Parmalat ruling boosts international networks

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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
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

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

A spokeswoman for Grant Thornton International said that the decision was

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

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

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

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