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

For the purpose of this appeal, the following brief summary will suffice. A fuller account can be found in the judge’s judgment.

The first respondent (‘Delos’), a company registered in the Marshall Islands, was the registered owner of the vessel. Its sole nominee director was Mr Evangelos Bairactaris, a Greek maritime lawyer and registered member of the Piraeus Bar Association. He is the managing partner and principal fee earner of a firm which has provided legal services to the NGM group of companies (the ‘NGM Group’), as well as to other Greek shipowning clients, for many years. He was also the sole director on a similar nominee basis of a number of other ship-owning SPVs within the NGM Group.

The second and third respondents (‘NGM’ and ‘FML’) were respectively the commercial and technical managers of the vessel. The fourth respondent (‘the Bank’) was not a co-assured under the policy but was the mortgagee of the vessel and the loss payee under the policy.

Delos and NGM were part of the NGM Group, a well-known and successful Greek shipping group founded by Mr Nikolaos Moundreas. The group is owned and controlled by Mr Nikolaos Moundreas and his three children. While he remains the ultimate decision-maker, day-to-day activities are supervised and monitored by his son, Mr Georgios Moundreas. NGM was, but FML was not, a company within the NGM Group.

The vessel’s war risks insurance had been placed with GAREX since 2008. GAREX is an underwriting agency based in Paris which specialises in marine war risks and underwrites for a pool of insurers, including the appellant insurers. The policy was renewed on 29^th June 2018 for the period 1^st July 2018 to 30^th June 2019.

In late 2018 the vessel discharged a cargo of iron ore at Bayuquan in China, following which she proceeded to Zhoushan for repairs. The vessel was then ordered to Singapore to take on bunkers. Bunkering was completed on 13^th February 2019 and on the same day NGM’s Operations Department ordered her to proceed to Singapore OPL (outside port limits), where she was to find a safe anchorage and drop anchor awaiting further instructions.

On 14^th February 2019 the vessel left Singapore and dropped anchor in a position just inside Indonesian territorial waters. This was within an area, partly inside and partly outside Indonesian territorial waters, which was generally understood to be Eastern OPL Singapore and which had for many years been used as an anchorage by hundreds, perhaps even thousands, of vessels without any problem. Many other vessels were also anchored in the vicinity when the ‘WIN WIN’ arrived and, before February 2019, there had been no known instances of any vessel being detained or reprimanded by the Indonesian authorities simply for anchoring within territorial waters.

This all changed very suddenly in February 2019. Starting on about 8^th February 2019 the Indonesian Navy arrested a large number of ships for anchoring in territorial waters without permission.

On 17^th February 2019 the ‘WIN WIN’ was boarded by armed personnel from the Indonesian Navy who demanded and removed all her documents and told the master that she was being detained because she had entered Indonesian waters illegally. The master apologised and offered to move to international waters immediately but the Navy dismissed these offers and ordered him to shift to a different location close to the naval base on Batam Island. Initially the master refused to comply on the ground that this new location was unsafe for a vessel of the size of ‘WIN WIN’. The following day, however, he was ordered to a different location in the port of Batuampar and threatened with seizure of the vessel and the arrest of himself and the entire crew if she did not move. Accordingly the vessel shifted to the new location where she dropped anchor on 18^th February 2019.

On 19^th February 2019 the Navy again boarded the vessel and demanded to inspect the entire crew and their passports. The master and the second officer were taken to the Batam Naval Base for interrogation and a Ship Investigation Report was prepared stating that the vessel had anchored illegally without a permit.

Attempts were made over the following weeks to obtain the release of the vessel, but eventually it became apparent that the vessel would only be released without allowing legal proceedings to take their course in exchange for an illicit or ‘unofficial’ payment, in other words a bribe. The NGM Group was not prepared to make such a payment and all negotiations were terminated around 11^th April 2019. The vessel remained detained.

The war risks policy provided that the vessel would be a constructive total loss if detained for a period of six months. From 19^th August 2019, once this period expired, a series of notices of abandonment were given to the insurers, which they declined.

On 9^th October 2019 the Batam District Court convicted the master of one of the charges against him. He was sentenced to 7 months’ imprisonment suspended for one year and a fine of Rp 1 million (around US$7,000) plus costs of Rp 5,000. On 11^th October 2019 the prosecutor lodged a notice of appeal to the High Court of Pekanbaru which affirmed the verdict of the District Court on 12^th December 2019. The fine was paid and the master was released on 8^th January 2020. The vessel was formally redelivered to the respondents on 9^th January 2020. In the event, in part because of difficulties caused by Covid-19, the vessel did not leave Indonesian waters until 7^th August 2020.