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Financial Institutions E-briefing: Insurance update: 9/11 attack on the Twin Towers of the World Trade Center: 1 attack or 2?

    • Insurance and reinsurance - E-briefings
    • Financial services


    The issue of whether the terrorist attack on the Twin Towers on 11 September 2001 was one attack or two was considered by an English Court for the first time in the decision of Aioi Nissay Dowa Insurance Company Limited –v- (1) Heraldglen Limited and (2) Advent Capital No. 3 Limited.

    The Court heard an appeal from the decision of an arbitration panel which had concluded the attack on the Twin Towers was not one occurrence or series of occurrences “arising out of one event” for aggregation purposes.

    The Court endorsed the view that a terrorist conspiracy or plan to carry out attacks is not in itself sufficient to characterise separate attacks as “arising out of one event”, but the position might be different if wider language was used such as “arising out of one originating cause”.

    The Retrocession Contracts

    There were four retrocession excess of loss reinsurance contracts (“the Retrocession Contracts”) by which the Claimant reinsured the Defendants. The Retrocession Contracts covered “all business underwritten by [The Defendants] and classified by them as Aviation” for a limit ranging between US$1million to US$3million “each and every loss” where the “the total original incurred Aviation loss” exceeded a specified limit, which ranged from US$200million to US$500million. Therefore, the Retrocession Contracts only responded in the event that a major market catastrophe exceeded those limits.

    Following the highjacking of four aircraft on 9/11, a large number of actions were started against the airlines concerned and those responsible for airport security. These led to claims being made under the inward reinsurances, i.e. those reinsured by the Retrocession Contracts. The claims on the inward reinsurances were settled on the basis that each aircraft that hit the Twin Towers were two separate events and therefore two separate losses.

    The Claimant’s contention was that liability under the Retrocession Contracts should be on a one-event basis. The issue needed to be determined by reference to the aggregation language in the Retrocession Contracts, which provided that the term “each and every loss” shall be understood to mean “each and every loss or accident or occurrence or series of occurrences thereof arising out of one event”.

    The Arbitration Award

    The Arbitration Tribunal had applied the “unities” doctrine originating from the Award of Michael Kerr QC in the Dawson’s Field arbitration and subsequently affirmed in the Court of Appeal. This doctrine holds that whether or not something which produces a “plurality of loss” (i.e. more than one) can properly be described as one occurrence should be decided by putting oneself in position of “an informed observer” of the true facts in order to consider the question of the degree of unity in relation to cause, locality, time and, if initiated by human action, the circumstances and purposes of the persons responsible.

    The Tribunal therefore considered the facts of what happened in respect of the attack on the Twin Towers in some detail in order to evaluate the four “unities” and determine whether there was one event or two.


    With regard to the circumstances and purposes of the persons responsible, the Tribunal acknowledged that the highjackings were the result of a co-ordinated plot paid for by al-Qaeda but observed that it was clear from the authorities that a conspiracy or plan cannot of itself constitute an “occurrence” or an “event” for the purpose of an aggregation clause.


    The Tribunal concluded that there were two separate clauses because there were two successful highjackings on two separate aircraft, albeit as part of the same “dastardly plot”. There was no factor of sufficient causative relevance to override the conclusion that two separate highjackings caused two separate losses.


    The Tribunal considered that it was right to look at the whole period from the check-in and passenger scrutiny to the collapse of each tower and not just from the time each flight took off. There were clearly similarities on the timing of events, but there were two occurrences and two events.


    The Tribunal held that the fact that the Twin Towers were located in close proximity to one another and were part of a single property complex did not give rise to a sufficient degree of unity of location. Each Tower was a separate building, which did not stand or fall together: if one of the hijackings had succeeded, only one Tower would have been destroyed.

    In the circumstances, the Tribunal concluded that none of the unifying factors was sufficient compelling to lead to a conclusion that there were two occurrences arising out of a single event.

    The Claimant's Appeal

    The Claimant appealed contending that the Tribunal had erred in law for a number of reasons. In particular, the Claimant argued that the Tribunal failed to have sufficient regard to the purpose and intent driving the hijacks and subsequent crashes. The Claimant argued that the Tribunal should have gone on to consider whether there had been “a series of occurrences” “arising out of one event”. The Claimant submitted that had the Tribunal done so it ought to have concluded that the incidents arose out of one event not two.

    The Claimant’s submissions were not accepted by the Court which concluded that the Tribunal had taken adequate account of the underlying plot when they came to analyse how that plan was implemented and that the Tribunal had accurately summarised the law relating to the unities and proceeded fairly and properly apply it.


    The result of this case might have been different if different language had been used in the aggregation clause as the criterion for determining aggregation of a plurality of losses. For example, if the clause had referred to all losses arising out of one “originating cause” the Claimant might have been able to rely on the underlying plot as such a cause because “cause” has been recognised by the courts as providing much wider unifying language than “event”.

    The Claimant here acknowledged the correctness of the Tribunal’s observation that a conspiracy of itself cannot constitute an “occurrence” or “event”, which made it difficult convincingly to argue that the two separate aircraft crashes were a series of occurrences arising out of one event.

    There is a considerable degree of case law on the meaning of “occurrence” and “event” in aggregation clauses such as the one at issue here. However, there is an infinite variation in the factual circumstances to which that language might have to be applied. It seems likely therefore that disputes arising in connection with aggregation issues will continue to brought before the courts because a relatively short point of construction can have a huge impact on the exposure of an insurer, or reinsurer, and therefore often be a point worth running even where, as here, the end result might be said to be unsurprising.