Lloyd's and insurer Arch deny Nord Stream claim, cite war exclusions
Insurers Lloyd’s and Arch will seek to fend off a claim by natural gas pipeline operator Nord Stream, chiefly leveraging policy exclusions to fend off demands they pay damages after underwater explosions destroyed the pipelines carrying Russian gas to Germany.
Lloyd’s and Arch chiefly build their defence on exclusions for acts of war, use of explosives or politically motivated malicious acts, their initial defence document to the UK court suggests.
Insurers likewise deny the application of the 'Institute Clauses for Builders’ Risks’ clause (ICBR) which, they say, only covers construction and maintenance and is not intended as a universal all-risks cover. Nord Stream has sought an enduring application of that clause.
Insurers further sought to limit potential liability by denying the Nord Stream claim that a per occurrence limit applies separately to each pipeline.
Lloyd's and Arch are on the hot seat after Nord Stream sued for €403 million to help offset the cost of the pipelines lost to explosions in September 2022.
Lloyd's is targeted as lead and representing insurer on primary ’offshore operating all risks’ policies with property damage and terrorism sections, while Arch had a similar role for a parallel excess policy.
Nord Stream has argued that property section exclusions on malicious use of explosives or weapons of war, should such be acknowledged by the court, are countered by the terms of the terror section of both the primary and excess policies.
Nord Stram tallied its demands on a per-occurrence per line basis, each to an aggregate limit of €200 million.
To Nord Stream's eye, it can collect on both policies to the maximum amounts on assumption that the explosions that ripped apart the two separate lines over the course of a 6.5km stretch of the joint path were separate incidents.
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