The annual Clyde & Co energy forum was held on 20 May 2015. This year the focus was on the Middle East and a number of the speakers were from Clyde & Co's MENA offices to provide local context. The programme included a fictional case study and panel discussion that illustrated some of the key differences and common issues when dealing with energy insurance claims in the GCC.

The case study involved a gas vapour explosion at a petrochemical complex in the United Arab Emirates. A panel comprising Wayne Jones from Dubai, Alfred Thornton from Abu Dhabi and Saud Alsaab from Riyadh contemplated some of the issues that were likely to arise following such an incident, and considered how such issues may impact on insurers and reinsurers exposed to claims from the fictional incident. All the issues raised in the case study were based on matters the panel members had been involved in, and the panel highlighted how various claims arising from the explosion were likely to be influenced by GCC insurance practice, local liability regimes, and local court process.

GCC insurance practice

The panel noted that the GCC energy insurance market was characterised by an admitted insurance regime, however, local insurers cede most of their energy risks to international reinsurers. Retention rates are therefore very low. It was also highlighted that it is common for both the original insurance and reinsurance to be placed by the same broker. Wayne Jones explained that in light of such arrangements, there were often conflicting interests between GCC insurers and international reinsurers. These conflicts could impact on claims handling and settlement if not carefully managed.

The panel recognised that the insurance laws in most GCC jurisdictions are not particularly well developed or sophisticated. However, there are a number of instances where formalities prescribed by local insurance laws may have a significant impact on policy interpretation if not taken into account or adequately addressed. In this regard it was highlighted that Arabic was the official language in all the GCC states and any policy dispute would therefore most often be resolved in Arabic before the local courts. However, reinsurers generally underwrite business in the GCC that has been written on the basis of international standard form wordings. These wordings are seldom reviewed to consider, for example, whether the wording would comply with local law formalities or whether the interpretation would remain the same if translated into Arabic.   

The liability regime

The fact that the liability regime in the GCC is very different to say the regime applied in common law jurisdictions was discussed. Alfred Thornton highlighted that one of the most important differences was in respect of tort claims. In the GCC the approach to tort is influenced by Shari'a considerations that require a party to make compensation for any direct losses that have been caused. This Shari'a influence was also to be noted from the fact that the codified civil laws recognise circumstances where the liability for losses can be considered to be strict. A further difference to the approach in common law jurisdictions was the fact that claims for compensation for physical injury or death could be brought in criminal proceedings.

The panel discussed the fact that, although there were slight differences between the various GCC jurisdictions, it was very difficult for insureds to seek to contractually limit damages that may be payable. This was due to local law's recognition that in virtually all circumstances the courts are entitled to revisit agreed limitations of liability if the agreed limits do not reflect the actual losses suffered.  

The dispute resolution process

The GCC jurisdictions are all civil law jurisdictions. Court proceedings in the GCC are therefore largely document based, with limited oral advocacy. There are also very limited opportunities to lead oral expert or factual witness evidence.

The relative evidentiary weight of various categories of documents was considered by the panel. Saud Alsaab, who regularly appears in the courts of Saudi Arabia, highlighted that the evidence laws in the GCC place great weight on what can be considered to be "official" documents. These are documents that have been prepared by an official acting within the scope of the official's authority. It was noted that "official" documents were often impossible to rebut, even in the event that contrary expert evidence had been obtained.

The panel then discussed the central role played by the court appointed expert. The court expert is tasked with investigating factual and technical matters on behalf of the court. In general it is the panel's experience that the court will simply endorse the expert's finding when handing down its judgment.

The panel highlighted that the pools from which the courts can appoint experts are small. The panel were aware of various instances where experts were appointed that did not have any real detailed technical knowledge regarding the issues they had been tasked to decide.

The panel discussed the fact that re/insurers often seek to settle claims to limit their litigation risk. However, in most instances negotiating such settlements in the GCC is complicated by the fact that there is no real concept of without prejudice that will allow the exchange of correspondence without the risk of such correspondence subsequently being referred to in court proceedings.


It was apparent from the case study and panel discussion that there were a number of key differences that should be considered by re/insurers writing Middle Eastern energy business. The panel were however of the view that the GCC jurisdictions were slowly developing as was apparent from the overhaul to the dispute process for insurance matters in Saudi Arabia. In addition, there are a number of relatively simple steps that re/insurers can take at the time that risks are written, and after claims have arisen, to ensure that re/insurer's rights are adequately protected. The panel's view was that if such steps are taken, then litigation risk in the GCC can be effectively managed.