Loss Proximately Caused by Piracy under ICC (A) Clauses, the Legality of Ransom Payments and their Recoverability as Sue and Labour Charges: Masefield AG v Amlin Corporate Member
| Author | Louise Lazarou |
| Pages | 43-49 |
SSLR Loss proximately caused by piracy Vol 1(2)
43
Loss Proximately Caused by Piracy under ICC (A) Clauses, the
Legality of Ransom Payments and their Recoverability as Sue and
Labour Charges: Masefield AG v Amlin Corporate Member Ltd
(The Bunga Melati Dua) [2011] EWCA Civ 24
Louise Lazarou
The Facts
he Bunga Melati Dua, a large oil tanker, was captured by Somali pirates
whilst sailing through the Gulf of Aden on 19 August 2008 during a
voyage from Malaysia to Rotterdam. The vessel was carrying two parcels
of biodiesel fuel belonging to the appellant insured, Masefield AG, who
brought a claim against the cargo insurers, Amlin Corporate Member Ltd, for
the total loss of the cargos on the grounds of an actual total loss and
alternatively a constructive total loss caused by the piratical seizure of the
carrying vessel. Negotiations between the pirates and the shipowners, MISC,
commenced promptly to ensure the release of the vessel, her crew and cargo.
On 18 September 2008 the insured cargo owners served a notice of
abandonment on the insurers claiming irretrievable deprivation of possession.
The notice was rejected, but proceedings were by agreement deemed to have
been commenced on that day. The vessel was released eleven days after the
notice of abandonment was served on payment of a ransom of US $2 million
by MISC.
The court considered a number of significant legal issues that spring from a
piratical capture of a vessel. The Court of Appeal addressed whether the
insured suffers any loss and the type of that loss, the legality of ransom
payments in regards to public policy and their recoverability in the context of
sue and labour expenses and, finally, the relationship between piracy and
maritime theft in the law of marine insurance. The decision offers helpful
guidance both to cargo owners and shipowners who may find themselves in
the unfortunate predicament of their vessels and cargos being hijacked by
pirates. This article looks at the Court of Appeal’s consideration of the law of
marine insurance in regards to claims arising from the capture of an insured
vessel and her cargo by pirates.
The claims
The risk was written under the Institute Cargo Clauses (A), an all risks
standard policy containing a war exclusion clause excluding “capture, seizure,
arrest, restraint or detainment (piracy excepted)”. The insured cargo owner
claimed deprivation of possession of the cargos, due to the capture of the
carrying vessel by pirates, which according to the insured created an
immediate actual total loss proximately caused by the insured peril of piracy.
Additionally to the actual total loss claim the insured also contended that the
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