Zachry Subrogation Waiver Win

In November 2024, a U.S. Bankruptcy Judge in Houston dismissed two insurer-filed lawsuits against Zachry Holdings Inc. and its joint venture partners stemming from a June 2022 explosion at the Freeport LNG facility. The court held that the engineering, procurement, and construction contract’s waiver of subrogation barred the claims and deprived the insurers of standing. The insurers had sought $1.3 billion in reimbursement for insurance payouts to the facility owner, including lost profits during an eight-month shutdown. Relying on the contract’s risk allocation framework—which required owner-procured property insurance, waived subrogation, and disclaimed consequential and business interruption damages—Zachry secured early dismissal. The decision underscores the power of negotiated risk allocation provisions in complex, multibillion-dollar projects to resolve high-stakes disputes at the pleading stage.