Claim Filed: Nord Stream AG has filed a claim against insurers Lloyd's of London and Arch Insurance, seeking damages exceeding €1.2 billion.Event Classification: Central to the claim is whether the pipeline damage is regarded as a single event or two separate incidents.Insurers' Position: Insurers contend that the damage was caused by military action, a typical exclusion under insurance policies.Policy Coverage: Nord Stream's insurance policy might include provisions that cover damages due to government actions.Court's Interpretation: The court's ruling will likely hinge on the interpretation of specific terms within the insurance contract.Financial Implications: Should insurers fail to demonstrate that military action caused the damage, they could face substantial payouts.Legal Considerations: There are potential legal options for pursuing claims against the state responsible for the damage; however, this process can be intricate and time-consuming.
"He considers damage to each of the two gas pipeline branches a separate insured event...
...The statement, signed by Nord Stream Managing Director Alexey Zaitsev, is dated May 2, was received in court on May 7, and is the company’s response to insurers Lloyd’s of London and Arch Insurance. They are defendants on behalf of several insurance companies (at least 13) that insured the exploded gas pipeline...
...The Financial Times, citing court documents, reported that Nord Stream had previously estimated the costs of restoration and repair work at 1.2–1.35 billion euros......Insurers considered that the gas pipeline was damaged was a result of military operations, and such risks are not covered by the insurance policy, Kommersant wrote in April...
[MRT: Note the "definition" of the event - here.IF the case is defined as Armed attack then governments are liable.More about the insurance claim - here.]
The operator also indicates in its statement that the insurance policies provided for the risks of damage to the gas pipeline, including in the event of military action. The policy “covers all risks of physical loss or physical damage to the object of insurance during the period of insurance - always subject to all the terms, conditions and exclusions of this insurance,” the plaintiff’s response states. The insurance policy also covers damage caused by the actions of any government body or agency, the document says.
[MRT: definition COULD BE "Armed Attack" or "Terrorist attack by state"
The Russian Prosecutor General's Office initiated a case regarding an Act of international terrorism.
"...If Nord Stream’s agreement with insurers excluded military actions from the list of insured events, the court may well recognize the incident as not subject to payment of compensation, says Forward Legal lawyer Oles Gruzdev.
The court's decision will depend on the specific wording of the contract, the meaning of which the court will interpret in relation to the circumstances of the dispute, the interlocutor points out.
Since there is no final investigation into the causes of the explosions on the gas pipeline, Nord Stream can appeal to this fact, even if the court finds that the insurance policy does not cover damage to the gas pipeline as a result of hostilities, says Business Council lawyer Nihad Kasumov.
For the same reason, the defense’s argument “looks very strained,” notes Anton Namenov, senior partner at Pen & Paper. The process for insurers to prove property damage due to military action is extremely difficult, he explains..."
[MRT: This basically says that it is up the insurers to prove that the attack was caused by a state actor.
Note that claims Against the Perpetrating State state that the state responsible for the destruction of the pipeline could be held liable for damages. This could involve diplomatic negotiations, international arbitration, or lawsuits in international courts. However, recovering damages from a state through legal channels can be challenging and may take years.
Subrogation Rights: If the insurance company pays out the claim, it may acquire subrogation rights, allowing it to step into the shoes of the insured and pursue a claim against the state responsible for the attack to recover the amount paid.
International Law and Treaties: The incident could be subject to international law and treaties. For instance, the United Nations Convention on the Law of the Sea (UNCLOS) and other relevant international agreements might have provisions regarding the protection of subsea pipelines and the responsibilities of states. (The latest version - UNCLOS.pdf)
Potential Classifications of the event:
Sabotage:
Sabotage generally refers to deliberate actions aimed at damaging, destroying, or obstructing an asset or operation, typically for political or military purposes. This act can be considered sabotage because State-which-did-it is intentionally destroying pipeline (even partly) owned by other state or states to harm Russian, and/or EU economy, and to assist Ukraine.
Grand Sabotage:
This term is less common but could be used to describe large-scale sabotage with significant impact. Given the substantial economic and strategic implications of destroying a subsea pipeline, the act might be classified as grand sabotage. Germany has announced that they are using this definition in winter 2022.
Act of War:
Since State State-which-did-it is not officially at war with Russia, but its actions are in support of a state that is, this classification is more complex. However, if State-which-did-it’s actions are seen as directly aiding an enemy in a conflict, it could be interpreted as an act of war, especially by Russia.
Act of International Terrorism:
For an act to be considered international terrorism, it typically needs to involve violence or threats intended to create fear or coercion for political purposes it typically needs to involve violence or threats intended to create fear or coercion for political purposes. While the destruction of the pipeline is politically motivated, it may not fit the typical definitions of terrorism, which often involve civilian targets and a broader aim to instill terror.
Armed Attack:
Under international law, an armed attack refers to the use of force by one state against another, causing significant harm. The destruction of critical infrastructure like a subsea pipeline could be considered an armed attack, particularly if it results in substantial economic and environmental damage.
Act of Aggression:
According to the UN General Assembly Resolution 3314 (XXIX) UN General Assembly Resolution 3314 (XXIX), aggression is the use of armed force by a state against the sovereignty, territorial integrity, or political independence of another state. The deliberate destruction of the pipeline by State-which-did-it could be seen as an act of aggression if it undermines the sovereignty and economic stability of Russia.
Summary:
The issue is going to be what happens if you can’t prove it is a state sponsor (responsible for the blasts), you end up with a massive claim for damage.
Nord Stream’s insurance companies will need to prove their policy doesn’t cover the damage from the blast.
Claims Against the Perpetrating State:
The state responsible for the destruction of the pipeline could be held liable for damages. This could involve diplomatic negotiations, international arbitration, or lawsuits in international courts. However, recovering damages from a state through legal channels can be challenging and may take years.
Burden of proof:
Policyholder/Insured:
International Disputes]
- Initial Claim: The insured party (the owner of the pipeline) generally has the burden of proof to demonstrate that the damage or loss falls within the terms of the insurance policy. This includes proving that the event occurred and that the damages claimed are legitimate.
- Exclusions: Once the insured party has demonstrated that a loss has occurred, the insurance company might bear the burden of proof to show that the loss is due to an excluded event (such as acts of war, terrorism, or sabotage, if such exclusions are present in the policy).
Insurer:
- Disputes: If the insurance company denies the claim based on an exclusion (such as an act of war), it generally must prove that the exclusion applies. This might involve showing evidence that the event was indeed an act of war, sabotage, or terrorism
State Claiming Aggression:
- In international law, the state alleging that an act of aggression, armed attack, or other hostile act has occurred typically has the burden of proof. This state must provide evidence to international bodies (like the United Nations or International Court of Justice) to support its claims.
- Evidence Required: This might include satellite imagery, intelligence reports, witness testimonies, and other forms of documentation that support the claim of an aggressive act.
Accused State:
- The state accused of committing the act may need to provide counter-evidence to dispute the claims. This could involve showing that the act did not occur as alleged or that it does not constitute an act of aggression or armed attack under international law.
RELATED POSTS:
136 - Nordstream and Lack of Jurisdiction by Sweden and Denmark
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