Beverage giant Coca-Cola seeks USD1M for Nepal blockade damages

KATHMANDU: Beverage giant, Coca-Cola Co., has filed a petition in the US against its insurers, demanding coverage for USD 1 million in losses incurred during the Nepal-India border blockade from the third week of September 2015 to the first week of February 2016.

The American multinational company hit Lloyd’s of London and another insurer with a suit in Georgia federal court Wednesday, claiming the amount was covered under a political risk policy it held with the insurers, according to

Certain Underwriters at Lloyd's and International Insurance Company of Hannover Ltd. of Hannover had allegedly refused to pay the damages claimed by Coca-Cola.

Bottlers Nepal Limited (BNL), run by Khetan Group,  is the bottler of Coca-Cola products in Nepal.

Imported from India, Coca-Cola was first introduced in Nepal in 1973 . Its production started in the country in 1979.

The BNL currently has two bottling plants, one each in Kathmandu and Bharatpur.

Under the terms of the policy the insurers “received substantial premiums in exchange for a promise to provide broad insurance coverage, including coverage for [losses caused by] the Nepal-India Border Blockade,” the Coca-Cola's complaint said.

It further claimed that the policy “does not limit or exclude Coca-Cola’s claim for coverage, and Coca-Cola has satisfied all conditions precedent to coverage.”

With an argument that the policy has a USD 50 million cap, Coca-Cola said it was suing for breach of contract, and seeking USD1 million plus interest, as well as a judgement that the loss is covered by the policy.

“The inability for supplies to arrive in Nepal significantly limited the Coca-Cola Bottling Plants’ ability to obtain sugar, fuel, CO2, and other supplies,” the complaint said. “The inability to run [one plant] to capacity and [the other] at all led to significant business interruption losses to Coca-Cola.”

“Despite Coca-Cola’s correspondence to the insurers, the insurers have disregarded Coca-Cola’s rights under the [policy] and continued to wrongfully deny coverage to Coca-Cola,” the complaint said, according to the report.