Nord Stream: €579m insurance claim dismissed by Commercial Court

06/07/26

The Nord Stream 1 (“NS1”) and Nord Stream 2 gas pipelines supplied Russian gas to Germany along the bottom of the Baltic Sea. In September 2022, seven months after Russia invaded Ukraine, they were both blown up and disabled. No individual, group or state has claimed responsibility for the attack.

NS1 and NS2 were insured separately. The operator of NS1, Nord Stream AG, sought an indemnity in the amount of €579 million under the primary and excess layers of certain Offshore Operating All Risks policies in respect of damage to the two pipelines comprising NS1. Insurers denied liability, relying on both limbs of a war risks and government act exclusion clause.

The subject of the claim included the rupture damage to Lines 1 and 2 of NS1, and a substantial dent identified on Line 2 in close proximity to rupture damage to Line 1 which was known to have been caused by explosives. Insurers’ case was that the dent was also caused by explosives in the course of the same attack. Nord Stream put Insurers to proof, relying on expert evidence that the dent may have been caused by something else, such as a dropped anchor.

The insurance wording was based on the WELCAR form. Although there were numerous disputes between the parties concerning issues of policy construction, factual causation and the cost of repairing the pipelines, the principal issue was whether the Insurers were entitled to rely on Exclusion 2i in Section I of the Policies, which excluded from coverage “loss or damage directly or indirectly occasioned by, happening through, or in consequence of war” and “confiscation or nationalisation or requisition or destruction of or damage to property by or under the order of any government”. This involved the construction of this clause in the context of several other provisions of the main wording and incorporated clauses.

Experts on geopolitics called by the parties agreed that there were only four possible perpetrators of the attack: (i) Ukrainian state actors (ii) Ukrainian sub-state actors, (iii) US state actors, and (iv) Russian state actors. The Insurers contended that they did not need to establish which was responsible, because both limbs of the exclusion were satisfied in any of those events.  

The trial took place over five weeks ending on 21 May. On 6 July 2026, the Commercial Court (Dame Clare Moulder) handed down judgment. The Court accepted the Insurers’ case on policy construction and factual causation in full, finding that: if any of the four possible perpetrators carried out the Sabotage, (i) “the War would have been a “significant” cause of their actions”, and, further (ii) while there was no evidence of a government order having been made, the damage would have been caused “by… a government” because there was evidence of military involvement.  

As to the Dent, the Court concluded that on the totality of the factual and scientific evidence, it was “extremely unlikely” that the Dent was caused by an anchor drop. Rather, on the balance of probabilities, the Dent had been caused by an explosion as part of the same attack that caused the rupture damage to the pipelines.

The judgment is available here.