Commercial Court’s latest decision on the marine war risk peril of detention and fair presentation under the Insurance Act 2015
In Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors [2024] EWHC 719 (Comm) Peter MacDonald Eggers KC, Sandra Healy, Charlotte Payne and Sophie Hepburn represented the successful claimants, including Nicholas G Moundreas Shipping SA, in their claim under a war risks policy for an indemnity for constructive total loss (CTL) of a vessel, the “WIN WIN”.
The claim arose out of what was described by the Judge as the “illegal parking” of the Capesize bulk carrier WIN WIN just inside Indonesian territorial waters off Singapore in February 2019. Despite the minor nature of the infraction, the WIN WIN was detained by the Indonesian authorities for more than a year, while the Master was prosecuted and eventually convicted under the Indonesian Shipping Law.
Following the detention of the WIN WIN for more than six months, after which it became a CTL under the Policy’s Detainment Clause, the claimants brought a claim under the Policy. The defendant insurers denied the claim on four bases. All of these defences were rejected by Mrs Justice Dias, thereby answering her own question as to whether the vessel had been “appositely named” decisively in the affirmative. In summary:
- The defendant insurers alleged that the detainment was not fortuitous since the Master and/or the claimants knew or should have known that the vessel had anchored in territorial waters and the arrest was the consequence of their voluntary conduct in so doing. The Court held that these allegations had not been proven on the facts and, in any event, the arrest and subsequent detention of the vessel was not the ordinary consequence of voluntary conduct arising out of the ordinary incidents of trading.
- The Policy included Exclusion (e) of the American Institute Hull War Risks and Strikes Clauses (1977), which excludes loss caused by, resulting from or incurred as a consequence of “Arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments not arising from actual or impending hostilities.” The defendants alleged that the arrest of the WIN WIN under the Indonesian Shipping law was a similar arrest, restraint or detainment to one under customs or quarantine regulations. The Court rejected this defence, ruling in favour of the claimants’ proposed construction of the exclusion, and finding on the facts that the detention was not “similar” to detentions under customs or quarantine regulations.
- The defendants alleged that the detention of the vessel in Indonesia was materially caused by the claimants’ unreasonable conduct in breach of their duty to sue and labour, in that the claimants got side-tracked into discussions with the Navy which ultimately led to a realisation that the Navy was seeking the payment of a bribe. This was firmly rejected by the Judge, who ultimately concluded that the claimants “cannot be criticised for pursuing all lines of enquiry” to procure the release of the vessel. The Judge also noted that there was no suggestion that the claimants had any intention of paying a bribe.
- The defendants alleged that the claimants breached the duty of fair presentation under the Insurance Act 2015 by failing to disclose that the sole director of the registered owner of the vessel was the subject of criminal charges in Greece. The Court rejected this defence on the primary basis that the claimants did not have actual or constructive knowledge of the criminal charges. In so doing, the Judge held that the director was not “senior management” for the purposes of section 4(3) of the 2015 Act. In any event, the defendants were held not to have been induced by the alleged non-disclosure.
The claimants’ separate claim for damages pursuant to section 13A of the Insurance Act 2015 was dismissed. That said, the Judge had serious doubts as to whether the defendants’ continued reliance on three out of four of their defences was reasonable, and further doubted whether the remaining defence could be deemed relevant to the section 13A claim.
Peter MacDonald Eggers KC, Sandra Healy, Charlotte Payne and Sophie Hepburn were instructed by Maria Moisidou, Alexander Freeman and Harris Kouppas of Hill Dickinson International.
