Carlyle’s $396M Oil Loss Row With Excess Insurers Revived
Caitlin Simpson, 14 April 2021
A New York appeals court has reversed a ruling that Carlyle Group affiliates can’t tap into excess insurance to cover part of $396 million in losses when a Moroccan oil refinery was seized, finding factual disputes remain about whether the policy’s coverage for theft was triggered.
A four-judge Appellate Division panel for the First Department on Tuesday reversed Justice O. Peter Sherwood’s July order that had granted underwriters at Lloyd’s of London’s motion for summary judgment and had rejected Carlyle’s assertion that its oil was essentially stolen by refinery operator Societe Anonyme Marocaine de l’Industrie du Raffinage, or SAMIR.
The panel revived the dispute, ruling that “issues of fact exist,” so the suit must proceed to trial in order to determine if Carlyle’s losses were attributable to theft and therefore qualify for coverage.
The lower court held that the losses didn’t trigger the policy’s coverage for theft. But, the appellate panel said that conclusion improperly decided a question of fact, because it required determining whether Carlyle changed the terms of its arrangement with the refinery after learning the Moroccan government had frozen the refinery’s bank accounts. If it did, and the refinery continued to use crude oil and oil products Carlyle was storing at the refinery, the company could potentially support its claim that the excess insurance underwriters wrongfully refused to pay out under policies for the lost oil, the panel said.
