On 21 June 2008, the passenger cargo vessel, Princess of the Stars, was lost in the Philippines after she sailed into the midst of Typhoon Frank. Tragically, over 800 lives were also lost.
The owners of cargoes on board the vessel brought claims against the owner of the vessel and in some cases also directly against the shipowner’s cargo liability insurer, Oriental. Oriental had placed a reinsurance policy in respect of its cargo liability exposure with underwriters at Lloyd’s in London.
The Reinsurers commenced proceedings in London seeking a declaration that they are not liable to indemnify Oriental in respect of such claims because of a breach of a Typhoon Warranty in the Reinsurance Contract. The Typhoon Warranty provided that the policy was void if the vessel departed on a voyage, in this case from Manila, at a time when there was a typhoon or storm warning in place at the port of sailing or where the vessel’s intended route or destination may be in the possible path of a typhoon or storm announced at the port of sailing, port of destination or any intervening port.
At a trial of the action, Mr Justice Field held that there had been a breach of the Typhoon Warranty, because (a) when the vessel sailed from Manila, there was a typhoon warning at the port of sailing, Manila, and (b) the vessel’s intended route might be within the possible path of the typhoon.
In the course of its judgment, the Court considered a number of issues of construction, including whether or not (i) the possible path of the typhoon was restricted to the forecast path and (ii) the warranty was to be construed in the context of Philippine Headquarters Coastguard Memorandum which provided guidelines as to the movement of vessels during heavy weather.
Counsel for the Defendant:
Peter MacDonald Eggers QC, 7 King’s Bench Walk
To view the judgment click here.