PracticeAccounting FirmsParmalat ruling boosts international networks

Parmalat ruling boosts international networks

Court ruling in favour of Grant Thornton provides hope of cover for international networks in the wake of Parmalat

Grant Thornton logo

International networks could still get cover for disastrous mistakes by their
related member firms, despite those firms invalidating the terms of the cover, a
court has indicated.

Grant Thornton
International
has won its battle to secure cover from insurers Brit, in
relation to Parmalat
claims in a case that offers some support for networks, though the court said
the relationships remained uncertain from a legal point of view.

The international network had previously been denied cover after a ruling by
the Court of Appeal because its former Italian member firm, Italaudit, had not
claimed under the policy, a decision reversed unanimously by the House of Lords.

‘If individual member firms are between themselves given full cover…
incurred by reason of their membership in GTI, it would seem very odd that GTI
itself did not enjoy similarly full cover in respect of claims,’ said Lord
Mance.

The ruling suggested that GTI constituted a ‘firm’ within the meaning of the
insurance contract. The ‘firm’ could not forfeit its insurance on the basis that
another network member had forfeited its own cover.

Barlow Lyde & Gilbert partner Simon Konsta said it would be ‘dangerous’
to make conclusions of broad application of the decision, due to a lack of
policy for the courts to draw on and each case turning on specific wording
within insurance documents.

‘Notwithstanding the positive result for GTI in this instance, this
litigation as a whole demonstrates how expected or intended cover on these
policies can potentially be subverted by ambiguous or unclear wording,’ said
Konsta.

A spokeswoman for Grant Thornton International said that the decision was
‘welcome’.

She added: ‘We’re very pleased it went in our favour, it was the right
decision.’

It is understood that the US courts are considering hearing claims against
GTI by lawyers representing
Parmalat.

The trial of 55 defendents involved in the collapse of the dairy group opened
in Parma this week, but without founder Calisto Tanzi.

Related Articles

BDO’s global revenues pass $8bn

Accounting Firms BDO’s global revenues pass $8bn

3d Alia Shoaib, Reporter
Top 40 International Networks, Associations and Alliances: Finding growth amid uncertainty

Accounting Firms Top 40 International Networks, Associations and Alliances: Finding growth amid uncertainty

5d Philip Smith, Reporter
Top 40 International Networks, Associations and Alliances 2017: Big Four tussle for top spot

Accounting Firms Top 40 International Networks, Associations and Alliances 2017: Big Four tussle for top spot

7d Emma Smith, Managing Editor
BDO reports revenue growth of 5.7%

Accounting Firms BDO reports revenue growth of 5.7%

2w Alia Shoaib, Reporter
Taylorcocks announces merger with Surrey firm

Accounting Firms Taylorcocks announces merger with Surrey firm

2w Emma Smith, Managing Editor
Kingston Smith reports 7% gender pay gap

Accounting Firms Kingston Smith reports 7% gender pay gap

2w Emma Smith, Managing Editor
RSM announces two partner promotions

Accounting Firms RSM announces two partner promotions

2w Emma Smith, Managing Editor
Backsourcing: The latest accountancy trend?

Accounting Firms Backsourcing: The latest accountancy trend?

1m Pillsbury Winthrop Shaw Pittman