Melinda Holdings v Hellenic Mutual: A Case Comment

AuthorAyodeji Sasegbon
SSLR Melinda Holdings v Hellenic Vol 1(2)
Melinda Holdings v Hellenic Mutual:
A case comment
Ayodeji Sasegbon
n Melinda Holdings SA v Hellenic Mutual1, the insured’s vessel was
insured by the defendant in respect of war risks. The policy specifically
excluded losses arising out of: ordinary judicial process; action taken for
the purpose of enforcing or securing payment of a claim; or any financial
cause of any nature. Moreover, the policy contained within it a sue and labour
clause which provided that it was the duty of the insured and his agents to
take and to continue to take all steps as may be reasonable for the purpose of
averting or minimising loss, failing which the directors of the insurer could
decide to reject any claim brought by the insured against the defendant. On 24
December 2008, the vessel was arrested as security for unpaid ‘court dues’
owed by the owners of another vessel in relation to a pollution incident. No
connection existed between the insured and the owner of the other vessel and
the insured brought an appeal against the arrest. Nevertheless, more than two
years after the initial arrest, the vessel remained in the custody of the Egyptian
authorities. It was accepted by the defendant that the vessel was a constructive
total loss, and that prima facie there was an insured cause of loss under the
war risk policy (“capture, seizure, arrest, restraint or detainment, and the
consequences thereof”). However, it attempted to avoid liability by relying on
the above policy provisions.
Two issues were raised for consideration: whether, on the facts of the case, the
‘ordinary judicial process’ exclusion in the policy had arisen and, whether
there had been a breach of the sue and labour clause (also contained within
the policy). Leaving aside the former, as regards to which it was emphatically
held by the trial judge, based upon the evidence presented to him, that there
had been clear failures in judicial procedure such that it could not legitimately
be suggested that the provision in the policy excluding the insurer’s liability
for “cost or expense arising out of ordinary judicial process” had been satisfied,
the true significance of this case stems from certain obiter comments made by
the trial judge (Burton J) in addressing the second issue put to him for
Had there been a breach of the sue and labour clause?
In answering this question Burton J sought to address a number of sub-issues
which had arisen in relation to the sue and labour clause:

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