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

The policy was concluded on 29 June 2018. The insurers agreed to insure part of the NGM Group fleet (including the vessel) against war and political risks for the policy period 1^st July 2018 to 30^th June 2019. Delos, NGM and FML were all named assureds in respect of the vessel and the Bank was named as mortgagee and loss payee. The policy insured the vessel for US $25 million in respect of Hull and Machinery, US $6.25 million in respect of Increased Value and US$ 6.25 million in respect of Disbursements and Additional Owners’ Interest. These were agreed values such that the total amount recoverable in the event of a total loss was US $37.5 million.

The policy was governed by English law but it expressly incorporated the American Institute Hull War Risks and Strikes Clauses dated 1^st December 1977 and the Addendum thereto dated 1^st April 1984. These effectively write back into the policy the war risk perils expressly excluded by the American Institute Hull Clauses. Thus the policy covered ‘Capture, seizure, arrest, restraint or detainment, or any attempt thereat’ (these being risks which had been excluded by the Hull Clauses and were written back in by the War Risks Clauses).

However, this was subject to certain exclusions from cover, as follows:

‘EXCLUSIONS

(1)

This insurance does not cover any loss, damage or expense caused by, resulting from, or incurred as a consequence of:

(a)

Any hostile detonation of any weapon of war described above in paragraph (2);

(b)

Outbreak of war (whether there be a declaration of war or not) between any of the following countries: United States of America, United Kingdom, France, the Union of Soviet Socialist Republics or the People’s Republic of China;

(c)

Delay or demurrage;

(d)

Requisition of preemption;

(e)

Arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments not arising from actual or impending hostilities;

(f)

Capture, seizure, arrest, restraint, detainment or confiscation by the Government of the United States or of the country in which the Vessel is owned or registered.’

Exclusion 1(e) is the relevant exclusion in this case.

The 1984 Addendum provided that:

‘3. In the event that the Vessel shall have been the subject of capture, seizure, arrest, restraint, detainment, confiscation or expropriation, and the Assured, by reason thereof, has lost the free use and disposal of the Vessel for a continuous period of twelve (12) months (even though condemnation has not occurred), then for the purposes of ascertaining whether the Vessel is a constructive Total Loss, the Assured shall be deemed to have been deprived of the possession of the Vessel without any likelihood of recovery.’

The period of 12 months referred to in the standard clause was reduced to six months in the policy on this vessel.