Key takeaways from the Nord Stream decision

Can insurers rely on a war exclusion where the immediate cause of loss is sabotage rather than a conventional act of war? The Commercial Court’s recent decision in Nord Stream AG v Lloyd’s Insurance Company S.A. and Arch Insurance (EU) DAC [2026] EWHC 1685 (Comm) confirms that, in the right circumstances, they can.

The case arose from claims worth approximately €580 million following the September 2022 explosions that damaged the Nord Stream 1 gas pipelines in the Baltic Sea. While the facts are unusual, the judgment has potentially far-reaching implications for insurers facing claims arising from sabotage, attacks on critical infrastructure and other forms of modern geopolitical conflict.

A broader approach to causation

The Court upheld insurers’ reliance on a war and governmental risks exclusion that applied to loss or damage “directly or indirectly occasioned by, happening through, or in consequence of war”. Importantly, the Court found that the exclusion imposed a broader causation test than proximate cause. It was not necessary for the war itself to be the immediate cause of the damage. Instead, it was sufficient that the conflict was a significant contributing factor in the chain of events leading to the loss.

Although the pipelines were damaged by acts of sabotage, the Court concluded that the attacks could not realistically be separated from the wider Russia-Ukraine conflict. The Court found that the war provided the motive, strategic purpose and wider geopolitical context for the attacks. As a result, the losses fell within the exclusion.

No need to identify the perpetrators

One of the most notable aspects of the decision is that the Court did not need to determine who carried out the attacks.

Various theories were advanced during the proceedings, including the involvement of Russian, Ukrainian or pro-Ukrainian actors. However, the Court concluded that, whichever realistic attribution scenario was adopted, the attacks were sufficiently connected to the war for the exclusion to apply.

That finding may prove particularly significant in future disputes involving covert sabotage, proxy actors and other indirect forms of hostile activity, where establishing responsibility is often difficult or impossible.

Practical takeaways for insurers

Three key points stand out:

1. Broadly worded war exclusions remain powerful tools. Exclusions applying to losses occurring “directly or indirectly” as a consequence of war may extend beyond conventional war damage and into losses arising from related acts of sabotage.
2. Causation can extend beyond the immediate cause of loss. The Court adopted a broad approach to causation, focusing on the wider chain of events rather than solely on the immediate physical cause of the damage. Where war or armed conflict is a significant contributing factor to the loss, an exclusion may apply even if the damage is ultimately inflicted through sabotage or other indirect means.
3. Attribution may not always be required. Where the relevant connection is between the loss and an underlying conflict, insurers may not need to establish precisely who carried out the act in question.

Looking ahead

The decision reflects the reality that modern conflicts increasingly involve disruption to critical infrastructure and covert operations, rather than conventional military engagements alone.

For insurers, Nord Stream provides helpful authority that broadly drafted war exclusions can remain effective even where losses arise from sabotage and the identity of the perpetrator cannot be established. As geopolitical tensions continue to evolve, the decision is likely to play a significant role in shaping future coverage disputes involving war exclusions and indirect causation.