Case law - War Risks Flashcards
- Aliza Glacial, The [2002]
The meaning of the words “trading regulations”, which were added to this exclusion clause in 1983, was considered in The Aliza Glacial 337 where the vessel was detained on grounds of illegal fishing, pursuant to the Fisheries Management Act 1991, of Australia. The Court of Appeal held that in the context of the Institute Clauses, the word “trading” should be read as referring to regulations forbidding, controlling or otherwise regulating the sale or importation of goods into a country and the supplying, delivery or carriage of goods for that purpose, but not to regulations prohibiting or controlling fishing for purposes of conservation. This phrase falls to be construed as part of “a long-standing regime of interlocking clauses designed and applied … as a package for inclusion in policies relating to vessels of fall kinds”. The fact that the insured vessel was a commercial fishing vessel, whose trade stood to be affected, was not a relevant consideration; the question whether or not a regulation is a trading regulation depends on its own nature and purpose, and the question to be asked in The Aliza Glacial
was whether, in the ordinary language and understanding of commercial men, a regulation whose purpose is the conservation and management of fishing stocks was a “trading regulation” in the sense contemplated by the policy. The answer to that question was that the Australian Act was not a “trading regulation”.
Exclusion in Institute War and Stikes Clauses Cl. 4.1.5:
“Arrest, restraint, detainment, confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations.
- Andreas Lemos, The [1983] BOLD
Theft of equipment by gang of armed men from vessel anchored in Chittagong Roads. Not piracy without force or threat of force (only used in escape). Riot occurred only after loss. Theft was deemed to be clandestine. No operation of the threat of piracy or riot under a war risks policy where violence was only used or threatened when the gang engaged in committing a clandestine theft were attempting to make an escape.
- Atlantic Maritime Company Inc. v Gibbon [1953]
Policy on freight covered risks excluded by F.C.& S. Clause but included a Frustration Clause warranting policy free of any claim based upon loss of or frustration of any voyage caused by arrests, restraints or detainments of kings, princes, people etc. Ship waited outside Chinese port to load and twice warned by Chinese naval forces to leave and, after witnessing warlike operations, Master sailed and did not return. Held that there was a loss of voyage by an insured peril (civil war, restraint of princes, or warlike operations, as mentioned in F.C. and S. Clause) but although Frustration Clause applied only to one of these risks (restraint of princes) that was enough to defeat the claim.
- Atlantic Mutual Insurance Co v B King [1919]
Goods placed aboard the vessel Tennyson, bound from Bahia to New York, were reinsured by the plaintiffs with the defendants under a marine risks policy of insurance. The policy contained an f c and s clause which stated: ‘Warranted free from all consequences of hostilities or warlike operations whether before or after the declaration of war.’ Five days out of Bahia, an explosion occurred in the hold of Tennyson and the goods, the subject matter of the reinsurance, were burned. It transpired that the explosion had been caused by a bomb placed aboard the vessel by a man named Niewerth, a German subject resident in Bahia, aided by an accomplice. The question before the court was whether a hostile act by a German civilian could be construed as a hostile act by a sovereign power. The court ruled that the reinsurers were not liable under the marine risks policy. The Act by a civilian, in following the policy of his government, amounted to a hostile act within the meaning of the f c and s clause.
- Baker Caster Oil Co v Ins Co of North America [USA 1944]
In this case, Baker Caster Oil Company (the cargo owners) sought to recover freight charges from their underwriters after their cargo, shipped from Brazil, was discharged at New Orleans instead of its intended destination in New York due to the actions of the Brazilian and US governments. Upon arrival, cargo owners paid for carriage by rail of cargo to their factory. It is these payments for freight which is the loss claimed.
The cargo was covered under a war risks insurance policy, which provided coverage only while the cargo was aboard the vessels from Brazil to the US.
The cargo owners argued that the voyages were interrupted due to the activity of German submarines, leading the Brazilian government to order the vessels into ports of refuge, and the US government subsequently directed the vessels to New Orleans to protect the cargo from enemy action. They contended that this intervention constituted a “sovereign restraint” by both governments, and they should be entitled to recover the freight charges paid to move the cargo by rail to their factory.
The insurers defended the claim, pointing out that the policy terminated once the cargo was “discharged overside from an overseas vessel at the final port of discharge.” They also argued that the Brazilian government, as the owner of the vessels, exercised its rights under the bills of lading to change the port of discharge to New Orleans, thereby terminating the coverage.
The central question was whether the actions of the Brazilian and US governments constituted a “sovereign restraint” as described in the policy. “Sovereign restraint” refers to the exercise of a sovereign power that controls and divests the owner’s authority over the ship. The court concluded that there was no evidence to suggest that the Brazilian government exercised sovereign power over the vessels’ destination in a way that could be considered a “restraint of princes” in the context of the policy. The court found that the orders given by Brazil were similar to those any private shipowner might issue, intended to protect the vessels, rather than reflecting a sovereign action in prosecution of hostilities.
Additionally, the US government’s actions were based on the Ship Warrant Act, not sovereign power, and did not constitute “sovereign restraint” either. The court ruled that the facts did not show that either the Brazilian or the US government exercised sovereign power in such a way as to trigger coverage under the war risk insurance policy.
As a result, the court ruled that the insurers were not liable for the freight charges, as the actions of the governments did not amount to sovereign restraint under the terms of the policy.
- Bamburi, The (Arbitration) [1982] BOLD
In The Bamburi, Staughton J held that unlikeliness of recovery within 12 months of notice of abandonment amounted to unlikeliness of recovery within a reasonable time.
A test case arbitration before Staughton J designed to resolve several issues involving numerous vessels detained at Umm Qasr and Basrah at the outset of the Iran-Iraq war in 1980, was as to the meaning of the words “deprived of … possession” in s.60(2)(i) of the 1906 Act. The adoption of the “free use and disposal” test by Staughton J, which is now generally accepted, may make it somewhat easier for an assured to establish a “continuous period”
The distinction between loss by the actual operation of insured perils and by their apprehension was again considered in The Bamburi, 109 which was a test case arbitration involving a large number of vessels trapped in Iraqi ports following the outbreak of war between Iran and Iraq in 1980. The Iraqi government issued orders prohibiting navigation, which were sensibly obeyed. This was held to constitute an actual operation of the perils of restraint or detainment. But Staughton J took a different view on whether there was an actual operation of perils of “hostilities” or “warlike operations”, a point which was material as between some of the underwriters; he was constrained by the authorities on loss by apprehension of perils to decide that there was no actual operation of those perils but merely a well justified apprehension of damage by hostilities to any vessels which tried to leave the ports where they were detained. Staughton J observed, 110 in the Reasons for his Award, that this conclusion might be thought to be contrary to commonsense, but that there was no reason to depart from well-established doctrine.
Held shipowners had be wholly deprived of the free use and disposal of their vessel. All movement of the ship was prohibited.
- Bayview Motors Ltd v Mitsui Mar & Fire Ins. Co [2003]
Meaning of capture and seizure in war policies.
The defendants contended that the cars were “confiscated” by the Dominican customs authority because, in purported contravention of Dominican law the cars had not been declared for transhipment at their local loading ports. As a consequence the loss was caused by “seizure” an excluded or excepted peril under the terms of the insurance cover.
The classic definition of seizure is “forcible dispossession.” Misappropriation by those already in possession of the cargo in this way did not amount to taking at sea or seizure. The Judge was right to conclude that there was no dispossession of the kind needed to establish seizure in this case
Thus, in Bayview Motors Ltd v Mitsui Marine & Fire Insurance Co Ltd two shipments of cars were stolen by custom officers from a compound at the port of discharge. This was neither a case of dispossession, nor could the theft be described as “forcible”. It could not amount to seizure. In the words of Tuckey LJ: “it is common ground on the authorities that actual force is not required. A threat of force or its indicia is however required. Here I cannot see that the taking was accompanied by any such display of force. The customs came into possession of the cars lawfully and then some of its officers stole them. The theft was not accompanied by any threat or display of force to which the claimants capitulated”.
- Becker Gray v London Ass Co [1915] BOLD
German ship “K” put into neutral port to avoid very real prospect of capture by British or French navy. Goods on board were insured against capture but no claim. The proximate cause of loss was the election of the master, or fear of the peril. (See also Hadkinson v Robinson).
- Cory & Sons v Burr [1883] BOLD
Usual policy with F.C. & S. Clause. Master had been smuggling (barratry) and was, in consequence, seized by the Spanish revenue authorities. F.C. & S. Clause prevented claim, does not apply only to seizure by belligerents.
The vessel had been used by her master, barratrously, as a vehicle for smuggling, in consequence of which she was seized by Spanish revenue officers. Lord Blackburn considered that the loss could properly be regarded as caused by the barratry or by the seizure, or indeed by restraint of princes, but that on its proper construction the f.c.& s. warranty in the policy was designed to relieve the underwriters of liability for loss by seizure even if also caused by barratry. The other members of the House held that seizure was the proximate cause of the loss, although the speeches delivered by Lord Selborne and Lord
Bramwell also appear to support Lord Blackburn’s construction of the f.c. & s. clause. It is submitted that Lord Blackburn’s analysis of causation is to be preferred, and that cases of this type afford a prime example of situations in which it is likely to be concluded that there were two proximate causes, where if one of them is excluded, the assured cannot recover.
- Costain-Blankevorrt (UK) Dredging Co Ltd v Davenport [1979]
Loss caused to the insured dredger by contact with ammunition dumped on the sea bed after the Second World War was held not to be a consequence of hostilities or warlike operations.
The ammunition was evidently derelict, and a similar loss would now doubtless be excluded from the marine cover, and be classified as a war risk (the reverse of the position in The Nassau Bay – this vessel).
- Fenwick (William France) & Co Ltd v North of England Association [1917]
Ship ran on to the wreck of a vessel torpedoed and sunk by enemy submarine only a few hours earlier. Held to be a MARINE peril, though would have been WAR risk if the other vessel had been deliberately sunk with the object of damaging passing vessels.
- Field & Others v Receiver of Metropolitan Police [1907]
Meaning of “riot”.
In this case, a group of youths gathered in a low neighbourhood, ranging in age from fourteen to eighteen, and engaged in disruptive behaviour, including shouting and using rough language. They were near a nine-inch wall that enclosed a yard and house. After a period of around fifteen minutes, the wall collapsed, and the youths dispersed when the caretaker came outside.
The issue was whether their actions constituted a “riot” under the Riot (Damages) Act 1886, which requires five key elements to establish a riot:
1. A group of at least three people.
2. A common purpose.
3. Execution or initiation of that common purpose.
4. An intent to help one another, by force if necessary, against anyone who opposes them.
5. Use of force or violence in such a way that it alarms at least one person of reasonable firmness and courage.
The court ruled that the youths’ actions did not meet the criteria for a riot. Although they caused the wall to collapse, there was no evidence that they had a common purpose of intentionally destroying the wall or that they acted with any intent to use force against others. Additionally, the violence used (the collapse of the wall) did not create a situation that would alarm a person of reasonable courage. Therefore, the court held that the youths were not riotously assembled within the meaning of s. 2 of the Riot (Damages) Act, 1886.
- Grecia Express, The [2002]
Interpretation of any person acting maliciously.
This case addressed the issue of whether “any person acting maliciously” in an insurance policy, which covered damage to a vessel, required the owners to prove spite or ill will, or whether it could also encompass random acts of vandalism. The insured vessel had its mooring lines cut and was subsequently scuttled by unknown individuals. The key question was whether malicious damage required proof that the sinking was specifically targeted at the owners, or if it could simply be a result of wanton vandalism.
Colman J held that the term “acting maliciously” should be interpreted broadly, consistent with the Malicious Damage Act 1861, and that it need not involve spite or ill will. The act of damage could be intentional or reckless, and the person responsible did not need to have any specific motive toward the insured or even know the identity of the owner. It was sufficient that the act was done with the intent or recklessness to cause loss or damage.
Furthermore, the owners were required to prove that the vessel had not been scuttled by the master or crew (as barratry covered under ITC, was excluded under the War risk policy, would not cover such actions), but they were not obligated to identify or demonstrate the motives of the unknown perpetrators. The court ruled that the owners did not need to establish the identity or specific intentions of those responsible for the damage.
- Ionides v Universal Marine Insurance Association [1863] BOLD
Vessel stranded owing to the Cape Hatteras Light having been extinguished by Confederate troops in American Civil War. 120 bags of coffee were saved (but appropriated by confederate troops) and another 1000 bags might have been saved but for their interference. These 1120 bags held to be lost as a consequence of (caused by) hostilities, but everything else held to be lost by the “marine” peril - stranding. This the proximate cause, and absence of light too remote.
Arnould:
6,500 bags of coffee were insured from Rio de Janeiro to New York, warranted free from capture, etc and from all consequences of hostilities, etc. The ship, being Federal, went ashore near Cape Hatteras, while that and the adjoining country were in possession of the Confederate forces during the American Civil War. The vessel stranded during a breeze amidst a heavy surge about midnight. As to 120 bags, which were safely landed, no question arose. But 1,000 more bags might have been saved, but for the interference of some Confederate officers who had come on board and taken possession of the ship. Subsequently the vessel perished with her cargo by the action of the waves. It was held that the 1,000 bags additional that might have been landed but for the intervention of the soldiers, were lost in consequence of hostilities within the meaning of the warranty; and that the rest of the cargo, together with the ship, was a total loss by perils of the sea from the moment of stranding.
- Kuwait Airways Corpn. v Kuwait Insurance Co [1996] BOLD
The insured perils were listed in a series of sub-paragraphs in the aviation war risks policy covering the assured’s fleet of aircraft. Paragraph (a) covered perils of war, invasion, acts of foreign enemies, etc. Paragraph (e) covered seizure, amongst other perils. There was an “extension” covering aircraft spares and equipment whereby the indemnity provided by the policy “other than paragraph (a)” was extended to include loss of or damage to the spares and equipment, and whereby para.(a) was nevertheless to apply to spares and equipment whilst in transit by sea or air. Large quantities of spares and equipment located at Kuwait airport were appropriated by Iraqi forces, together with 15 aircraft, when Kuwait was invaded in August 1990. It was common ground, following the decision at first instance, that the causative event fell within the description of several perils in para.(a). The House of Lords held that the event also fell within the description of “seizure” in para.(e) and as such was covered by the spares and equipment extension. The assured could recover for the loss by seizure, an insured peril under the extended cover, notwithstanding the fact that the event also fell within the description of perils in para.(a); it was not covered under that description, but nor was it expressly excluded. The result would have been different if the policy had been worded so as to specify that events within para.(a) were excepted perils. In that case, the principle applying to loss by a combination of causes, one of which is excluded, which is discussed in the next paragraph, would have applied.
- Levi v Assicurazionie Generali [1940]
Definition of civil commotion
In this case, the owner of a stock of merchandise stored in a warehouse in Palestine claimed insurance for fire damage. The policy excluded coverage for loss due to certain events, including “civil commotion” and “abnormal conditions.” The insurance company argued that the fire was caused by civil commotion, which was excluded under the policy.
A police witness testified that there was significant unrest between Jews and Arabs, creating a dangerous environment, and he couldn’t definitively say if conditions were “normal.” The court considered whether the situation constituted “civil commotion,” defined as a stage between a riot and civil war, involving general unrest or insurrection, but not necessarily rebellion.
The court ruled that there was no “civil commotion” at the time of the fire, as the conditions did not meet the required level of turbulence or tumult. Therefore, the insurance company’s argument was rejected, and the owner’s claim for fire damage was upheld
- Leyland Shipping Co v Norwich Union Fire Insurance Soc. [1918] BOLD
The “Ikaria” was torpedoed and seriously damaged and taken into Le Havre and pumped etc. Gale sprang up and as vessel in danger of sinking at quay she was shifted to an outer berth where she grounded at each fall of tide. On the third fall her bulkheads gave way and she sank. Held that the train of causation unbroken from the torpedoing and no claim on the marine policy.
- Middows Ltd v Robertson [1941] BOLD
The Institute Theft, Pilferage and Non-Delivery Clause
Cargo insured “including theft, pilferage and non-delivery”. Non-delivery did not constitute an additional risk, but meant that assured need only prove non-delivery in circumstances consistent with theft or pilferage. It was then for Underwriters to show that loss caused by something for which they not liable.
- Miller v Law Accident Insurance Society [1903]
A number of bulls were insured from Liverpool to Buenos Aires. On arrival at destination the Argentine Government ordered the vessel to leave port and not to land the cattle owing to their suffering from a contagious disease. They were sold at a loss at Montevideo and the loss was held to be by “restraint of princes”. (Force is implicit in any Government Order).
In this case it was definitely established that in order to constitute a restraint of princes no manifestation of force was necessary. It is enough, in order to constitute a restraint of princes, for a state to make an order.
- National Oil Co of Zimbabwe v Sturge [1991]
Meaning of “Civil war, revolution, rebellion and insurrection”.
In National Oil Co of Zimbabwe v Sturge, the court addressed a cargo insurance claim under the Institute Strikes Clauses, where coverage for war risks was excluded for losses caused by “rebellion” or “insurrection.” The issue was whether the actions of the Mozambique National Resistance (Renamo), responsible for violent acts and sabotage, amounted to an “insurrection” and thus fell under the exclusion.
Saville J ruled that Renamo’s activities, aimed at overthrowing the government of Mozambique, constituted an “insurrection.” He explained that “civil war” refers to an internal war, while both “rebellion” and “insurrection” involve violent uprisings to overthrow the government, with “insurrection” being a lesser degree of organization than “rebellion.”
The court further clarified that the difference between “insurrection” and “civil commotion” is that the former is aimed at government overthrow, while the latter may refer to disturbances without such intent. Since Renamo’s goal was to replace the government, the losses were excluded under the “insurrection” clause of the policy.
The term “civil commotion” may also connote a lesser scale of disturbance than “insurrection”.
- Nishina Trading Co. Ltd v Chiyoda Fire & Marine Insurance Co Ltd [1969]
Meaning of “takings at sea” in the S.G form.
In this case, the issue was whether the cargo loss could be classified under various perils in the insurance policy, including “takings at sea,” “theft,” or “persons acting maliciously.”
The vessel, chartered by Asia Line to Mandarin Shipping, carried cargo for Messrs. Tai from Bangkok to Kobe. After the charterers failed to pay two months’ hire, the ship’s master refused to deliver the cargo at Kobe and sailed to Hong Kong. There, he landed the goods, stored them, and mortgaged them to raise money. After three months, the cargo was returned without the need to discharge the mortgage, but the plaintiffs incurred legal and transportation costs.
The judge initially ruled the loss as “theft,” but later concluded that there was no theft, as the cargo was eventually returned. The plaintiffs also claimed that the loss was due to “takings at sea” and “persons acting maliciously.”
The judge rejected the “takings at sea” claim, stating that the master didn’t “take” anything he didn’t already have. He also rejected “persons acting maliciously,” because malice / spite was required, and none was evident.
However, the appellate judge disagreed. He argued that the shipowners, by directing the master to sail to Hong Kong and convert the cargo to their own use, effectively “took” the cargo at sea. The judge further clarified that the shipowners might have mistakenly believed they had a right to mortgage the cargo, so their actions did not constitute “theft.” The claim of “persons acting maliciously” was also dismissed because no ill will was involved.
In conclusion, the appellate judge upheld the decision based solely on “takings at sea,” as the cargo owners’ loss was due to the shipowners’ wrongful actions, not theft or malice.
- Naylor v Law Accident Insurance Soc. [1902] BOLD
In this case, the plaintiff, an insurer covering the transportation of Chinese emigrants from China to Peru, sought to recover expenses after the emigrants murdered the captain and part of the crew, took control of the ship, and diverted its course. The ship was eventually returned to the remaining crew.
The policy covered losses from “pirates, rovers, thieves, etc.,” and the plaintiff claimed the loss resulted from the emigrants’ actions, which they described as “piratically murdering” the captain and stealing the ship. The insurers refused the claim, arguing that the emigrants’ actions were driven by a desire to escape, not piracy.
The court ruled in favor of the plaintiff, determining that the emigrants’ actions amounted to piracy. The court held that the seizure of the vessel, the murder of the captain, and the diversion of the ship were acts of piracy or closely related to piracy, even if the motive behind the actions (escaping to land) was not relevant. The court emphasized that the proximate cause of the loss was the unlawful act of the emigrants taking control of the ship, regardless of their underlying motives.
Thus, the court concluded that the loss was covered by the insurance policy, as it stemmed from an act of piracy or something sufficiently similar, and the insurers were liable for the claim.
- Nesbit v Lushington [1792] BOLD
Nesbitt v Lushington is an early, but noteworthy, authority, which deliberated on what constitutes an act of piracy.
A “meal mob” on the coast of Ireland ran a ship on a reef and forced the Master to sell them the corn cargo at a low price. A loss by “pirates” “Includes passengers who mutiny and rioters who attack the ship from the shore.”
…I think that this loss falls within a capture by pirates: and if a particular average could have been recovered upon this policy, the plaintiffs might have recovered on the count, stating the loss to have happened by piracy: but this being a policy upon corn, the memorandum states that the underwriter will not be liable for any average, unless general, or the ship be stranded; and I am of opinion that this is not a general average; because the whole adventure was never in jeopardy
- Panamanian Oriental Steamship Corporation v Wright (The Anita) [1970] BOLD
In this instance, a vessel was confiscated at Saigon for carrying unmanifested goods. The policy of insurance was in standard form, with the f c and s clause deleted, but incorporated the Institute War and Strikes Clauses (Hulls—Time).
Fortunately, after further criticism in 1978 by UNCTAD, that the method used to distinguish war risks from marine risks was, at the very least, unsatisfactory, the London market radically reformed the structure of their policies. New and separate Institute Clauses were introduced for both marine risks and war risks; the cargo clauses taking effect in January 1982, hull and freight clauses following in October 1983.5 Significantly, the system was
harmonised, whereby the war risks policy covered the same risks as those which have been excluded from cover by the marine risks policy.
- Panamerican World Airways Inc. v Etna Casualty & Surety Co [USA 1975] BOLD
In September 1970, Pan American Flight 083 was hijacked by two members of the Popular Front for the Liberation of Palestine (PFLP) during a flight from Brussels to New York. The aircraft was diverted to Beirut and Cairo, where it was destroyed after passengers were evacuated.
Pan American had all-risk insurance covering such incidents, but the insurers argued the loss was excluded under several clauses, including “military…or usurped power,” “riots,” “civil commotion,” and “insurrection.” They claimed the hijacking was caused by PFLP’s actions, which they linked to insurrection or military activity.
The district court ruled that the loss was covered by the policy, rejecting the insurers’ claims. The court held that “war” only applied to conflicts between governments, not political groups like the PFLP. It also ruled that the PFLP did not qualify as a “military or usurped power,” as it did not control territory independently. The hijacking was not considered a “riot” it lacked the typical disorder of such events, or “civil commotion” as this comprehends a local disorder rather than a hijacking occurring in the skies over two continents. The court also found no evidence of an ongoing “insurrection” at the time.
Thus, the court determined the loss was not caused by any excluded peril, and the all-risk policy applied.
- Pesquerías y Secaderos v Beer [1949]
Supporters of the then existing Spanish Government seized a number of trawlers at outset of Civil War and handed over to the representatives of the latter. The resulting loss to the owners was held to be a “war risk”, which was excluded under the policy, not a loss by the insured perils of riots or civil commotions.
First held to be the result of riots and civil commotions but later held to be civil war.
- Polurrian S.S. Co. Ltd v Young [1915] BOLD
Ship with cargo of coals for Constantinople detained by Greeks in Greco/Turco war of 1912 for 6 weeks. Assured tendered notice of abandonment to underwriters and writ issued on 26th October. Ship released on 8th December.
Warrington J, when he was considering the meaning of the phrase ‘unlikelihood of recovery’, confirmed that s 60(1) and 60(1)(a) – introduced into the Act to replace ‘uncertainty of recovery’—were related to constructive total loss by capture.
In the Polurrian case, the court deliberated on the fact that, when the 1906 Act was codified, the previously used phrase of ‘uncertainty of recovery’ was replaced by the phrase ‘unlikelihood of recovery’. Warrington J was of the opinion that the change in phraseology was to the detriment of the assured in that ‘unlikelihood’ is a more severe test than ‘uncertainty’.
The Court of Appeal upheld the decision of the trial judge, and ruled that, although the recovery of Polurrian was uncertain, it was not unlikely.
- Rickards v Forestal v Land Timber [1942]
In accordance with general orders, on outbreak of 1939 War, German ships put into neutral ports and some were scuttled. Held that the Frustration Clause only excepted loss of voyage claims, not an actual loss of the goods; found to be a C.T.L. since “unlikely that he can recover the goods” if it was known that ship probably would be scuttled.
“In the case of a policy on goods in normal form the owner can claim either for loss of goods or loss of adventure, while in the case of a policy on the ship the underwriters are liable only on loss of ship and are not liable in respect of loss of adventure”.
- Robinson Goldmining v Alliance Marine & General Insurance Co Ltd [1901] BOLD
Issue of “capture and seizure”.
In this case, the plaintiffs had insured a shipment of gold from South Africa with the defendants under a policy covering risks such as “arrests, restraints, and detainments of all kings, princes, and people.” However, the policy also included a free of capture, seizure, and detention (f c and s) clause that excluded coverage for losses caused by “seizure.”
The gold was seized by South African commandos, acting on behalf of the government, in anticipation of the Boer War in 1899. The plaintiffs claimed the loss of the gold under the policy, but the insurers refused to pay, citing the f c and s clause.
The court ruled in Favour of the insurers, stating that the seizure of the gold, although carried out by the government for security reasons, amounted to “seizure” under the terms of the f c and s clause. The court noted that “seizure” involves the act of a government or public authority taking control of property, often for reasons related to laws, trade regulations, or state of war. As such, the policy’s exclusion for “seizure” applied, and the insurers were not liable for the loss.
- Rodoconachi v Elliott [1874] BOLD
“Restraint of princes”
Silks insured Shanghai/UK via Paris had reached Paris but further transit prevented by German siege of Paris during Franco-Prussian War 1870. Notice of abandonment given. Held to be a CTL of the silks by “restraints of princes”, though goods safely at destination by time action heard.
There are few English cases to be found of English goods blockaded in a foreign port; but there are several cases where the question has arisen as to the goods which are prevented by a blockade from getting in. It seems to me that goods which are within a besieged or a blockaded town or port, stand precisely in the same position as goods detained under an embargo. It is true that, in the one case, the detention is the act of the sovereign of the State in which the goods are, and in the other it is the act of the enemy. But in both a restraint is placed upon the owner of the goods by a sovereign power. That is precisely the case. It is found that it was impossible, in consequence of the German armies having closely invested Paris, to remove the silks from the railway station there. I apprehend that was a loss which was covered by these policies. The goods were for an indefinite time lost to the assured. If, therefore, the case of a besieged town is analogous to that of a blockaded port, as I think it is, the assured were clearly entitled to abandon.
- Salem, The [1983] BOLD
What is meant by “acting maliciously” and description of barraty
In this case, Mustill J examined whether Shell Oil could claim under their marine insurance policy for a loss of crude oil due to the actions of a ship’s crew. The ship, initially named Salem, was involved in a conspiracy to sell illegal oil in violation of a United Nations embargo. The crew, under the direction of the conspirators, scuttled the ship after discharging most of the cargo. Shell Oil, having purchased the cargo, sought to recover the loss under the policy, citing barratry as the cause.
Mustill J rejected the claim, explaining that barratry applies specifically to fraudulent or dishonest actions by the ship’s master and crew, but only when these actions harm the shipowner’s interests. In this case, the shipowner, Oxford Shipping, was complicit in the illegal activities, meaning the loss was not caused by barratry. The judge emphasized three key points:
1. Barratry is limited to fraudulent actions by the master or crew that harm the shipowner’s interests.
2. Fraud by the shipowner or third parties does not qualify as barratry.
3. If the shipowner is involved in dishonest acts, there can be no recovery under an insurance policy on either the ship or the goods because the shipowner cannot claim for their own wrongful acts.
Therefore, Shell Oil’s claim failed because the loss was linked to actions in which the shipowner was complicit, and the loss was not covered by the peril of barratry.
- Sanday v British and Foreign Marine Insurance [1916] BOLD
Insurance on linseed from River Plate to Hamburg by British steamers at outbreak of 1914 war with Germany. Vessels ordered into British ports and assured entitled to claim C.T.L. by “arrests, restraints and detainments etc.”, for which not necessary that an actual exercise of force be made. Loss of voyage also covered, i.e. insurance on linseed from Plate to Hamburg, and assured covered against any loss by reason of goods not arriving at destination as an immediate consequence of peril insured against and where voyage impossible of performance by reason of peril insured against.
- Société Belge de Bétons and Others v London & Lancashire Insurance Co. Ltd [1938]
Restraint of princes
The term restraint of princes refers to the detention or embargo imposed by a government on foreign ships within its ports, often used in marine insurance policies to describe certain risks. In this case, the plaintiffs had insurance coverage for their vessels and equipment used in constructing the harbor works in Valencia, Spain, from January to December 1936, including protection against “arrests, restraints, and detainments of all kings, princes and people, of what nation, condition, or quality soever . . . and of all other perils, losses, and misfortunes that have or shall come to the hurt, detriment or damage of the said [property].”
When the Spanish Civil War broke out in July 1936, the plaintiffs’ property, including a large floating crane and other construction equipment, was seized by force. The plaintiffs argued that this seizure was covered under their insurance policy. The defendants denied liability, asserting that the policies did not cover capture or seizure, and that the type of restraint covered was specific to actions by “kings, princes, and people.”
The court found that the seizure, even if not fully legal, qualified as a “restraint” under the policy. This was because the vessels were taken over by workers with the support of local authorities during the civil war, which amounted to a restraint of the plaintiffs’ property. The court ruled that the act of seizure, even if not entirely lawful, was a form of restraint covered by the policy.
Seizure of the vessel by workmen acting with support from the authorities controlling Valencia during the Spanish Civil War was held to be a “restraint” though it was “not absolutely legal”.
- Spinney’s v Royal Insurance Co. Ltd [1980]
The plaintiffs, merchants in Beirut, had insurance policies that excluded coverage for losses due to specific conditions, including civil war, civil commotion, insurrection, rebellion, and revolution. In January 1976, their shops and warehouses were looted and damaged by groups of people, leading them to file insurance claims. The insurers refused payment, citing the policy’s exclusion clause.
The court ruled in favour of the insurers, finding that the losses fell under the policy’s exclusions. Although the situation in Beirut was not considered a full civil war, it was deemed to be “assuming the proportions of a popular rising.” Mustill J analysed the meaning of the exclusions to reach this conclusion.
The judge outlined the criteria for defining civil war, which included:
1. Conflicts between opposing sides with identifiable leadership and community of objective, not necessarily identical goals.
2. Objectives such as seizing or retaining state control or forcing changes in power without altering the political structure.
3. The scale of conflict, involving combatants, casualties, weapons, occupied territories, and public impact.
For ‘rebellion’ and ‘insurrection’, the judge noted they must involve organized resistance against the government with the aim of displacing it or challenging its authority. A ‘rebellion’ often implies more organization, while an ‘insurrection’ may be less so but still involves opposition to the ruling power.
The term ‘revolution’ was not well-defined in the context of the case, but it was suggested to imply a broader, more widespread uprising than a ‘rebellion’. The court concluded that the disturbances in Beirut fit the definition of a civil commotion akin to a popular uprising, thus falling within the policy’s exclusion clause.
- Stoomvaart Maatschappij SVH v Merchants Marine Insurance Co Ltd [1919]
A ship was lost owing to encountering mines supposed to have broken loose from Russian minefields protecting the Finnish coast. Under insurance policies the ship was covered against marine risks and damage from explosions, but the insurers were exempt in the case of “capture, seizure, detention, and all other consequences of hostilities. In an action on the policies the appellants contended that the ship was lost by marine and not war risks, and that the clause warranted free from capture, &c., referred to hostile acts which amounted to taking possession of the ship insured and did not include consequences of hostilities which were not ejusdem generis (of the same kind) with capture, seizure, and detention, such as the destruction of the ship by drifting mines. Those words “other consequences of hostilities” are to be construed and ought to be construed so as to include the casualty which has happened in this case. Held that the loss of the vessel was the direct consequence of hostilities, and the respondents were not liable therefore under the policies. Decision of the Court of Appeal affirmed.
- Wondrous, The [1997] BOLD
The plaintiffs chartered their vessel Wondrous to an Iranian company to transport 30,000 tons of molasses from Bandar Abbas, Iran, to North Europe or Mediterranean ports. The plaintiffs took out insurance policies, including coverage for loss of hire, which incorporated war risks. However, Wondrous was delayed for 18 months in Bandar Abbas due to the charterers’ inability to pay port dues and freight taxes. When the vessel finally set sail for Denmark, it required repairs to its engines and incurred significant losses. The plaintiffs filed an insurance claim, but the underwriters denied payment.
The central issue was whether the delay (detainment) fell within the meaning of “detainment” under the war risks policy. The trial judge, Hobhouse J, ruled that the plaintiffs could not recover because the delay was caused by the charterers’ failure to pay customs dues, which he deemed an infringement of customs regulations. This, he argued, excluded liability under the war risks insurance.
At the Court of Appeal, Lloyd and Nourse LJJ agreed with Hobhouse J, ruling that there was no detainment within the meaning of the policy. However, McCowan LJ dissented, believing that Wondrous had been “detained” in a manner similar to house arrest—where the vessel was free within the port but would be apprehended if it attempted to leave. He argued that the vessel’s failure to leave the port did not constitute an infringement of custom regulations, as no attempt to depart was made.
Thus, McCowan LJ disagreed with the others, maintaining that the vessel had been detained and the plaintiffs should have been able to recover under the insurance policy.
