Global law firm Clyde & Co has successfully defended a group of 20 insurance companies against a USD $470m energy construction claim that stems from 2009.
The case relates to the Norwegian energy company Noreco’s claim that its all-risk insurance policy should pay USD $470m for damage to the Siri oil platform in 2009. The three Siri area fields were shut down in August 2009 after an inspection revealed cracks in a water buffer tank at the Siri platform.
In proceedings where Clyde & Co represented the appellant, the Danish Eastern High Court overturned a previous ruling by the Danish Maritime and Commercial High Court and found in favour of the 20 insurers.
The main coverage finding was that the fatigue damage had occurred long before 1 January 2006, so the cost of correcting it could not be covered under any of the policies engaged by the proceedings, whether one applied the ‘effect of damage’ or the ’cause of damage’ principle.
The court also ruled that some limited elements of the early costs were recoverable as sue and labour up to January 2010.
The award in respect of sue and labour amounts to USD $12.5m plus interest. The finding was that costs incurred up to installation of the seabed support were incurred for the purposes of minimising potential further serious loss. But the court also made a cost award of USD $4m in favour of the appellants.
Clyde & Co’s team was led by partner Nigel Chapman and associates Anna Myrvang and Sophie Shiffman
Nigel Chapman, partner at Clyde & Co, comments: “The case has been ongoing for almost a decade and we hope this latest ruling will bring the dispute to an end. Insurers play a vital role in mitigating risks for global business and so it’s imperative that these big ticket claims are thoroughly and fairly examined. We’re delighted to have successfully defended this claim and even more delighted that this result tallies with and confirms our original assessment of the exposure.”