In Hamilton Corporate Member Ltd v Afghan Global Insurance Ltd [2024] EWHC 1426 (Comm), the Commercial Court has handed down judgment construing the cover afforded under a political violence insurance policy in the context of seizure of property by the Taliban.
During August 2021 US forces were withdrawing from Afghanistan and the Taliban was taking over. The original insured (Anham) owned or operated a warehouse in Afghanistan and alleged that it had been irretrievably deprived of the Warehouse by seizure by the Taliban and sought to recover such loss on its political violence policy issued by an Afghan insurer which was reinsured by the Claimant reinsurers.
The deemed wording for the direct policy provided cover in respect of physical loss or physical damage in respect of the Warehouse caused by perils including war, civil war, coup d’état, insurrection, revolution and rebellion. It was common ground that the Taliban’s actions in August 2021 amounted to a coup d’état.
The policy included an exclusion in respect of:
“Loss or damage directly or indirectly caused by seizure, confiscation, nationalisation, requisition, expropriation, detention, legal or illegal occupation of any property insured hereunder, embargo, condemnation, nor loss or damage to the Buildings and/or Contents by law, order, decree or regulation of any governing authority, nor for loss or damage arising from acts of contraband or illegal transportation or illegal trade.”
Calver J held that, on the true construction of this exclusion, the word “seizure” was not restricted only to seizure by law, order, decree or regulation of any governing authority, and accordingly the claimed loss was excluded under the terms of the policy. On this basis Anham’s claim had no real prospect of success and summary judgment was granted to the Claimant reinsurers for declarations of non-liability.
The judgment confirms that “seizure” has a settled legal meaning, namely “the act of taking forcible possession either by a lawful authority or by overpowering force” which includes both belligerent and non-belligerent forceable dispossession, following Kuwait Airways Corporation v Kuwait Insurance Co [1999] 1 Lloyd’s Rep 803 (HL) and Cory v Burr (1883) 8 App Cas 393.
The Court considered that the meaning of the exclusion was clear. The judgment rejects Anham’s submission that the clause should be construed in light of factual matrix evidence addressing the market’s understanding of the differences between political risks and political violence insurance and the history of similar clauses.
Finally, the court held that on the wording of this particular political violence policy, cover was restricted to physical damage or destruction, and not loss by way of deprivation.
Peter MacDonald Eggers KC and Michael Ryan acted for the Claimant reinsurers (instructed by Andrew Tobin of Mills & Reeve).
Rebecca Sabben-Clare KC acted for the Defendant insured (instructed by Paul Lewis of Herbert Smith Freehills).
