Case Comment: Should the Leader be Followed? The Decision in The Buana Dua
| Author | Mateusz Bek |
| Pages | 49-52 |
S.S.L.R. Should the Leader be Followed?
49
Vol.2
Case Comment: Should the Leader be Followed?
The Decision in The Buana Dua
Mateusz Bek
Introduction
he nature of the relationship between the leading underwriter and the
following market has been subject to debate over the past years. The
recent decision in The Buana Dua
1 is to be seen as a wasted opportunity
to clarify that matter.
The Background
The claimant was the owner of the tug Buana Dua, insured with three
syndicates of whom the leading underwriter was Axa. The policy contained a
‘follow leader’ clause (LUC) in these terms:
It is agreed to follow Axa HK in respect of all decisions, surveys and
settlements regarding claims within the terms of the policy, unless
these settlements are to be made on an ex gratia or without prejudice
basis.
The Institute Times Clauses — Hulls (with certain exclusions) were
incorporated. Amongst other clauses, Clause 1.1 provided:
It is warranted that the Vessel shall not […] undertake towage or
salvage services under a contract previously arranged by the Assured.
On 26 October 2005 the tug ran aground while en route to render a towage
service to a stranded tanker. Subsequently, Buana Dua was declared to be a
constructive total loss.
Axa agreed to indemnify the owner for the loss. However, the other insurers,
including the defendant, rejected liability on the basis of the claimant being in
breach of the warranty contained in Clause 1.1 of the ITCH.
1 P.T. Buana Samudra Prata ma v Maritime Mutual Insurance Association (NZ) Limited [2011] EWHC
2413 (Comm).
T
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