French court orders insurer to pay restaurant’s business interruption losses from coronavirus

Via Yahoo Finance

French court has ordered the multinational insurance company Axa to compensate a leading restaurateur for income lost because of the coronavirus shutdown in a landmark ruling expected to prompt lawsuits by other restaurant across Europe.

The firm had refused to pay compensation to Stéphane Manigold, whose four Paris restaurants include the Michelin-starred Maison Rostang. It argued that his policy did not cover the emergency lockdown.

But the Paris Commercial Court ruled this weekend that Axa France must make an initial payment of €45,000 (more than £40,000) to Mr Manigold while a court-appointed expert assesses the extent of his losses.  

In a judgment likely to set a precedent in France and other European countries, the court dismissed Axa’s argument that Mr Manigold’s policy would have covered the closure of one restaurant by the authorities but did not apply to a general public health measure.

About 100 other French restaurateurs have initiated legal proceedings against their insurers since Mr Manigold brought his case against Axa over one of his restaurants, Le Bistrot d’À Côté Flaubert.

“This is a great moment for all bosses of small and large businesses that are suffering, who’ve got one knee on the ground,” Mr Manigold said. “We took on a multinational and we won. It’s a much-needed boost. For two-and-a-half months, we haven’t had made a single euro while we’ve still got overheads and costs to pay.”

His lawyer, Anaïs Sauvagnac, said the court had also rejected another line of defence by Axa, whose lawyers contended that Mr Manigold had closed his restaurant “voluntarily”.

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Eric Le Maire, an Axa spokesman, said the firm would appeal against what he described as a “provisional” ruling “taken as a matter of urgency, without debate on the substance.” He added that “99 per cent of policies clearly exclude [losses resulting from] the pandemic”.   But Mr Manigold contested the claim. “I know that thousands of policies like mine exist and behind them are tens of thousands of workers.”

Foolowing the ruling, dozens of well-known French chefs, including Gérald Passedat, Marc Veyrat, Michel Sarran and Gilles Goujon, renewed demands for their insurers to shoulder “15 to 20 per cent of losses”.

Insurers evaluate the sector’s total losses at €60 billion (nearly £54bn). Some 55,000 restaurants, cafés and hotels have obtained government-guaranteed loans to tide them over, with many of France’s 1 million restaurant and café workers furloughed under a government job retention scheme similar to Britain’s. 

Mr Manigold estimates that about half of Paris restaurants risk going under, and a third of those elsewhere in France, where overheads are lower.