Contractor Sues Insurer Over $11 Million in Damages at Amazon Server Farm
Exyte Israel Projects, the contractor responsible for building Amazon's server farms in Israel, has filed a NIS 53.5 million lawsuit against All Insurance, the company that insured the project. The lawsuit claims over NIS 40 million in damages and losses incurred during the construction of three server farms for Amazon, all built by Exyte. The total value of the construction contracts for these three facilities reached NIS 1.47 billion, but Exyte ultimately received only NIS 1.17 billion due to the issues.
Exyte, part of the international Exyte Group, was contracted to build an industrial facility for Compass Datacenters, which was acting as the developer for Amazon, at the Har-Tuv industrial zone near Jerusalem. The project, spanning approximately 30,000 square meters, included the construction of an industrial building with offices, electrical rooms, and server halls, along with infrastructure development.
According to Exyte, cracks, swelling, and subsidence in the floors and infrastructure began appearing in April 2023, after the ground-level floor casting and peripheral systems were installed. By August 2023, Compass Datacenters informed Exyte that these defects required the dismantling of systems and the replacement of 8,000 square meters of flooring.
Exyte claims it incurred NIS 7 million in repair work at its own expense, including waterproofing and modifying landscaping, sidewalks, and existing floors. Compass Datacenters blamed Exyte for the issues and withheld NIS 46 million from the final payment, citing damages. Exyte estimated its repair costs at NIS 51 million, covering various aspects including sealing, flooring, piles, server and cable work, and management costs. Exyte disputes Compass Datacenters' assessment, citing expert opinions that found no fault with its work.
Ultimately, Exyte and Compass Datacenters agreed that Exyte would pay NIS 37 million in compensation instead of performing the repairs. However, due to the overall issues, Compass Datacenters deducted over NIS 300 million from Exyte's payments for the three farms. Exyte is now seeking compensation from its insurer, All Insurance, for its direct damages, which it estimates at NIS 43.6 million, plus interest and linkage, totaling NIS 53.5 million. Exyte alleges that All Insurance has not responded to its claim since being notified of the incident.
