LONDON (Reuters) - U.S. private equity firm Carlyle Group is suing a group of its insurers over $400 million worth of oil it claims it lost when Morocco’s sole refinery went bankrupt two years ago, court documents show.

FILE PHOTO: A general view of the lobby outside of the Carlyle Group offices in Washington, U.S., May 3, 2012. REUTERS/Jonathan Ernst/File Photo

Carlyle claims in a suit filed in the United States District Court for the Southern District of New York that insurance underwriters led by Mitsui Sumitomo Insurance Underwriting (now known as MS Amlin) have reneged on their obligations when refusing to cover the losses, according to documents on the court’s website.

Insurers have said in response to the suit that the nature of Carlyle’s dealings with Samir, the refinery’s operator, mean that its losses are not covered by the type of insurance it had.

They also say Carlyle did not alert them early enough about the plant’s financial troubles.

The rare public case provides an insight into dealings between insurers and commodity trading firms, which take big risks when supplying raw materials to clients in financial difficulty.

The case also sheds more light on the collapse of Samir, which became the biggest casualty of the oil price crash of 2014-2015, leaving some of the world’s biggest trading firms including Carlyle with unpaid debts of over $1 billion.

Carlyle declined to comment on the position of the insurers. Samir and the Moroccan state-appointed liquidator for the refinery declined to comment when contacted by Reuters.

Carlyle Commodity Management, a subsidiary of Carlyle Group formerly called Vermillion Asset Management, said in the court filing it had about 7 million barrels of crude and oil products stored at Morocco’s 200,000 barrel per day refinery in Mohammedia in 2015 prior to its stoppage.

The refinery was shut down in August 2015 after the Moroccan government imposed a $1.35 billion unpaid tax bill on Samir and froze its accounts.

The crisis at the refinery unfolded as oil prices crashed from the middle of 2014, drastically reducing the value of oil Samir bought and held in its tanks for refining purposes.

Carlyle says that during 2015 Samir emptied the tanks without its consent.

Carlyle filed the first request for cover to its insurers in January 2016 concluding that the oil could not be recovered.

In late February this year, Carlyle’s insurers denied any cover, leading Carlyle to launch a lawsuit against the underwriters in early March, according to the court documents.

The litigation is still ongoing.

In their answer to the claim, the underwriters said Carlyle’s position in relation to Samir was as a lender and not as an oil supplier since the group never actually owned the oil it claims was stolen.

Therefore, insurance cover for physical loss did not apply, the insurers argued, according to documents.

“As the transactions were financings rather than true sales of the commodities and Carlyle did not take title to the commodities, the loss or losses allegedly suffered by Carlyle was an uninsured credit loss,” the insurers said in a response filed at end-April to the court in New York.

The insurers also allege that Carlyle breached its contract by not notifying the underwriters of payment problems.

“Carlyle has breached its contractual duties ... by failing to take any steps to mitigate the alleged loss or losses upon becoming aware that Samir had been processing the commodities,” the counterclaim said.

“To the contrary, Carlyle entered into numerous additional transactions with Samir, thereby exacerbating the size of the alleged loss or losses by hundreds of millions of dollars.”

(This version of the story has been refiled to add dropped word to name of court)