The High Court has ruled that two insurance companies have a liability to indemnify a computer chip manufacturing company for losses, calculated at some $5 million (€4.86 million), suffered by the company when the wrong types of filter were installed during a preventative maintenance programme at its plant in Limerick.
Analog Devices, which manufactures integrated circuits and employs 1,400 at its plant at the Raheen Industrial Estate, said it was forced to destroy some 1,250 six inch silicon wafers and suffered serious business disruption as a result of the maintenance error of August 1999.
It sought compensation on foot of two insurance policies it held with the Zurich Insurance Company with an address at Eagle Star House, Ballsbridge Park, Dublin, and the American Guarantee and Liability Insurance Company (AGLIC), of Schaumburg, Illinois.
Both insurance companies denied liability and the High Court was asked, over a 12-day hearing, to determine whether they had a liability.
In his reserved judgment yesterday, Mr Justice Kelly held the companies were liable to indemnify Analog for the losses sustained.
The judge noted the proceedings arose after a technician had, on August 2nd, 1999, during a preventative maintenance programme, installed incorrect filters to a chemical-dispensing system through which hydrochloric acid passed. As a result, particles and dye were deposited on wafers making them unfit for use.
That error and its consequences gave rise to this litigation and litigation in the US. Analog claimed it had sustained losses of some $5 million and that the defendants were obliged to indemnify it for those losses.
The defendants admitted the existence of the policies but argued that, for a variety of reasons, they did not have to provide cover for the losses.
Rejecting their arguments, the judge said he was satisfied that, for the past 20 years, it had been common practice for multinational companies to insure their businesses in the way Analog had done in this case. The case was adjourned to January 17th.
