Police Must Pay for Sony Warehouse Damaged in Riots, Judge Says

London police must repay the insurers of a warehouse that held Sony Corp. (6758) goods, damaged in riots that spread through the city in the summer of 2011, a judge ruled.

Judge Julian Flaux said the attack on a building in north London constituted a riot, meaning the Mayor’s Office for Policing and Crime was responsible for losses because of a century-old law that holds police responsible for public disorder. It was “the behavior of an agitated, volatile group, not the behavior of professional thieves,” the judge ruled today.

Royal & Sun Alliance Insurance Plc, a unit of RSA Insurance Group Plc (RSA), and Mitsui Sumitomo Insurance Co. (Europe) Ltd. sued the police, seeking about 60 million pounds ($95 million). The judge said they were only liable for physical damage, not lost rent or profits, meaning insurers won’t get all the damages they sought.

The worst public violence in Britain since the 1980s flared in August 2011 after a London man was shot by police. A three-minute long attack on the Sony warehouse by a group of youths in masks and hooded tops caused a fire that burned for 10 days.

Lawyers for the police had argued the incident was an organized raid and not a public disorder. The office of London Mayor Boris Johnson, which oversees the police, said last year it had received claims totaling about 106 million pounds arising from the August 2011 riots.

Price Impact

The decision not to award lost profits or rent is “disappointing for the insurance industry as a whole” and will have a “significant impact on the way in which riot insurance priced,” Kennedys Law LLP, the lawyers for Royal & Sun Alliance, said in a statement.

Chris Wilkes, a lawyer for Mitsui, didn’t immediately respond to an e-mail seeking comment.

Jennifer Sheldon, a spokeswoman for the Greater London Authority dealing with crime and policing, also declined to immediately comment when reached by phone.

The cases are: Royal & Sun Alliance Insurance Plc v. The Mayor’s Office for Policing And Crime, High Court of Justice, Queen’s Bench Division, 12-1025; and Mitsui Sumitomo Insurance Co (Europe) Ltd & Anr v. Mayor’s Office for Policing and Crime, High Court of Justice, Queen’s Bench Division, Commercial Court, 12-975.

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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