The Commercial Court’s decision in Nord Stream AG v Lloyd’s and Arch [2026] EWHC 1685 (Comm) provides fresh judicial guidance on the operation of war exclusions and the fundamental issue of causation. While the judgment arose from the unique circumstances surrounding the Nord Stream pipeline sabotage, it gives insurers a potentially powerful shield in future coverage disputes arising from geopolitical events.
At the heart of the case was a €580 million claim following the destruction of the pipelines in September 2022. Insurers argued that the loss fell within a war exclusion covering damage “directly or indirectly occasioned by, happening through, or in consequence of” war. The court agreed.
What makes the decision so interesting is the judicial guidance on causation. The court held that the Russia-Ukraine war only needed to be a significant cause of the loss for the exclusion to apply. The word “significant” did not require any relative ordering of causes, or that the cause had a greater contribution than another, but it had to be noticeable or specifically accountable as a cause of the loss.
The court concluded that this threshold was met despite uncertainty as to the identity of the perpetrator, one potential perpetrator not being a belligerent in the war, and one possible rationale for the sabotage predating the outbreak of the conflict.
That approach provides insurers with a potentially significant defence to coverage disputes. By focusing on the wider geopolitical backdrop rather than solely the immediate act that caused the damage, the court endorsed a relatively broad connection between conflict and loss.
The language considered by the court is not unique to Nord Stream. Similar wording appears in many commercial insurance policies. Where war exclusions refer to losses caused “directly or indirectly” by war or hostilities, insurers are likely to rely on this judgment in support of a broader interpretation. The decision, therefore, has the potential to influence claims arising from a wide range of geopolitical events, whether in Eastern Europe, the Middle East or elsewhere.
That is particularly important because the nature of modern conflict has changed. Traditional war exclusions were drafted against a backdrop of conventional warfare between states. Today’s geopolitical threats increasingly involve cyber operations, sabotage, proxy actors, covert state activity and attacks on critical infrastructure located far from any traditional battlefield.
The Nord Stream judgment recognises that reality. The damaged pipelines were not situated within an active war zone, yet the court was prepared to conclude that the loss was sufficiently connected to the wider conflict. In doing so, it arguably widens the practical reach of war exclusions into areas that many policyholders may not previously have expected.
We are already seeing the consequences of geopolitical instability play out in insurance litigation. Aircraft leasing disputes arising from aircraft detained in Russia continue to generate complex coverage battles, with further appellate scrutiny awaited. Similar issues are emerging in both insurance and reinsurance markets as parties debate what constitutes a war peril and how closely a loss must be connected to a conflict before causation language is satisfied.
The key point for policyholders is the need for proactive risk management. Businesses with physical assets, critical infrastructure, supply-chain dependencies or international operations should treat the current geopolitical environment as a genuine insurance stress test. They should review how their policies address war, political violence, terrorism and state-backed activity, paying particular attention to exclusion wording and, crucially, the causation language used.
Many organisations may find that the protection they believe they have does not match the actual cover. In an increasingly volatile world, scrutiny of insurance coverage is more important than ever.
