A government changes, and the new one revokes the measure that started everything. The plant is returned, the concession restored, the licence handed back. The insured was indemnified eighteen months earlier and finds itself once more holding an asset for which it has received the price. That situation is not rare, it is even the happiest conclusion this subject knows, and it nonetheless produces bitter disputes between an insured and its own insurer, because nobody read the clause governing it.
The governing principle is that of indemnity: it restores, it does not enrich. Keeping both the sum received and the returned asset would be double recovery for the same damage, which no legal system allows. The consequence is therefore settled in principle: something must go back to the insurer. The whole difficulty, and it is considerable, concerns the measure of that something, because the asset returned is not the asset taken.
One must see precisely how it differs, because that is where the file is decided. A site run for eighteen months by a provisional administration has suffered deferred maintenance, a loss of skilled staff, a rupture of its commercial contracts, degradation of its stocks and often investment that was not made. It may also have been improved, which happens where the state injected public funds. And it sometimes carries new debts, social or fiscal, incurred under public management and following the entity. Restitution returns a shell whose condition can be observed, costed and argued over.
Two contractual mechanisms organise that return and one must know which was signed. The first is ordinary subrogation: the insurer having paid has taken the insured's rights over the asset, so restitution accrues to it directly and it is for the insured to justify what it keeps. The second is a recovery clause, which leaves the insured as owner and obliges it to remit all or part of what it recovers, under a key written in advance. Those two constructions give very different results where the asset has lost value, and nobody notices while nothing is returned.
The sharing key deserves close attention because it almost always contains a latent injustice one way or the other. A clause providing for full repayment of the indemnity against restitution makes the insured bear all the degradation suffered during the occupation, which amounts to making it carry damage caused by the very event it had insured. A clause providing for sharing pro rata to the value observed on return, conversely, requires a contested valuation in a country emerging from a political crisis, a long and costly exercise of uncertain outcome. The drafting that works best separates the principle of repayment from its measure, and refers the latter to a valuation at the date of restitution.
A third term invites itself in and is almost always forgotten: the intervening period. Between the triggering event and restitution the asset produced nothing for its owner, and that business interruption may or may not have been indemnified depending on the policy. If it was, it is not called into question by restitution, since it repairs a definitively suffered loss that the asset's return does not erase. Confusing the two heads leads the insurer to claim repayment of an indemnity that remains due, and the insured to refuse the whole when it should refuse on that head and accept on the other.
It should be added that restitution is not always good news for the insured, and a professional must be able to ask the question without embarrassment. Taking back a degraded asset, in an unstable country, with new debts and dispersed teams, can cost more than it is worth, especially if the business reorganised its operations elsewhere over eighteen months. Some policies allow it to be renounced in the insurer's favour, which then becomes owner and manages. It is a right exercised only with full knowledge, and knowledge means having costed the take back before rejoicing at the news.
Three checks close this module and two of them are made at inception. Know whether the return is organised by subrogation or by a recovery clause, which decides who must justify what. Check that the clause separates the principle of repayment from its measure, and that the measure is assessed at the date of restitution and not at that of the loss. And on the day, have the asset's condition recorded before resuming operations, because once the teams are back and production restarted, nobody can any longer establish what was degraded during the occupation.
A cement works held by a Portuguese group in a West African country is transferred to a public agency by decree in May 2024. The insurer pays 88 million euros in February 2025 for the value of the asset, plus 14 million of business interruption for the period from the decree to settlement. The policy contains a recovery clause providing for repayment of the indemnity in the event of restitution, with no further detail. In November 2026 a new government revokes the decree and returns the plant. An audit finds: two kilns out of three shut down for want of maintenance, half the managers gone, the limestone supply contracts terminated, and 9 million of social security arrears incurred under public management. The value of the returned asset is estimated at 51 million. The insurer claims 102 million. What should be argued?
The 102 million claim adds two heads that are not handled the same way, and that is the first thing to separate. The 14 million of business interruption repairs a definitively suffered loss between May 2024 and February 2025: the plant produced nothing for its owner during that period, and its return in November 2026 does not erase that past. That head is not repayable and its inclusion in the claim is an error by the insurer, to be pointed out calmly rather than treated as a manoeuvre. That leaves the 88 million, and there the principle runs against the insured: keeping the sum and the asset would be double recovery, something must go back. The whole argument concerns the measure, and the clause does not settle it since it provides for repayment of the indemnity with no further detail. Read literally, it would require returning 88 million against an asset worth 51, that is it would make the insured bear the 37 million of degradation occurring during the public occupation, damage caused by the very event it had insured. That reading is defensible as pure grammar and it offends the object of the contract, which is exactly the argument to develop: a recovery clause organises the return of an enrichment, it cannot turn cover into a loan repayable in full whatever the condition of the thing returned. The reasoning is supported by the principle of indemnity itself, which refuses enrichment of the insured but equally of the insurer. One must then cost properly what is actually recovered, and the audit supplies the material: 51 million of value, from which the 9 million of social arrears following the entity and not existing at the date of loss must be deducted, that is 42 million net. That figure, not 88, measures the enrichment. Two practical steps finally impose themselves without awaiting the outcome: have the plant's condition recorded on a contested basis before any resumption of operations, since that evidence disappears the moment the teams return, and put openly the question the group may not have examined, namely whether it wants this asset at all. Taking back a cement works with two kilns shut, no managers and no supply, in a country that has just changed government twice, can cost more than the 42 million it is worth on paper.
- 01Indemnity restores and does not enrich: keeping the sum and the returned asset would be double recovery, so the principle of repayment is settled. Everything turns on its measure.
- 02The asset returned is not the asset taken: deferred maintenance, managers gone, contracts terminated, and sometimes new debts incurred under public management.
- 03Subrogation and a recovery clause give very different results where the asset has lost value, and decide who must justify what.
- 04Business interruption for the intervening period repairs a definitively suffered loss: restitution does not call it into question, and confusing the two heads leads to claiming what remains due.
- 05Have the asset's condition recorded BEFORE resuming operations: once the teams are back, nobody can establish what was degraded.