The three assureds owned various business premises in Beirut. For several months prior to January 1976, the Lebanon, in particular Beirut, had suffered internal political strife accompanied by violence and destruction. On 18 and 19 January 1976, a group of people broke into the premises owned by the assureds, resulting in looting and vandalism. The assureds suffered damage approximating £1 A million. The assureds claimed under various policies with underwriters who, although agreeing that prima facie the losses fell within the cover, relied upon the war exclusion clause.
The basic policy was a standard form fire insurance which included a standard war and civil strife exclusion. However, additional cover was provided by a riot and strife endorsement, malicious damage endorsement and standard explosion endorsement.
The riot endorsement provided cover for the the act of any person taking part together with others in any disturbance of the public peace, not being an occurrence mentioned in Special Condition 6.
The malicious damage endorsement provided cover for loss of or damage to the insured property directly caused by malicious acts of any person not being an act amounting to or committed in connection with an occurrence mentioned in Special Condition 6.
The standard explosion endorsement provided cover for loss of or damage to the property insured by fire or otherwise directly caused by explosion.
Special Condition 6 excluded liability in respect of loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences:
- act of foreign enemy;
- hostilities or warlike operations (whether war be declared or not);
- civil war;
- civil commotion assuming the proportions of or amounting to a popular rising;
- military rising;
- military or usurped power or any act of any person acting on behalf of or in connection with any organisation with the activities directed towards the overthrow by force of the government dejure or de facto or to the influencing of it by terrorism or violence.
In addition, Special Condition 6 included a reverse burden of proof clause which stated that where the insurer alleged that the war exclusion clause applied, the burden of proof that the loss or damage was covered by the policy was placed upon the assured.
The manner in which the cover was constructed meant that Special Condition 6 re-defined riot so as to state that the occurrences in that condition were not riots for the purposes of the endorsement and also that such occurrences were excluded from the policy.
The issues raised by the insurers were typical of any case defended on the basis of a war exclusion. Did the events in Lebanon constitute any of the occurrences set out in Special Condition 6 and, if so, did those occurrences cause the loss?
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