|Balthier: I'm afraid the jury's still out on that one.|
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It is shown to have invaded Lucis during the peace treaty signing party, which would have settled the dispute over the last crystal. Presumably, this is only a ruse to enter Lucis and invade.
Niflheim, or Niflheimr, is a location in Norse Mythology meaning "Mist World". In the story of Gylfaginning, Odin explains that creation began when the ice of Niflheim met the flames of Muspelheim.