Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors
[2024] EWHC 719 (Comm)
Herculito Maritime Ltd and others v Gunvor International BV and others
17 January 2024
[2024] UKSC 2
Supreme Court
A ship was hijacked by pirates, and the owner paid a ransom. The owner wanted the cargo owners to help pay, but the cargo owners argued that a contract said the ship owner should only use insurance. The court said the contract didn't actually say that, so the cargo owners had to pay their share.
Key Facts
- •On 30 October 2010, the MT POLAR was seized by Somali pirates in the Gulf of Aden.
- •The vessel was released after a US$7,700,000 ransom was paid.
- •General average was declared, with cargo interests disputing liability for the ransom payment.
- •The voyage charterparty included war risk clauses and a Gulf of Aden clause allocating certain insurance costs to the charterer.
- •Bills of lading incorporated the charterparty terms.
- •The dispute proceeded to arbitration and subsequent appeals.
Legal Principles
Contractual parties may agree that specified losses are covered by insurance, precluding recourse against the counterparty.
Gard Marine and Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2017] UKSC 35
Whether an 'insurance code' or 'insurance fund' exists is a matter of contract construction; a high threshold must be met to establish such a code.
The Ocean Victory
Joint names insurance is a significant factor, but not decisive, in determining the existence of an insurance code.
The Ocean Victory
General words of incorporation in bills of lading only incorporate charterparty terms directly relating to shipment, carriage, delivery, or freight payment.
Scrutton on Charterparties
Manipulation of incorporated charterparty clauses is permissible to make the wording fit the bill of lading, but only to a limited extent and when necessary to reflect the parties' clear intention.
Pride Shipping Corpn v Chung Hwa Pulp Corpn (The Oinoussin Pride) [1991]
Outcomes
Appeal dismissed.
The court found no insurance code or fund in the charterparty, as the charterer's obligation to pay insurance premiums did not preclude the shipowner's claim against the charterer or bill of lading holders for general average contributions. The court also determined that material charterparty clauses were incorporated into the bills of lading and that clause manipulation was not justified.
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