Global beverage giant Coca-Cola has filed a lawsuit against certain Lloyd’s underwriters and insurer Hannover, demanding compensation worth nearly US$1 million (over £800,000) for unpaid company losses in Nepal.
Coke lodged the case in a Georgia federal court in the US last week, claiming that the business interruption losses that it incurred from the Nepal-India blockade were covered under a political risks insurance policy that it purchased from the insurers.
The Nepal-India blockade occurred after Nepal adopted a new constitution on September 20, 2015, which allegedly discriminated against women and the Madhesi ethnic group. The move led to political unrest in the country and in the region, with the Madhesi obstructing the inflow of supplies from India after the Nepalese government refused to revise the new constitution.
Coke said its local plants suffered a shortage of supplies including fuel and sugar due to the blockade. One plant had its operations partially halted, while the other was completely closed for a certain period.
On December 29, 2016, Coke wrote to the insurers and provided evidence of its business interruption losses which totalled to US$986,029. The company alleged that despite the correspondence, the insurers still denied coverage.
Coke accused Lloyd’s and Hannover of breach of contract for refusing to reimburse the business interruption losses. The beverage maker argued that it paid substantial premiums for the cover and had complied with all of the terms and conditions of the political risks insurance policy.