In an unexpected move, the Virginia Supreme Court is to reconsider a ruling from last year in which it held that an insurance company doesn't have to foot the bill for a company facing damages over climate change.

It was the first ruling of its kind in the nation (Greenwire, Sept. 16, 2011).

In September, the court held in AES v. Steadfast that Steadfast Insurance does not have a duty to defend AES Corp., a utility which is a defendant in a major climate case.

That case, Kivalina v. Exxon Mobil Corp., et al., is currently before the San Francisco-based 9th U.S. Circuit Court of Appeals.

That the Virginia court will rehear the case is of keen interest to lawyers following the litigation.

The move is "significant in the sense that the Virginia Supreme Court only rarely grants such petitions," said Christina Carroll, a partner at McKenna Long & Aldridge.

AES is arguing that the precedents cited by the court do not support its conclusion. The court had ruled that when a defendant should have known its conduct would cause harm there is -- in insurance-speak -- no "occurrence," meaning no incident that leads to a duty to defend.

AES maintains that the standard should be whether the defendants knew there was a "substantial probability" that conduct would cause harm.

Climate change legal expert J. Wylie Donald, a partner at the McCarter & English law firm in Wilmington, Del., said the fact that the court has agreed to rehear the case "is a great result" for AES as it indicates the court will change its ruling in a way that benefits policyholders.