Reinsurers agree to pay 95% of claim and withdraw fraud allegations
London Market reinsurers have ended their long-running Commercial Court litigation with Korea National Insurance Corporation (KNIC) by agreeing to pay approximately 95% of KNIC’s reinsurance claim and to retract and withdraw all allegations of fraud and impropriety made against the North Korean insurer.
In the litigation, commenced in the High Court in January 2007, KNIC sought to enforce a Judgment of the Pyongyang Court (the agreed jurisdiction of the reinsurance policy) for more than €44m.
The lawsuit followed a decision by the reinsurers to contest the claim, which arose from an accident in 2005 when a helicopter crashed and destroyed a Pyongyang warehouse containing emergency relief goods.
Reinsurers had their primary defence struck out by the High Court in August 2007 and the Court of Appeal in October 2007, but continued to maintain both that the underlying insurance claim was fraudulent and that the Pyongyang Court judgment was fraudulently obtained, both with the knowledge of KNIC.
The Commercial Court trial began on 12 November 2008. Having heard submissions and evidence, including oral evidence from numerous North Korean witnesses of fact challenging the allegations of fraud, reinsurers agreed to settle the case by paying KNIC €40 million. The reinsurers and their lawyers, Clyde & Co, further agreed to retract and withdraw all allegations of fraud and impropriety against KNIC.
Tim Brentnall, senior partner of Elborne Mitchell, KNIC’s solicitors, said: ;We and KNIC are delighted by this settlement. It represents a total vindication of KNIC. We hope that, in the light of this, KNIC can begin to normalise its long-standing relationship with the London Market which goes back many years.'