Introduction
In a decision dated 6 July 2026, the High Court of Justice, King’s Bench Division, Business and Property Courts of England and Wales, Commercial Court, in case number CL-2024-000094 ([2026] EWHC 1685 (Comm)) rendered a judgment on whether damage to the Nord Stream pipelines was excluded from insurance cover under war-related policy exclusions.
The Court held that the damage to NS1 Line 1 and NS1 Line 2, including both the ruptures and the disputed dent to NS1 Line 2, was directly or indirectly occasioned by, happened through, or was in consequence of the war between Russia and Ukraine. On that basis, the damage was excluded from cover by Exclusion 2.i of the relevant policies.
Facts
Nord Stream AG operated two natural gas pipelines in the Baltic Sea, NS1 Line 1 and NS1 Line 2. The pipelines ran from Russia to Germany and were owned by Nord Stream AG, a Swiss company majority-owned by a Gazprom entity.
On 26 September 2022, seismic signals were detected in relation to damage to the Nord Stream pipeline system. At 02:03 CEST, signals were detected in relation to NS2 Line A southeast of Bornholm in the Danish Exclusive Economic Zone. At 19:03 CEST, further seismic signals were registered northeast of Bornholm, corresponding to explosions on NS1 Line 1 and NS1 Line 2.
The explosions rendered three out of four pipelines inoperable: NS1 Line 1, NS1 Line 2, and NS2 Line A. NS2 Line B was also damaged externally, but no leak occurred. NS1 Line 1 ruptured in the Swedish Exclusive Economic Zone, and NS1 Line 2 ruptured in the Danish Exclusive Economic Zone.
The experts agreed that some type of directional or shaped charge was used and that the explosives were RDX-based. They also agreed that the mechanical process causing the ruptures involved initial piercing by an explosive charge followed by pipe whip and bending failure.
A separate item of damage, described as the “Dent”, was found on NS1 Line 2. Its cause and timing were disputed. Nord Stream AG contended that the Dent was not shown to have been caused by the same sabotage operation. The insurers argued that it was caused by an explosion on or about 26 September 2022 as part of the same coordinated attack that caused the rupture damage.
After the explosions, Swedish and Danish authorities established exclusion zones, which initially prevented Nord Stream AG from accessing the damaged areas. Subsea inspections on behalf of Nord Stream AG began later in the Swedish and Danish sectors. The Dent was identified in a seabed disturbance survey on 30 October 2022 and visually inspected on 31 October 2022. It was also identified in survey material connected with the German prosecutor’s investigation.
The defendants were Lloyd’s Insurance Company S.A. and Arch Insurance (EU) DAC, each sued on its own behalf and as representative of groups of insurers subscribing to primary and excess offshore operating all risks policies. The insurers argued that any claim for the damage was excluded either because it was occasioned by the Russia-Ukraine war or because it was caused by an act of a state.
Legal Considerations
The relevant insurance policies provided cover for the pipelines for the period from 1 November 2019 to 31 October 2023. The policies included Section I, headed “Property Damage”, Section II, headed “Terrorism”, and Section III, headed “Third Party Liabilities”.
The insurers relied on Exclusion 2.i of Section I. The wording quoted in the judgment was as follows:
“Notwithstanding anything to the contrary contained herein, this section does not cover loss or damage directly or indirectly occasioned by, happening through, or in consequence of war (whether war be declared or not), invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalisation or requisition or destruction of or damage to property by or under the order of any government or public or local authority except as otherwise provided in Section I of the Policy.”
It was common ground that the insurers bore the burden of proving that the exclusion applied. It was also common ground that the conflict between Russia and Ukraine beginning on or around 24 February 2022 qualified as “war” under the policies.
Nord Stream AG argued that the exclusion should not apply. It relied in part on incorporated Institute Clauses for Builders Risks and Institute War Clauses Builders’ Risks, contending that these provided or preserved war risks cover. The Court rejected that analysis. It held that the Institute Clauses for Builders Risks were limited to property under construction or repair, and that the Institute War Clauses Builders’ Risks were limited to floating assets. The damage to the pipelines did not fall within the scope of cover granted by those incorporated war clauses.
The Court then considered the structure of Exclusion 2.i. Nord Stream AG argued that the clause was essentially one war exclusion and that the government-related wording was tied to the preceding war-related language. The insurers argued that the exclusion contained two separate heads: a war exclusion and a government act/order exclusion.
The Court accepted the insurers’ construction. It held that Exclusion 2.i contained two separate heads of exclusion, so that the exclusion would apply if either the War Exclusion or the Government Act/Order Exclusion was met. The Court also held that the concluding proviso, “except as otherwise provided in Section I of the Policy”, qualified only the second limb of the exclusion.
The Court further considered General Condition 9, which dealt with deliberate damage caused by governmental or regulatory authorities in the context of pollution hazards. Nord Stream AG argued that this provision restored cover for damage caused by governmental orders. The Court rejected that argument and held that General Condition 9 was limited to pollution hazard. It did not displace the War Exclusion.
The key causation issue was whether the pipeline damage was “directly or indirectly occasioned by, happening through, or in consequence of war”. Nord Stream AG submitted that the war was merely the background against which the sabotage occurred and that the insurers had not shown a sufficiently strong causal connection. The insurers argued that the clause required a broad causal connection and that the war need not be the direct or proximate cause of the damage.
The Court accepted that causal limits exist and that an event can become merely an item of history rather than a legal cause. However, it found that the connection between the war and the sabotage was sufficient. The geopolitical experts agreed that there were connections between the attack and the war and that the war was at least a contributing factor to the attacks.
The Court held that it was not necessary to determine which of the possible perpetrators had carried out the sabotage. The parties had proceeded on the basis that the possible perpetrators were Russia, Ukraine, a Ukrainian substate actor, or the United States. The Court found that, whichever of those possible perpetrators was responsible, the war would have been a significant cause of their actions. Accordingly, the damage was within the wording of the War Exclusion.
The Court also addressed the Dent. Nord Stream AG argued that the insurers had not proved that the Dent was caused by an explosion and that its cause should be treated as unknown. The insurers argued that it was more likely than not caused by an explosive charge laid and detonated as part of the same coordinated attack.
The Court considered expert evidence on explosives science, materials science, and subsea operations. It found that an explosive cause was physically admissible and capable of causing the observed Dent. The Court rejected alternative explanations such as anchor damage and held that, on the balance of probabilities, the Dent was caused by an explosion as part of the same attack that caused the rupture damage.
The Court therefore found that both the ruptures and the Dent were “directly or indirectly occasioned by, happening through, or in consequence of war” and were excluded from cover by Exclusion 2.i of the policies.
The full text of the judgement can be found here.