Cyberlaw wonks squint at NotPetya insurance smackdown: Should ‘war exclusion’ clauses apply to network hacks?

In June 2017, the notorious file-scrambling software nasty NotPetya caused global havoc that affected government agencies, power suppliers, healthcare providers and big biz.

The ransomware sought out vulnerabilities and used a modified version of the NSA’s leaked EternalBlue SMB exploit, generating one of the most financially costly cyber-attacks to date.

Among the victims was US food giant Mondelez – the parent firm of Oreo cookies and Cadburys chocolate – which is now suing insurance company Zurich American for denying a £76m claim (PDF) filed in October 2018, a year after the NotPetya attack. According to the firm, the malware rendered 1,700 of its servers and 24,000 of its laptops permanently dysfunctional.

In January, Zurich rejected the claim, simply referring to a single policy exclusion which does not cover “hostile or warlike action in time of peace or war” by “government or sovereign power; the military, naval, or air force; or agent or authority”.

Mondelez, meanwhile, suffered significant loss as the attack infiltrated the company – affecting laptops, the company network and logistics software. Zurich American claims the damage, as the result of an “an act of war”, is therefore not covered by Mondelez’s policy, which states coverage applies to “all risks of physical loss or damage to electronic data, programs, or software, including loss or damage caused by the malicious introduction of a machine code or instruction.”

While war exclusions are common in insurance policies, the court papers themselves refer to the grounds as “unprecedented” in relation to “cyber incidents”.

Previous claims have only been based on conventional armed conflicts.

Zurich’s use of this sort of exclusion in a cybersecurity policy could be a game-changer, with the obvious question being: was NotPetya an act of war, or just another incidence of ransomware?

The UK, US and Ukrainian governments, for their part, blamed the attack on Russian, state-sponsored hackers, claiming it was the latest act in an ongoing feud between Russia and Ukraine.


The minds behind the Tallinn Manual – the international cyberwar rules of engagement – were divided as to whether damage caused met the armed criterion. However, they noted there was a possibility that it could in rare circumstances.

Professor Michael Schmitt, director of the Tallinn Manual project, indicated (PDF) that it is reasonable to extend armed attacks to cyber-attacks. The International Committee of the Red Cross (ICRC) went further to enunciate that cyber operations that only disable certain objects are still qualified as an attack, despite no physical damage.

Source: Cyberlaw wonks squint at NotPetya insurance smackdown: Should ‘war exclusion’ clauses apply to network hacks? • The Register

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