(Article from Insurance Law Alert, July/August 2026)
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Holding
The English Commercial Court held that the September 2022 sabotage of the Nord Stream 1 pipelines fell within the policies’ war exclusion because the Russia-Ukraine war was a significant cause of the loss, regardless of whether the sabotage was carried out by Russia, Ukraine or a Ukrainian sub-state actor, or the United States. Nord Stream AG v. Lloyd’s Ins. Co. SA & Anor [2026] EWHC 1685 (Comm).
Background
After explosions rendered two natural gas pipelines in the Baltic Sea inoperable, their Swiss operator, Nord Stream AG, sought coverage under offshore operating all risks policies. The insurers declined coverage based on the policies’ war exclusion. It was common ground that the Russia-Ukraine conflict, which began on 24 February 2022, constituted a “war” within the meaning of the policies, and that the only possible perpetrators were Ukraine (including sub-state actors), Russia, or the United States. Nord Stream argued, among other things, that the sabotage lacked a sufficient causal connection to the war to trigger the war exclusion.
Decision
The court held that the war was a significant cause of the sabotage under each of the possible perpetrator scenarios. If Ukraine was responsible, the war provided both a motive to retaliate against Russia and removed the prior restraint imposed by the risk of escalation. If Russia was responsible, the war had altered Germany’s relationship with Russia giving Russia a motive to punish or coerce Germany into reversing its support for Ukraine. If the United States was responsible, the invasion removed the prior concern that sabotaging the pipelines might provoke Russia and made such an action a “conceivable act.”
The court held that these connections satisfied the broad requirement that the loss be “directly or indirectly occasioned by, happening through, or in consequence of war.” That language did not require the war to be a proximate or effective cause; it was sufficient that there be an “indirect” link, i.e., that the war be a “significant” contributing factor in the sense of being “noticeable” or “specifically accountable” as a cause. To the extent there were several causes, the war need not have “some higher degree of comparative causal contribution.” Because the war exclusion applied under each of the possible perpetrator scenarios, it was unnecessary to determine who actually carried out the sabotage.
Comments
This decision is a significant ruling on the application of a war exclusion to an act of sabotage occurring outside the immediate theater of armed conflict. The judgment is notable for its broad approach to indirect causation under the “directly or indirectly occasioned by” language, confirming that the causal test is substantially less demanding than proximate cause and that the chain of causation need not be direct. The decision also confirms that an insurer need not necessarily establish the identity of the actor responsible for a loss to satisfy the causal standard.