KNIC wins case against London

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.

The litigation, which began in January 2007, involved a claim by KNIC to enforce in the UK a North Korean judgment for more than €44 million. Reinsurers had rejected the claim, which arose from an accident in 2005 when a helicopter crashed and destroyed a Pyongyang warehouse containing emergency relief goods.

Reinsurers’ primary defence was struck out by the Commercial Court in August 2007, a decision upheld by the Court of Appeal in October 2007, but continued to maintain both that the underlying insurance claim was fraudulent and that the Korean judgment was fraudulently obtained, in each case with the knowledge of KNIC.

The trial proper began in the Commercial Court on 12 November 2008. After submissions and evidence, including that of numerous North Korean witnesses of fact challenging the allegations of fraud, reinsurers agreed to settle the case by paying KNIC €40 million, effectively some 95% of the claim. The reinsurers and their lawyers, Clyde & Co, further agreed to retract and withdraw all allegations of fraud and impropriety against KNIC.

According to Reuters, the lawsuit is “one of several which North Korea is pursuing, with claims exceeding $150 million dollar according to some estimates, involving several calamities.”