Thu, 11 August, 2016
Guy Blackwood QC acted on behalf of the successful underwriters in this appeal, in which the Court of Appeal considered the interplay between insured perils and excepted perils under the Institute War Clauses.
On 13 August, 2007 the vessel “B Atlantic” was detained in Lake Maracaibo, Venezuela. She had loaded a cargo of coal, destined for shipment to Italy, when during a second divers’ inspection some 132kg of cocaine was discovered attached to the vessel’s hull. The vessel was detained and subsequently abandoned by her Owners, who claimed for a constructive total loss and for sue & labour expenses under war risks cover.
At first instance, Mr Justice Flaux held that the detention of the vessel was caused by an insured peril, malicious acts of the drugs smugglers, and held that the standard war risk exclusion for detainment by reason of infringement of any customs regulation, clause 4.1.5, did not apply when the infringement was no more than the “mere manifestation” of third parties’ malicious acts.
The Court of Appeal handed down judgment on 1 August 2016 unanimously overturning Flaux J (Christopher Clarke LJ, Sir Timothy Lloyd and Lord Justice Laws). The Court of Appeal held that the loss was caused by both the concealment of the drugs and the detention. The Court also held that clause 4.1.5 should not be read as being subject to the “mere manifestation” limitation imposed by Flaux J, for 7 main reasons.
In the circumstances, underwriters’ appeal succeeded and Owners’ claim failed.
Please click here for a copy of the judgment.