Mr Justice Flaux has given judgment in the “B Atlantic”, a war risk insurance case in which the vessel was detained and ultimately confiscated by order of the Venezuelan courts as a result of 130kg of cocaine being strapped to its hull by persons unknown. Neither the owners nor (despite the conviction of the master and second officer) the officers and crew were complicit in the attempted smuggling. Flaux J. upheld the claim of the owners, represented by Alistair Schaff QC and Alex MacDonald, for a constructive total loss and for sue and labour expense. In particular, he held that the detention of the vessel was caused by the ‘malicious acts’ of the drugs smugglers who, in planting the drugs, acted recklessly as regards the likely detainment of the vessel in the event that the drugs were discovered by the Venezuelan authorities. He also rejected insurers’ principal defence that the standard war risk exclusion for ‘detainment by reason of infringement of customs regulations’ applied to a situation where the ‘infringement’ relied on (the attempted smuggling of drugs by their attachment to the vessel’s hull) was no more than the very manifestation of the third parties’ insured malicious acts. Although the judge rejected Owners’ factual arguments that the detainment was wrong as a matter of Venezuelan law and/or the result of improper political interference, Owners’ claim succeeded in full to the tune of US$22m.
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