Atlasnavios-Navegação, LDA (formerly Bnavios—Navegação, LDA) v Navigators Insurance Company Ltd & Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE HAMBLEN,Mr Justice Hamblen |
| Judgment Date | 29 March 2012 |
| Neutral Citation | [2012] EWHC 802 (Comm) |
| Docket Number | Case No: 2011 Folio 537 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 29 March 2012 |
[2012] EWHC 802 (Comm)
Mr Justice Hamblen
Case No: 2011 Folio 537
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane
Mr Alistair Schaff Q.C. and Ms Rebecca Sabben-Clare (instructed by Ross & Co) for the Claimant
Miss Philippa Hopkins (instructed by Stephenson Harwood) for the Defendant
Hearing dates: 23 March 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is the trial of preliminary issues in an action in which the Claimant claims under its war risks insurance for the constructive total loss of the vessel "B Atlantic" ("the Vessel"). Between 7 and 12 August 2007 the Vessel loaded a cargo of coal at Maracaibo, Venezuela, for carriage to Italy in the course of routine trading. The following day, 13 August 2007, a pre-departure inspection by the Venezuelan authorities discovered 3 bags of cocaine strapped to her hull below the waterline. The Vessel has been detained in Venezuela ever since then.
The Defendant Underwriters ("Underwriters") do not dispute that the Vessel is a CTL, but deny that the Vessel's loss was caused by a peril insured against. They rely principally on the "customs regulations" exclusion contained in clause 4.1.5 of the Institute War Clauses. In the alternative, they contend that the loss was caused by the Claimant's failure to put up security for the Vessel's release.
The preliminary issues were ordered to be tried by H.H.J. Chambers Q.C., sitting as a Deputy Judge of the High Court, on 16 December 2012. The issues were ordered to be tried on the basis that they are pure issues of construction of clause 4.1.5 of the Institute War Clauses, and that no disclosure or evidence would be required.
The preliminary issues are:
(1) Whether, in order for Underwriters to be able to rely on the exclusion in clause 4.1.5, they must show that there was privity or complicity on the part of the insured in any infringement of customs regulations.
(2) If not, whether Underwriters must show that there was privity or complicity on the part of the servants or agents of the insured in any infringement of customs regulations.
(3) Whether the exclusion in clause 4.1.5 is only capable of applying to exclude claims for loss or damage to a vessel which would otherwise fall within insuring clause 1. 2 or 1.6, and not the other perils insured against under clause 1 and/or Section A of the Conditions.
(4) Whether the exclusion in clause 4.1.5 is capable of applying if an infringement of customs regulations is found not to be, or not reasonably arguably to be, a ground for the arrest, restraint, detainment, confiscation or expropriation of the vessel in question as a matter of the relevant local law.
The Policy
The war risks policy ("the War Policy") incorporates the Institute War and Strikes Clauses 1.10.83 ("the Institute War Clauses").
The Institute War Clauses list 6 groups of insured perils within clause 1. Clause 1 provides:
"PERILS
Subject always to the exclusions hereinafter referred to, this insurance covers loss of or damage to the Vessel caused by
1.1 war civil war revolution rebellion insurrection …
1.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat
1.3 derelict mines torpedoes bombs or other derelict weapons of war
1.4 strikers, locked out workmen …
1.5 any terrorist or any person acting maliciously or from a political motive
1.6 confiscation or expropriation".
Exclusions are listed in clause 4. These include loss, damage, liability or expense arising from:
"4.1.4 capture seizure arrest restraint detainment confiscation or expropriation by or under the order of the government or any public or local authority of the country in which the Vessel is owned or registered.
4.1.5 arrest restraint detainment confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations
4.1.6 the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause".
The Institute War Clauses are commonly used in conjunction with the Institute Time Clauses (Hulls). The two sets of standard terms form part of the well-known, London market marine insurance background and fall to be construed together.
Thus, exclusion 4.2 of the Institute War Clauses excludes "loss damage liability or expense covered by the Institute Time Clauses – Hulls 1/10/83…"
The Institute Time Clauses – Hulls 1/10/83 ("the Institute Hull Clauses") contain an express 'war' exclusion in respect of loss, damage, liability or expense caused by "capture seizure arrest restraint or detainment (barratry and piracy excepted), and the consequences thereof or any attempt thereat" (clause 23.2). They also contain exclusions for loss, damage, liability or expense arising from "any terrorist or any person acting from a political motive" (clause 24.2) or from 'Malicious Acts' (clause 25).
Accordingly, the effect of the Institute War Clauses and Institute Hull Clauses, read together, is that:
(1) an assured's hull cover does not respond to the detention of a vessel unless caused by barratry or piracy (clause 23.2 of the hull cover);
(2) with those exceptions, detention is prima facie covered under the war risks cover (clause 1.2 of the war risks cover) but subject to certain exceptions set out in clause 4; and
(3) loss caused by malicious acts is insured under the war risks cover (clause 1.5), but not under the hull cover (clauses 24.2 and 25).
In addition to the standard form cover, section A of the Slip broadened the cover for the consequences of malicious acts by the words: "Including … Malicious damage and Vandalism, Piracy and/or Sabotage and/or Terrorism and/or Malicious Mischief and/or Malicious Damage".
Factual background
Although I am not concerned with any issue of fact it is relevant to set out the factual background against which the present dispute arises.
It is common ground that the owners of the Vessel knew nothing about the drugs and had no involvement in any attempted drug trafficking.
It is the Claimant's case that the crew had no involvement with the drugs either. Although charges were brought against the Master and 2 nd Officer and they were ultimately convicted of liability for drug-trafficking offences, it is the Claimant's case that (i) there was no factual or legal basis for any such conviction; and (ii) the proceedings against the master and crew were politically motivated. The Underwriters rely on the fact that charges were brought against the Master and 2 nd Officer and were convicted but do not advance any positive case that the Master and/or 2nd Officer (or any other officer or crew) participated in or were privy to the attempted drug-trafficking.
The Claimant contends, therefore, that the Vessel has been detained/confiscated in Venezuela pursuant to the actions and orders of the Venezuelan authorities, as a result of the fortuitous intervention of unknown third parties who decided to affix narcotics to the Vessel's hull for their own drug-trafficking purposes.
Further, the Claimant's factual case is that that the continued detention of the Vessel has had nothing to do with any conduct on its part or that of its master, officers or crew; and indeed, had nothing to do with the fact that some unknown third party had fixed the drugs to the hull. After the drugs were discovered, Venezuelan law permitted a limited initial investigation period during which (the Claimant accepts) the Vessel was lawfully detained. After that, however, Venezuelan law required the Courts to release the Vessel from arrest because there was no evidence of the owners' involvement and no charges were brought against them. Under Venezuelan law, the Claimant will say, the Vessel should have been released from arrest on 31 October 2007, when a "preliminary hearing" took place. Thereafter, the continued detention was contrary to the local law and was not the consequence of local customs regulations or their lawful effect.
Moreover, as well as saying that the continued detention of the Vessel was contrary to Venezuelan law, the Claimant also advances the positive case that the Vessel was detained as a result of political interference and/or improperly motivated political acts and/or malicious acts. To use Lord Denning's phrase in The "Anita" [1971] 1 WLR 882 at 888 the continued detention was 'a put-up job.'
Accordingly, and however the preliminary issues are resolved, it remains to be determined whether any customs 'infringement' was actually the proximate cause of the detention on the facts.
The general approach
Only a handful of cases have considered the exclusion contained in clause 4.1.5 of the present clauses and their similarly-worded predecessors – all at Court of Appeal level. They are The "Anita" (generally cited as the leading case), The "Wondrous" [1992] 2 Lloyd's Rep. 566, The "Kleovoulos of Rhodes" [2003] 1 Lloyd's Rep. 138 and The "Aliza Glacial" [2002] 2 Lloyd's Rep. 421. The last of these is concerned with an alleged infringement of trading regulations (though in fact the regulations in question were held not to be so characterised, with the result that the exclusion did not apply). The remainder involved an alleged infringement of customs regulations, as does the present case.
As was largely common ground, a number of general principles can be derived from those cases.
First, the...
To continue reading
Request your trial
-
Piraeus Bank A.E. v Antares Underwriting Ltd and Others
...been excluded by Rule 3.5 of the Club Rules. I accept that submission for the reasons which follow. 130 In The B Atlantic (No. 1) [2012] Lloyd's Rep IR 363, [22]–[25], Hamblen J (as he then was) considered exclusion 4.1.5 in the Institute War and Strikes Clauses 1.10.83 (“ This insurance e......
-
Atlas Navios-Navegacao Lda v Navigators Insurance Company Ltd; The B Atlantic
...or expropriation of the vessel in question as a matter of the relevant local law. 13 In his judgment dated 29 March 2012 ( [2012] EWHC 802 (Comm); [2012] 1 Lloyd's Rep 629), the learned judge only answered the first three questions, all in the negative. It was common ground that the fourt......
-
Delos Shipholding S.A. v Allianz Global Corporate and Specialty S.E.
...for smuggling are within the exclusions: The Kleovoulos of Rhodes (supra); The Anita, [1970] 2 Lloyd's Rep. 365; The B Atlantic, [2012] EWHC 802 (Comm); [2012] 1 Lloyd's Rep. 629 at [22]–[25]. Nonetheless, the express addition of trading regulations in 1983 indicates that there are some ......
-
Atlasnavios-Navegacao Lda (formerly Bnavios-Navagacao Lda) v Navigators Insurance Company Ltd and Others
...First, four preliminary issues were identified, three of which were determined by Hamblen J by a judgment given on 23 March 2012: [2012] EWHC 802 (Comm). There was then a trial before Flaux J of all other issues of fact and law extending over some 14 days in October 2014, leading to a judg......
-
Navigators Insurance Company Ltd And Ors v Atlasnavios-Navegacao LDA [2018] UKSC 26: Malicious Acts And Exclusion Of Cover In Standard War Risk Insurance
...of customs regulations. FIRST INSTANCE AND THE COURT OF APPEAL A number of preliminary issues were determined before Hamblen J [2012] EWHC 802 (Comm), including, importantly, that in order to rely upon clause 4.1.5 insurers did not need to show that there was 'any privity or complicity on t......