Herculito Maritime Ltd and others v Gunvor International BV and others
[2024] UKSC 2
Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors
25 March 2024
[2024] EWHC 719 (Comm)
High Court
A ship was unfairly held in Indonesia. Its owners sued the insurers for the ship's value. The insurers argued the owners were at fault, but the court sided with the owners. The owners also tried to get extra money for the delay, but the court said they couldn't prove they lost money because of the delay.
Key Facts
- •The Capesize bulk carrier "WIN WIN" was detained by Indonesian authorities for nearly a year due to illegal anchoring in Indonesian territorial waters.
- •The vessel was insured by the defendant insurers for war risks, including detention.
- •Claimants asserted constructive total loss (CTL) due to detention exceeding six months.
- •Insurers denied the claim on grounds of non-fortuitous detainment, policy exclusion, breach of sue and labour duty, and material non-disclosure.
- •Criminal charges were pending against Mr. Evangelos Bairactaris, a director of the claimant Delos, at the time the insurance policy was renewed.
- •The Claimants pursued discussions with Indonesian authorities to secure the vessel's release, which Insurers alleged involved attempts to pay a bribe.
Legal Principles
A loss must be fortuitous to be covered by insurance; this does not mean unexpected but excludes losses certain to result from the assured's deliberate conduct or ordinary consequences of voluntary actions.
British and Foreign Marine Insurance Co. Ltd v Gaunt, [1921] 2 AC 41; The Miss Jay Jay, [1987] 1 Lloyd’s Rep. 32; The Cendor Mopu, [2011] UKSC 5; The Wondrous, [1991] 1 Lloyd’s Rep. 400.
Breach of the sue and labour duty, while not independently actionable, can break the chain of causation between the insured peril and the loss if the breach is so significant as to displace the operation of the insured peril.
National Oilwell (UK) Ltd v Davy Offshore Ltd, [1993] 2 Lloyd’s Rep. 582; State of The Netherlands v Youell, [1998] 1 Lloyd’s Rep. 236; ABN Amro Bank NV v Royal & Sun Alliance Insurance plc, [2021] EWHC 442 (Comm).
Under the Insurance Act 2015, an assured has a duty to make a fair presentation of the risk, including disclosure of every material circumstance. An insurer only has a remedy if the breach caused it to enter the contract on different terms or not at all.
Insurance Act 2015, sections 3(1), 3(4), 7(3), 8(1).
Outcomes
Claimants' CTL claim under the policy succeeded.
The detainment was fortuitous; the exclusion clause did not apply; there was no breach of the sue and labour duty; and there was no material non-disclosure.
Claimants' section 13A claim for damages due to late payment failed.
Claimants failed to prove they would have purchased a replacement vessel had the claim been paid earlier.
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