In this coverage dispute, Coca-Cola claims that the insurance companies mistakenly refused to replace nearly $ 1 million in business shortages as it suffered at two bottling plants in Nepal following a blockade of the Nepal-India border.
Coca-Cola operates two bottling plants in Nepal. The company issued an insurance policy for political risks from its insurance companies in order to protect against the risk of interruptions in the plants. In September 2015, Nepal adopted a new constitution that led to political unrest since some of the Nepalese believed that the new constitution discriminated against Madhesi, an ethnic group. When the Nepalese government refused to revise the new constitution, Madhesi blocked the border between Nepal and India, which significantly reduced Coca-Cola's ability to deliver supplies, which in turn slowed down production at a bottling plant and shut down the other. The Nepalese government tried to secure its border, but failed.
After the insurers refused to provide coverage, Coca-Cola left a declaratory verdict in the Northern District of Georgia, claiming that it was a matter of action for breach of contract and seeking lawyers fees, including relief. Coca-Cola's insurers moved to refuse legal expenses claims because no claim was made as to which relief could be granted. Whether New York or Georgia's law applies to Coca-Cola's attorney fees will likely determine the outcome of this issue. Although the policy includes a New York legislative provision, insurers claim that Georgia's common law governs the issue of Coca-Cola being able to recover lawyer fees. According to insurers, Georgia's common law does not recognize the right to recover legal fees. Coca-Cola opposes this and claims that the New York law regulates its claim for fees because the policy has a valid legal provision.
You can read Coca-Cola's full answer here.
See our latest blog with similar cross-border insurance issues here, here and here.
See also Oehninger, Sergio, co-author, cross-border insurance, New Appleman Insurance Law, LexisNexis Publishers, September 1