Summary

An agency agreement signed on 1 December 2000 contained an indemnity from the selling agent to the two insurers it sold for. The insurers' successors later paid large sums of customer redress on policies sold long before that date, and claimed the money back under it. The Commercial Court awarded them about 677 million pounds. The Court of Appeal has set that award aside. The clause answered for any act or omission by the agent while performing their duties under this agreement, and the agent had no duties until the agreement took effect. A cross appeal on contribution failed as well.

Background and facts

Two insurers underwrote payment protection cover sold alongside retailer branded credit cards. The credit lender sold it at the point of sale as agent for the insurers. The relationship ran for years with nothing in writing. The agency agreement was executed on 1 December 2000. The judge below found that before then the lender owed duties of care in contract and tort, but had given no indemnity, express or implied.

Sales ended on 14 January 2005, when credit lenders became directly regulated for insurance mediation. Complaints about the earlier book expanded from around 2011, and the rules left them with the insurers. The lender had taken around 95 per cent of net premium and the insurers around 5 per cent. The insurers paid nearly 500 million pounds in redress. They sued on the indemnity and, in the alternative, for contribution.

The issue

The appellants said the indemnity looked forward only. It ends with the words while performing their duties under this agreement, the duty clauses are in the future tense, and the whole agreement clause covers marketing and sale from and including the effective date.

The respondents said the agreement governed the whole relationship. Clause 1.2 applied it to the marketing and sale of the insurance under all of the schemes, including schemes with policies already on risk. Clause 12 carved nothing out.

On the cross appeal they said redress paid under the complaints rules was a liability within sections 1 and 6 of the 1978 Act.

The decision

The court began with clause 1 and held that it marked out the scope of what followed rather than reaching backwards. On the other reading the agreement would impose obligations about marketing and sale years after those events.

The default position is for agreements to govern what happens after they are agreed, not before.Lady Justice Cockerill, paragraph 72

The indemnity itself was the stronger point.

Those words are, on a plain reading, prospective. GE-CB only had duties under the agreement on and after the Effective Date. By definition, therefore, acts and omissions prior to the Effective Date fell outside the scope of the indemnity.Lady Justice Cockerill, paragraph 84

The reciprocal indemnity in favour of the agent was conditional on the insurers complying with duties confined to the term and the run off period. Only a forward looking reading kept the two sides in step. The judge had given the commercial arguments too much weight: the parties had negotiated for years, the wave of complaints had not yet broken, and for much of the period both companies sat in the same group.

There is force in the Appellants' argument that since the parties were introducing a new indemnity for the first time, there is no reason to assume that they intended it to apply to decades of historic conduct unless they said so.Lady Justice Cockerill, paragraph 101

the objective intention is that Clause 12.2 does not apply to policies sold before the date of the Agency Agreement. The appeal on this question of construction succeeds.Lady Justice Cockerill, paragraph 104

The cross appeal on contribution was dismissed. The respondents paid because the complaints rules obliged them to pay, and no customer had a claim to bring. Section 1(6) speaks of a liability which has been or could be established in an action brought by the person who suffered the damage. Those words do not reach a liability arising only on facts that never happened: a refusal to pay in breach of the rules, a determination, its acceptance, and then a claim.

There has to be an extant cause of action at the time when the payment is made.Lady Justice Cockerill, paragraph 133

That was treated as consistent with BDW Trading Ltd v URS Corporation [2025] UKSC 21, where a liability capable of being established on the existing facts sufficed although no proceedings had been brought, the court recording that the point was dealt with there in passing. Grounds 2 to 4 of the cross appeal did not arise.

Practical implications

Construction contracts carry indemnities of this shape, and they are often signed late. A contractor starting under a letter of intent, a consultant appointed months into a design, a subcontractor novated after the work has begun: in each case some of the acts the clause might be asked to answer for happened before it was executed. The burden sits on whoever wants the clause to reach them.

A tailpiece tying the indemnity to duties under this agreement fixes it to the term. If the party giving the wider indemnity has obligations for a period in which the other has none, that asymmetry counts against the wider reading.

The contribution point travels beyond insurance. A party that pays under a scheme rather than under a legal liability may have no contribution claim. Ask whether the person who suffered the damage could have sued the payer on the day of payment.

AXA France IARD S.A. & Anor v Santander Cards UK Limited & Anor [2026] EWCA Civ 1185, Court of Appeal (Civil Division), judgment handed down 15 September 2026, on appeal from [2025] EWHC 1881 (Comm). Quotations are taken word for word from the judgment of Lady Justice Cockerill at the paragraphs given. Sums and dates are as recorded in that judgment.