Delos Shipholding S.A. v Allianz Global Corporate and Specialty S.E.
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Dias DBE |
| Judgment Date | 25 March 2024 |
| Neutral Citation | [2024] EWHC 719 (Comm) |
| Year | 2024 |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000523 |
[2024] EWHC 719 (Comm)
Mrs Justice Dias DBE
Case No: CL-2019-000523
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Peter MacDonald Eggers K.C., Sandra Healy, Charlotte Payne and Sophie Hepburn (instructed by Messrs Hill Dickinson International) for the Claimants
Philippa Hopkins K.C., David Walsh and Lorraine Aboagye (instructed by Adams & Moore Solicitors LLP) for the Defendants
Hearing dates: 18, 22–25, 29–31 January, 1, 7–9 February 2024
The Honourable
INTRODUCTION
This claim arises out of what might be described in layman's terms as the illegal parking of the Capesize bulk carrier “WIN WIN” (the “Vessel”) just inside Indonesian territorial waters off Singapore in February 2019. The layman might be forgiven for thinking that for an infringement of this nature the Vessel would have been given a metaphorical slap on the stern and a parking fine, maybe with a discount for prompt payment, and sent on her way. Instead, however, she was detained by the Indonesian authorities for nearly a year while her Master was prosecuted under the Indonesian Shipping Law, eventually receiving a suspended sentence of 7 months' imprisonment and a fine in the grand sum of around US$7,000.
The Vessel was insured by the Defendant insurers for war risks, including the risk of detention, and in these circumstances, the Claimants brought a claim under the policy in force at the time (the “Policy”) asserting that the Vessel became a constructive total loss by virtue of being detained for more than six months and that they were accordingly entitled to recover the sum assured under the Policy. Insurers broadly accept that the requirements for a constructive total loss were met but nonetheless deny the claim on essentially four grounds: (1) the detainment was not fortuitous since the Master and/or one or more of the Claimants knew or should have known that the Vessel had anchored in territorial waters and the arrest was the consequence of their voluntary conduct in so doing; (2) the claim falls within an exclusion to the Policy; (3) the delay was materially caused by the Claimants' unreasonable conduct in breach of their duty to sue and labour; (4) Insurers are entitled to avoid the Policy for material non-disclosure. Should the claim under the Policy succeed, the Claimants assert an additional claim for damages sustained by reason of Insurers' failure to pay the insurance proceeds within a reasonable time. There are also some minor quantum points.
Resolution of these issues will incidentally (and quite irrelevantly) determine whether the Vessel was appositely named or rather the opposite. Undoubtedly, the events in Indonesia were unfortunate and, as will appear below, it could be said that her detention was somewhat unlucky. On the other hand, if the Claimants' claims succeed, Insurers say that they would obtain a substantial windfall, having purchased the Vessel for less than her market value and sold her for more than her agreed residual value, such windfall being further inflated if they recover the claimed damages as well.
FACTUAL BACKGROUND
The First Claimant (“Delos”) was the registered owner of the Vessel. Delos is an SPV registered in the Marshall Islands. 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 external legal services to the NGM group of companies (the “NGM Group”) for many years and he was also the sole director on a similar nominee basis of a number of other ship-owning SPVs within the group.
The Second Claimant (“NGM”) and Third Claimant (“FML”) were respectively the commercial and technical managers of the Vessel. The Fourth Claimant was the mortgagee of the Vessel and the loss payee under the Policy. Delos and NGM were part of the NGM group which is a well-known and successful Greek shipping group founded by Mr Nikolaos Moundreas. The group is entirely owned and controlled by Mr Nikolaos Moundreas and his three children but while he remains the ultimate decision-maker in the group, day-to-day activities are supervised and monitored by his son, Mr Georgios Moundreas. Unless otherwise indicated, references to Mr Moundreas in this judgment are to Mr Georgios Moundreas.
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, so far as relevant to this case, the Defendants (“Insurers”). The Policy was renewed for the 2018/2019 year on 29 June 2018 for the period 1 July 2018 to 30 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. On 1 December 2018, she was joined there by a new Master, Captain Kumar. Captain Kumar had previously been employed by V-Ships and this was his first command for FML. Following completion of operations in China, the Vessel was ordered to Singapore to take on bunkers. Bunkering was completed on 13 February 2019 and on the same day NGM's Operations Department ordered her to proceed to Singapore OPL, where she was to find a safe anchorage and drop anchor awaiting further instructions. The email of instruction continued: “Recommended anchoring position to be around the following area: Lat: 01.25N / Long: 104.34E.” It is common ground that these co-ordinates lay within Indonesian territorial waters.
On 14 February 2019, the Vessel left Singapore having been cleared to proceed to “High Seas”. It is not in dispute that a passage plan was prepared which identified a different anchoring position. The Master explained in both his written and oral evidence that he did not use the position recommended by NGM because in his view it was too close to the traffic separation system in operation in the Straits of Singapore. The Straits of Malacca and Singapore is one of the busiest shipping lanes in the world and vessels coming from all directions are subject to a traffic separation scheme (the “TSS”) which requires them to pass through a designated channel before peeling off again when they exit the channel at the other end. In the Master's view, NGM's suggested anchoring area was too close to the TSS for comfort given that the WIN WIN was a large vessel and, once anchored, would not be able to move quickly in the event of an incident occurring.
It has not been possible to locate either an electronic or a hard copy version of this passage plan and this gave rise to much interlocutory skirmishing and criticism by Insurers. However, the route sheet incorporated into the passage plan has survived which shows that the Master's alternative anchoring position was in fact in international waters. Had the Vessel been able to anchor there, no problems would have arisen. In the event, however, while the Vessel was underway from Singapore, it became apparent from her radar when she was approximately half-way along the TSS that the Master's chosen position was already occupied by another vessel. The Master therefore altered the planned passage to find an alternative safe location and eventually dropped anchor in position 01 21.89N, 104 41.96E, just inside Indonesian territorial waters (the “Waiting Location”).
The evidence of the Master, which I accept and which was confirmed by the master mariner experts, was that the Waiting Location was within an area – partly inside and partly outside Indonesian territorial waters — which was generally understood to be Eastern OPL Singapore (“EOPL Singapore”) and which had for many years been used as an anchorage by hundreds if not thousands of vessels without problem. Indeed, many other vessels were also anchored in the vicinity when WIN WIN arrived and, prior to 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. The reasons for the change in attitude on the part of the Indonesian authorities were controversial and were explored at some length in the oral evidence. Suffice it for the present to say that starting on about 8 February 2019 the Indonesian Navy arrested a large number of ships for anchoring in territorial waters without permission, of which the Vessel was one.
On 17 February 2019, the Vessel 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 repeatedly apologised and offered to move to international waters immediately but the Navy dismissed these offers and instead ordered him to shift to a different location close to the naval base on Batam Island.
Meanwhile, the Master had contacted the Operations Department of NGM in understandable distress asking for urgent assistance. The Operations Department notified the NGM Group's Insurance and Claims Manager, Mr Eleftherios Tsouris, who in turn immediately notified Mr Nikolaos and Mr Georgios Moundreas. Mr Tsouris also contacted Captain Dev Lajmi of the Vessel's P&I Club, North of England...
To continue reading
Request your trial