CA-2024-000950 - [2025] EWCA Civ 1019

Once it is concluded that ‘customs regulations’ in the American Institute clause refers to laws regulating the import of goods into the land territory of a state and that ‘quarantine regulations’ refers to laws for the protection of health, it is possible to consider the effect of the ‘and similar’ wording in exclusion 1(e). In my judgement this is straightforward. Plainly the ‘and similar’ wording must be construed by reference to customs or quarantine regulations. In my judgement this wording refers to detention under regulations which have a similar purpose to regulations concerning the import of goods or the protection of health. This is a less demanding connection than is required by the judge’s interpretation, supported by Mr Peter MacDonald Eggers KC for the respondent insureds, which was that the purpose of the ‘similar’ regulation must be ‘materially the same’ as the purpose of a customs or quarantine regulation, but a connection is nevertheless required.

Examples of what might qualify as a similar regulation on this basis were canvassed in argument at the hearing. It is unnecessary to reach any decision about these, but one possibility is the detention of a vessel passing through a state’s territorial waters on the ground that it was engaged in smuggling prohibited goods into the territory of another state or was carrying an infected cargo. However, it is unnecessary to decide whether this would fall within the ‘and similar’ wording. It is sufficient to say that this wording extends the scope of the exclusion beyond what it would be if those words were not there.

The detention of the vessel in the present case occurred because, contrary to its previous practice, the Indonesian government decided to assert its sovereignty over its territorial waters by arresting and detaining vessels which had anchored without permission. In my judgement this had no relevant similarity to an arrest or detention under customs or quarantine regulations. It was completely unconnected with the import of goods (the vessel was in ballast) and with health (there was no question of any cargo being infected, as there was none, and no suggestion of any member of the crew having any disease) and there was no suggestion that the crew was engaged in smuggling. The point is really as straightforward as that.

I would therefore reject both the wider construction and both versions of the narrower construction advanced by Ms Hopkins. The wider construction (detention under any ordinary peacetime law) disregards the need for the detention to have been effected under a customs or quarantine regulation or a regulation which is similar to a customs or quarantine regulation. It treats the exclusion as if it referred to any detention under any regulation not arising from actual or impending hostilities and renders the reference to customs or quarantine regulations superfluous. That does considerable violence to the language of the exclusion. As the judge said, if this was the intention of the drafters, they expressed themselves in an extraordinarily obscure way.

The narrower construction (exercise of control/clearances) proceeds on the basis that customs regulations and quarantine regulations are members of the same genus, to use the Latin term. But that is not necessarily so and in my judgement is not so in the present case. The exclusion simply refers to two different kinds of regulation and extends to other regulations which have a similar purpose to either of them.

Alternatively, if the two different kinds of regulation, customs and quarantine, have anything in common it is that they are concerned with who and what is on board the vessel (including more or less intangible things such as diseases and infections). On that alternative basis also, a regulation concerned with permission to anchor in territorial waters, which has nothing to do with anyone or anything on board the vessel, could not be regarded as falling within the ‘and similar’ wording.

For these reasons, which differ to some extent from those of the judge, I conclude that exclusion 1(e) does not avail the appellant insurers in this case and would reject their appeal on this ground.