PHILIPSBURG–The Court has given Princess Juliana International Airport (PJIA) Operating Company N.V. and National General Insurance Corporation N.V. NAGICO four weeks to settle the PJIA’s post-Hurricane Irma insurance claims.
Parties will reconvene on July 16 to inform the Judge about the outcome of the negotiations, it was decided Tuesday afternoon at the end of deliberations on the injunction, which was filed by PJIA on May 14. Whether the negotiations will lead to any tangible results remains to be seen, as the parties’ standpoints are miles apart.
PJIA was severely damaged by Hurricane Irma on September 6, 2017. As a result, the airport had to be temporarily closed. Today, PJIA is still provisionally operational using temporary tents and other facilities.
Due to the loss of revenues for the airport, due to fewer aircraft and passengers, while the fixed expenses continue, such as wages for employees, the loss of earnings is enormous, PJIA claims.
The airport claims damages to the amount of US $134.2 million, consisting of $105.7 million in damage and $28.5 for profit loss. This is well within the $193-million policy under which the airport is covered for damage, which includes coverage for loss of profit to the amount of $29.5 million, PJIA stated.
Represented by attorneys Eric de Vries and Michiel van den Brink, PJIA called on the Court to order NAGICO to pay PJIA $72.6 million, and three monthly instalments of $2,3 million as per June 1, July 1 and August 1, 2018, with legal interest.
Shortly after the hurricane NAGICO paid a $5-million advance to PJIA and a second advance of $10 million on December 12, 2017.
NAGICO, represented in the injunction by attorneys Richard Gibson Jr. and Arnold Huizing, refuted the claims and stated that establishing the damage of 26 items, including the airport terminal, is no simple task.
“This is not a simple residential building that suffered damage. To establish the damage, it is required for PJIA to submit per item a full scope of work, bill of quantities and contractor’s estimates,” Huizing said. “Without this information it is not possible to establish the actual damage. The reason that we are here today before you is that PJIA to date did not want to or could not provide this strictly necessary information.”
Indicating how difficult it is to establish the real damage, Huizing stated that in a damage report provided by Studio Acht it is stated that $12 million is in the budget for the air-conditioning installation. However, in another report, it was indicated that the installation could be repaired for $605,000.
According to the insurer, the claims for mechanical damage to the amount of $13.5 million and of $18.2 million for electrical damage were estimated by its adjuster at $5.7 million.
Between October 2017 and May 2018 PJIA submitted eight reports with more than 400 pages and photos to prove that damage was suffered. However, according to the insurer, none of these reports provided indications of the real cost of repair.
“Without this information it is impossible for NAGICO and its adjuster to establish the amount of damage incurred by PJIA,” said Huizing.
NAGICO is demanding a “fully quantified and documented” claim, which is to include contractor estimates for all proposed repairs, “comparable with those presented by Ballast Nedam in respect to the roof construction,” and copies of the scope documents on which prospective contractors are being asked to tender; a detailed and fully documented claim list allocating the items under the respective headings in the policy schedule; as well as 24 monthly management accounts and a copy of the last annual financial statements prior to the loss.
“Without the required information it is impossible for NAGICO’s adjusters to establish a responsible and substantiated claim,” said Huizing.
After negotiations, based on a report submitted by US-based architectural company Corgan to establish the damage to the terminal and other buildings, NAGICO offered PJIA a settlement of $37.3 million, which included an amount for business interruption, on March 26. However, PJIA did not respond to the proposal, Huizing said.
Based on the report, NAGICO’s adjusters made a new calculation of the damage incurred by PJIA. However, PJIA also did not respond to invitations to discuss a settlement based on these new calculations. Huizing said it seemed that parties would not be able to reach an agreement on the damage and that arbitration would be “inevitable.”
According to Van den Brink, NAGICO only wants to pay out $36.3 million, which is 27 per cent of the amount mentioned by PJIA’s experts. He said efforts to come to an agreement under guidance of a mediator had failed in early April.
Parties agreed to start negotiations in the next four weeks based on a PJIA report about the material damage to be compensated and on contractor quotations.
In their report to the Court, PJIA and NAGICO will have to indicate on which damages coverable under the business damage insurance they have reached an agreement.