SAP is suing insurer Swiss Re International, claiming that the company has refused to pay its share of an US$80 million settlement with Waste Management, which had brought suit against SAP in 2008 over a troubled software project.
Waste Managements suit lodged an array of allegations against SAP, including a charge that company executives used a fake software demonstration to trick the trash hauler into believing SAPs products would meet its needs.
Waste Management had been seeking more than $1 billion in damages from SAP, but the parties entered mediation in March 2010 and soon reached an agreement for the $80 million, according to SAPs complaint against Swiss Re, which was filed last month in a Delaware court. The action was removed last week by Swiss Re to U.S. District Court for the Eastern District of Pennsylvania.
SAP had told Swiss Re, one of its liability insurance providers, that the settlement was imminent, and a policy SAP acquired from Swiss Re in 2007 granted the company $18.5 million in coverage, its complaint adds.
Swiss Re didn't object to the settlement but also wouldn't commit to paying its share of the $80 million, according to SAP.
At one point in February 2011, Swiss Res law firm told SAP that there were several arguments it could make to avoid providing insurance coverage to SAP under the policy's terms, the complaint states.
While SAP and Swiss Re recently spent a number of months discussing a mediation process, those negotiations have broken down, SAP added.
In contrast, a number of other insurers, including AIG Europe, have made payments in full according to the policies SAP held with them, the complaint adds.
SAP is demanding all amounts due from Swiss Re as well as assorted damages and other costs.
Swiss Res notice of removal doesn't directly address SAPs allegations. The company didn't immediately respond to a request for comment on Monday.
SAPs lawsuit is sure to spark some tensions between the two companies, which have a history outside the disputed insurance policy. In 2007, they announced that Swiss RE would use SAP software to harmonise and consolidate its global human resources, finance and logistics processes.