Favourable approach for insurers to the construction of exclusion clauses

In a recent decision the Commercial Court has followed the Supreme Court in the Impact Funding case. It declined to apply the contra proferentem rule to an exclusion clause in an insurance policy. Insurers will welcome the decision.

The contra proferentem rule is a rule relating to the construction of exclusion clauses in contracts. It applies where an exclusion clause purports to cut down liabilities that would otherwise be borne by a contract breaker. It operates where the drafting of the exclusion is ambiguous and it requires the clause to be construed narrowly against the party that is relying on it.