Prize indemnity

United Kingdom

India's cricket team was at the heart of another dispute in the case of Toomey and Others v Baron Electronics Pty Limited (16 January 2002).  Prize Indemnity cover was provided to Baron Electronics, a company based in India, for a promotion in which cash prizes were linked to India's results in the 1999 cricket world cup.  In the event, India were knocked out in the early stages of the Cup and the cover ran loss free.  Insurers, however, were unable to obtain payment of the premium, Baron Electronics failing to obtain exchange control clearance from the General Insurance Company of India, which contended that the insurance contract was a wagering contract which was void and unenforceable.  Insurers commenced proceedings in London for payment of the premium and obtained judgment to this effect.

The case is interesting on a number of counts:

  1. The Commercial Court followed the 1994 decision in Newbury International Limited v Reliance National Insurance in holding that the Prize Indemnity cover in issue was a valid insurance contract and not a gambling or wagering contract.
  2. The slip required payment of the premium to the brokers in India, which did not breach Indian exchange control regulations.  Thus, the contract was enforceable, as a matter of English law, and insurers were entitled to payment of the premium.

For further information please contact John Hall at john.hall@cms-cmck.com or on +44 (0)20 7367 3014.