The case is about an insurance dispute between the insured Norwegian based energy company Noreco and 24 international insurance companies regarding coverage provided under a Marine Offshore Package Insurance as a result of damage found to exist on the Siri platform's sponson in August 2009.
The Eastern High Court ruled in favour of the insurers on Noreco’s claim for payment of expenses for permanent platform repairs and loss of production income. The High Court also ruled that some limited elements of early costs up to January 2010 in the amount of USD 12.5m plus interest were recoverable as sue and labour. Essentially, the High Court regarded the insurers as having prevailed and made a cost award of DKK 26.1m in favour of the insurers.
The physical damage consisted of cracks in the Siri platform's sponson and the resultant deterioration of the ability of the sponson to hold the caisson. Based on the court experts' answers, this damage occurred and began to accelerate long before 1 January 2006 as a result of metal fatigue, which, in turn, was caused by long-term increased loads on the lower part of the sponson as a result of an increased gap that, contrary to expectations, had developed between the caisson and the grouted sleeve, and that unintended loads were thereby transferred to the lower part of the sponson from the caisson which exceeded what the sponson had been designed to withstand.
The crucial interpretation
Crucial to the resolution of the dispute was an interpretation of the policies regarding the general term occurrence, the general coverage provision all risks of physical damage, certain exclutions e.g. inherent vice, wear and tear, gradual deterioration, metal fatigue, espansion and contraction due to changes in temperature or latent defect and the specific coverage provision faulty design as well as an assessment of the actual course of events.
Poul Schmith’s team was led by partner Henrik Nedergaard Thomsen, attorneys Sigrid Majlund Kjærulff and Felix Holten Fröhlich and associate Tugba Öztunc.
Nielsen Nørager’s team was led by partner Michael S. Wiisbye and attorney Michael Kjær Lauritsen.
Clyde & Co’s team, who instructed Nielsen Nørager and Poul Schmith in the case, was led by partner Nigel Chapman and associates Anna Myrvang and Sophie Schiffman.