Our Commercial Disputes Solicitor, Lucy Emanuel, looks at the Supreme Court's decision on AIG Europe Limited v Woodman. 

On 22 March 2017, the Supreme Court handed down its decision on AIG Europe Limited v Woodman and others. This case was surrounding the interpretation of aggregation provisions in the Minimum Terms and Conditions to be contained in solicitors’ professional indemnity insurance.

The Supreme Court overturned the Court of Appeal’s earlier decision and held that the test to determine whether certain claims were “in a series of related matters and transactions” was an objective one taking the transactions in the round.

The Facts

Two sets of claims were brought against a firm of solicitors by groups of investors, whose funds had been lost due to the solicitors' failure to establish that sufficient security was in place before releasing the sums to their client through a cover test. The client, a developer, was developing two separate property projects in Morocco and Turkey which had been invested in by the claimants. The projects were shut down before any of the property had been purchased after the funds had been released by the solicitors.

Following the loss of the investment funds, claims were brought which totalled around £10 million. The solicitors' PI policy had a limit of £3 million per claim, and permitted the aggregation of claims in circumstances where all claims arise from 'similar acts or omissions in a series of related matters or transactions'. The insurers argued that none of the claims should be aggregated or, in the alternative, the aggregation should apply per location resulting in just two claims.

Court of Appeal: ‘an intrinsic relationship’ 

When determining how to deal with the aggregation, the Court of Appeal held that there must be an 'intrinsic' relationship between the transactions, rather than a relationship with some outside connecting factor (such as geographical location).  

Supreme Court decision: ‘inter-connection’ 

It was unanimously agreed to allow the insurers appeal. Following the reasoning in the 2003 case of Scott v Copenhagen Reinsurance Co (UK) Ltd, the Supreme Court held that determining whether the transactions were related was fact dependent. The Court held that to do this is an acutely fact sensitive exercise. The Court rejected the notions of ‘dependent transactions’ and ‘intrinsic relationships’ used by the lower courts which they felt were unhelpful descriptors of related transactions. The Court said that “related” means some inter-connection between the matters or transactions, or in other words that they must in some way fit together." 

The Supreme Court held the two development projects were unrelated because despite having a similar legal structure, they related to two completely different sites and there was a different deed of trust for each site with security over different complete assets.


Whilst the claims which related to the Morocco investments could be connected due to the shared objective of the underlying development project and the claims regarding the Turkey investment could be aggregated in the same way, the claims relating to the two separate projects could not be aggregated because of a similarity between the two claims is not enough.

This case shows that in determining aggregation factors, the starting point will be to objectively consider the relationship between the relevant transactions in order to identify their interconnection. It demonstrates that the courts, when looking at aggregation, will look at each case objectively taking the transactions in the round.