access (limited to £2.5m for “any one loss”).

There were a number of preliminary issues before the court, including:

1. Whether a reference to actions of “competent authority” in the denial of access cover included the British Horseracing Authority (the BHA) and the Greyhound Board of Great Britain (the GBGB) who had directed that the various racecourses be closed during the pandemic.
2. How the “any one loss” cover applied.
3. How the arbitration agreement in the policies worked.

The court held:

1. The actions of the BHA and/or the GBGB qualified as those of “competent authorities” for the purposes of the Denial of Access Cover. This is a significant finding, given that these were not public bodies.

2. A separate “any one loss” limit of £2.5m under the Denial of Access Cover was available for each claimant individually per relevant measure or action and per premises. This is a highly significant finding for business policyholders with multiple insured premises with similar “any one loss” wordings, going further than earlier rulings on the issue.
3. The conditional arbitration clause in the policy which provided:

“If any difference shall arise as to the amount to be paid under this Certificate (liability being otherwise admitted) such difference shall be referred to an arbitrator…”

did not apply in this case as there had been no admission of liability. Therefore, the court will have jurisdiction to hear all aspects of the case, including quantum.

The full Commercial Court judgment can be read here

Implications for policyholders

Given what is at stake in this litigation, it is likely that the Commercial Court judgment will be appealed, particularly in relation to issues 1 and 2 highlighted above. And, of course, the Supreme Court has yet to rule on the multi-billion pound furlough issue. It is not clear how long these and other Covid-19 BI claims will take to make their way through the courts. Therefore, any policyholders who have not yet settled their Covid-19 BI claims with their insurers should take urgent steps to protect their position and make sure that their claims do not become time barred, given that the six year limitation deadline is fast approaching.

If you have any questions or concerns about Covid business interruption insurance or coverage and policy disputes generally, please contact insurance lawyer Marie-Claire di Mambro.