When a long-running commercial relationship is finally written down, does a new indemnity reach back over what went before? On 15 September 2026 the Court of Appeal said no, and set aside an indemnity award of about £677 million. In Axa France Iard SA & Anor v Santander Cards UK Limited & Anor [2026] EWCA Civ 1185, the Court allowed Santander’s appeal on the construction of the indemnity and dismissed AXA’s cross-appeal under the Civil Liability (Contribution) Act 1978.
What the case was about
The dispute arises out of the historic sale of payment protection insurance with store cards, from the 1970s to 14 January 2005 (para 1). The policies were underwritten by two GE Capital companies whose liabilities AXA inherited in December 2015, and sold by GE Capital Bank, later Santander Cards UK Limited (paras 5–7). For years the agency ran without a written agreement; a formal Agency Agreement was executed on 1 December 2000 (para 13).
Clause 12.2 had the seller indemnify the insurer “against any liability which they may incur by reason of any act or omission by GE-CB (including negligence) while performing their duties under this agreement” (para 22). Whether that reached policies sold before that date was the whole fight (para 23). Around 95 per cent of net premiums went to the seller, yet the insurers bore the redress: AXA paid nearly £500 million to customers and over £70 million in Ombudsman fees on pre-2005 policies (para 31).
Mrs Justice Dias held that the whole agreement, clause 12 included, applied to all policies whenever sold (para 34), awarding about £677 million including interest; Santander said roughly 85 per cent related to pre-2000 sales (para 36). She dismissed both contribution claims (para 37).
What the Court of Appeal decided
Lady Justice Cockerill gave the judgment; Lord Justice Holgate and Lord Justice Lewison agreed (paras 139, 140). The exercise was the iterative, whole-contract one described in Wood v Capita Insurance Services Ltd (paras 58, 61). Clause 1.2, central to the judge’s approach (para 62), did not carry that weight: it does not refer to all policies written before or after the effective date, which “would have been the ‘crystal clear’ way of covering earlier sales” (para 73).
The strong point lay in the indemnity itself. Clause 12 defines its own scope by acts or omissions “while performing their duties under this Agreement”, words prospective on a plain reading; the seller only had duties under the agreement from the effective date, so earlier acts and omissions fell outside it (para 84). Read overall, the agreement “speaks with a single voice: indicating prospective operation only as regards sales and marketing” (para 97). The judge erred in balancing the construction factors, and clause 12.2 does not reach policies sold before the agreement (para 104).
The cross-appeal failed at its foundation. Section 1(6) of the 1978 Act confines contribution to a liability “which has been or could be established in an action” brought by the person who suffered the damage — an insuperable obstacle here (para 111): no PPI claimant had brought, or could have brought, such an action when payment was made (para 112). A regulatory liability to pay redress was not a liability established in an action (para 123), and the words do not stretch to one that might have arisen had other things happened later (para 130). In any event the two liabilities were different in nature and so not in respect of the same damage (para 135). The appeal succeeded and the cross-appeal was dismissed (para 138).
Why it matters
- Formalising an old relationship did not backdate this new indemnity. An indemnity tied to duties “under this agreement” starts when the duties do, and a protection introduced for the first time is not assumed to reach decades of past conduct (paras 84, 97, 101).
- Backward-looking cover invites clear words. Agreements are expected to govern what follows them; an intention to reach earlier sales was not supplied by clause 1.2 or by continuity (paras 72–73, 99).
- Regulatory redress did not found a Contribution Act claim. AXA’s redress payments discharged no liability consumers had established, or could have established, in an action (paras 112, 123).
- Commercial asymmetry is not a construction trump card. A bargain that looks lopsided in hindsight is still risk allocation sophisticated parties may make (para 103).
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Read the full judgment: Axa France Iard SA v Santander Cards UK Limited [2026] EWCA Civ 1185 (The National Archives).