The Full Court of the Federal Court in Australia has finally released a judgement on the appeals in the second business interruption (BI) test case in Australia.

In its final ruling, the Federal Court decided to substantially uphold Justice Jayne Jagot’s earlier judgement in October 2021 that the insuring clauses did not apply to pandemic coverage in nine of 10 cases.

The court further explained in its final ruling that insurers could not reply on a section of Victorian property legislation to exclude liability, finally clarifying key issues relating to wordings in BI insurance policies, such as disease definition, COVID-19 outbreak proximity, the impact of government mandates, and other policy wording matters.

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The Insurance Council of Australia (ICA) has acknowledged the court’s ruling and offered assurances that its members – including those indirectly involved in the court proceedings – have committed to applying the principles of the court’s final ruling consistently and efficiently to all BI insurance claims. Moreover, they will determine the claims based on the applicable principles of the final judgement in the first and second test cases, as well as the wording of policyholders’ particular insurance policies.

“We welcome [the] Full Court judgement, which marks another important step in seeking clarity for business policyholders and the general insurance sector,” said ICA CEO Andrew Hall.

“These matters are not clear cut, and we acknowledge that this has been a long but necessary process that will ultimately provide important guidance on how business interruption policy wordings are to be interpreted and applied,” he continued. “We hope that the matter can be brought to a close as soon as possible.”

The parties to the Full Court proceedings have 28 days to apply for special leave to appeal to the High Court.