Claim No: CL-2022-000527 - [2025] EWCA Civ 1387

For the reasons I have given, despite differing from the judge on the small point explained at [61]-[62] above in relation to the inconsistency ground, I would dismiss the appeal on all grounds broadly for the reasons the judge gave.

I have tried, however, to explain a little more than the judge did about the red hand ground which was seemingly not fully argued before him. In my view, the onerous clause doctrine (as I would prefer to call it) provides (as I have said at [86] above) that:

I agree.

I also agree. I add three comments.

First, the rationale for the red hand doctrine or, as we must now call it, the onerous clause doctrine, is that the party seeking to escape from the effect of the clause was not aware of it and should not reasonably have been aware of it because it was not fairly and reasonably brought to his attention. It is therefore concerned with the kind of contract which a reasonable party would not be expected to read carefully from beginning to end. It is difficult to see how this doctrine could ever apply to a contract of marine insurance in which the insured was represented, as will usually be the case, by specialist brokers who can be expected to familiarise themselves with the terms available in the market. If the proposed policy contains a clause which can genuinely be regarded as unusual or unreasonable, it would be the brokers’ duty to draw that clause to the insured’s attention.

Second, as Mr Ashcroft pointed out, pay first clauses in marine liability policies have often been referred to in disparaging terms by judges and commentators. Nevertheless, they remain prevalent. It can therefore safely be assumed that the market understands their effect but is content to contract on such terms. There is of course nothing to prevent an insured from seeking a quotation for a policy which does not include such a term, but that might affect the premium which it was required to pay.

Finally, whether pay first clauses in marine liability policies should be rendered ineffective as against third parties must be a matter for Parliament. I note that the reason why they were excluded (save to the extent that they insure against liability for death and personal injury) from section 9(5) of the 2010 Act was that the Law Commission wished to avoid proposing provisions which might conflict with potential international measures which were said to be the subject of then current international negotiations. If such negotiations have not resulted in international agreement, it is always open to Parliament to think again.