"Coca-Cola Disputes Choice-Of-Law Issue Governing Claim For Attorneys' Fees In Cross-Border Insurance Coverage Dispute"
Time 2 Minute Read
Categories: Cross-Border

In this coverage dispute, Coca-Cola claims that its insurers wrongfully refused to reimburse nearly $1 million in business interruption losses it suffered at two bottling plants in Nepal resulting from a blockade of the Nepal-India border.

Coca-Cola operates two bottling plants in Nepal. The company took out a Political Risks Insurance Policy from its insurers to protect against the risk of an interruption at the plants. In September 2015, Nepal adopted a new constitution, which led to political unrest because some of the Nepalese believed that the new constitution discriminated against the Madhesi, an ethnic group. When the Nepalese government refused to revise the new constitution, the Madhesi blockaded the Nepal-India border, significantly limiting Coca-Cola's ability to deliver supplies, which in turn slowed production at one bottling plant and shut down the other. The Nepalese government tried to secure its border, but failed.

After its insurers refused to provide coverage, Coca-Cola filed a declaratory judgment action in the Northern District of Georgia, asserting a cause of action for breach of contract and seeking attorneys' fees, among other relief. Coca-Cola's insurers moved to dismiss the attorneys' fees claim for failure to state a claim for which relief may granted. Whether New York or Georgia law applies to Coca-Cola's claim for attorneys' fees will likely determine the outcome of this issue. Even though the policy contains a New York choice-of-law provision, the insurers argue that Georgia's common law governs the issue of whether Coca-Cola can recover attorneys' fees. According to the insurers, Georgia common law does not recognize a right to recover attorneys' fees. Coca-Cola disputes this and argues that New York law governs its claim for attorneys' fees because the policy has a valid choice-of-law provision.

You can read Coca-Cola's full response here.

See our recent blog involving similar cross-border insurance issues here, here and here.

See also Oehninger, Sergio, Co-author, Cross-Border Insurance Coverage, New Appleman Insurance Law, LexisNexis Publishers, September 15, 2016.


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