Bath Racecourse v Liberty Mutual confirms COVID-19 business interruption principles

The High Court's recent ruling in Bath Racecourse Company Ltd & Ors v Liberty Mutual Insurance Europe SE & Ors provides crucial guidance on business interruption insurance claims arising from COVID-19 pandemic restrictions. Sean O'Sullivan KC, sitting as a Deputy Judge, delivered a comprehensive judgement in July 2025 that addresses key interpretative issues affecting similar claims across multiple sectors.

Case background and parties

The claimants, comprising various entities within the Arena Racing group operating racecourses and greyhound tracks across England and Wales, sought recovery for substantial losses following government-mandated closures during the pandemic. The defendants—Liberty Mutual Insurance, Allianz Insurance PLC, and Aviva Insurance Ltd—contested the scope and extent of coverage under the relevant business interruption policies.

This litigation emerged following the Supreme Court's landmark decision in Financial Conduct Authority v Arch Insurance (UK) Ltd, which established important precedents for pandemic-related business interruption claims and triggered numerous similar disputes across various industries.

Key legal determinations

The judgement addressed two fundamental questions that have become central to COVID-19 business interruption litigation. Firstly, whether measures imposed by the British Horseracing Authority (BHA) and Greyhound Board of Great Britain (GBGB) constituted actions by a "competent authority" within the meaning of the insurance policies. The court confirmed that such regulatory bodies fell within this definition when acting pursuant to government directives.

Secondly, the court examined how claim limits should be applied across multiple claimants under related policies. O'Sullivan KC supported the position that each entity could claim losses under individual limits rather than being subject to an aggregate limit covering all claimants collectively. This determination has significant implications for group litigation involving related entities.

The judgement also established that subsequent modifications to existing restrictions would not necessarily trigger separate insurable events unless they constituted substantive changes to the regulatory framework rather than mere procedural adjustments.

Policy interpretation principles

The court's analysis emphasised the importance of precise policy wording when determining coverage scope. O'Sullivan KC distinguished between "damage" and "loss" within the policy context, establishing that actual financial loss must flow directly from actions by defined authorities. The judgement reinforced that coverage determinations must focus on the substance and practical effect of restrictions rather than their formal characteristics.

The court referenced established legal precedents in assessing whether different restrictions constituted separate events or variations of existing measures. This analysis proves particularly relevant given the evolving nature of government restrictions throughout the pandemic period.

Industry implications

The ruling provides important clarity on several contentious issues that have emerged in pandemic-related business interruption disputes. The confirmation that regulatory bodies can constitute "competent authorities" when implementing government policy extends potential coverage beyond direct government action. Similarly, the individual limits determination may benefit policyholders operating through multiple related entities.

The judgement's emphasis on substance over form when evaluating restrictions offers guidance for assessing claims involving evolving regulatory measures. This approach suggests that courts will examine the practical impact of restrictions rather than merely their procedural or technical characteristics.

The decision reinforces the Supreme Court's approach in FCA v Arch Insurance while providing specific guidance on issues that have generated uncertainty in subsequent litigation. The ruling represents a significant contribution to the developing jurisprudence surrounding business interruption coverage during unprecedented circumstances.