Spinney's (1948) Ltd v Royal Insurance Company Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 12 July 1979 |
| Date | 12 July 1979 |
| Court | Queen's Bench Division |
States as international persons — In general — Sovereignty and independence — Conduct of foreign relations — Conclusiveness of statements of the Executive — Whether Executive recognized Lebanese conflict as constituting a civil war — Insurance contract — Exemption from liability for loss caused by civil war — Dispute between parties to contract — Whether definition of civil war to be ascertained from Executive certificate — Whether Executive certificate solely relevant in situation where State involved in sovereign diplomatic relations — The law of England
War and neutrality — War in general — Definition and technical meaning of war — Civil war — Proceedings on insurance contract — Exemption from liability for loss caused by civil war — Whether events in the Lebanon constituted ‘civil war’— Whether same meaning to be attributed to phrase in contract as in public international law — Practice of seeking executive certificate — Whether appropriate in private contractual dispute — Whether solely relevant to situation where United Kingdom's sovereign diplomatic relations involved — The law of England
International law in general — Relation to municipal law — Proceedings on insurance contract — Exemption for loss caused by civil war — Whether ‘civil war’ bears same meaning in contractual context as in public international law — Practice of seeking executive certification of recognition of civil war — Whether appropriate where international relations of United Kingdom not involved — Conflict in Lebanon — The law of England
Summary: The facts:—The plaintiffs' property in Beirut was damaged during disturbances and looting in January 1976. They claimed under their insurance policies with the defendants. The latter sought to rely on the exemption clauses in the policies for loss caused, inter alia, by civil war. The plaintiffs contended that the phrase ‘civil war’ should be accorded the meaning it bore under public international law and that the Court should request a certificate from the Foreign Office as to whether or not the United Kingdom recognized the events in the Lebanon as a civil war.
Held:—At the time the loss was incurred the Lebanese situation had not amounted to civil war within the appropriate meaning to be attributed to that phrase in the present context. The words ‘civil war’ were to be given their ordinary business meaning which was not necessarily the same as the meaning they bore under public international law. The phrase was to be interpreted in the light of the contractual context in which it appeared. Although there were situations in which the practice of the English courts was to seek, and treat as conclusive, an executive certificate, this practice was adopted principally in relation to situations where the foreign relations of the United Kingdom were involved. It would be inappropriate in the present case to require the Secretary of State to ascertain the meaning of the words as used in the contract. The situation in Lebanon was not one of ‘war’, ‘invasion’, ‘hostilities’ or ‘rebellion’. While it was difficult to determine whether the entry of Syrian and Palestinian troops into Lebanon constituted an invasion, it was unnecessary to decide the point as there was no causal connection between their intervention and the losses suffered by the plaintiffs. Nevertheless, the situation in Lebanon was one of ‘usurped power’ or ‘civil commotion’ within the generally accepted meaning of that term, and the defendants were therefore exempt from liability on that basis.
Mr. Justice MUSTILL: During 1975, the plaintiffs entered into eight contracts of insurance with the defendants in respect of their property in Beirut.
Between them, the three plaintiffs owned and carried on business at a tower block in Jnah, Ramlet el Baida, a shop in Anis Assaf Building, Rue Verdun, and another shop in Khadijeh El Fadel Building, Rue Chouran. 1 will call these premises the Spinney's Centre, the Rue Verdun shop, and the Pigeon Rocks shop, respectively.
The first plaintiffs, Spinney's (1948) Ltd., carried on business as retail grocers and household merchants at the Rue Verdun and Pigeon Rocks shops. These were quite small concerns, employing a total of about 20 people. In addition, the first plaintiffs operated a substantial wholesale business from Spinney's Centre, where they occupied depots and cold stores in the basements, and offices on two floors of the tower block.
The second plaintiffs, Spinney's Centres S.A.L., operated a supermarket and department store in the tower block, where they also occupied storage space and offices.
The third plaintiffs were the owners of the building at Spinney's Centre, and occupied offices on the upper floors.
For several months before January, 1976, the Republic of Lebanon, and in particular the capital city of Beirut, had been suffering from internal political strife accompanied by violence and destruction on a large scale. On Jan. 18 and 19, 1976, a group or groups of persons broke into the Rue Verdun shop and looted it. The Pigeon Rocks shop and the Spinney's Centre suffered the same fate on Jan. 21, and Jan. 22 to 23, 1976, respectively. The wholesale and retail businesses were stripped of all their stocks. Virtually the whole of the furniture and fittings were taken away, and most of what remained was smashed. The internal structures of the buildings were damaged—in the case of the basement at Spinney's Centre, by fire. The external structure of the buildings also suffered damage, although on a small scale. As a result of these events, the plaintiffs suffered financial loss which they estimate at approximately £1,400,000. They now seek recovery of their losses by virtue of the various contracts of insurance.
The insurances covered the following interests:
(i) The first plaintiffs were covered in respect of:
(a) The contents of the three premises, except stock-in-trade and stocks in cold store: against fire, riot, explosion and malicious act.
(b) Stock-in-trade: against fire, riot, explosion and malicious act.
(c) Stocks in cold store: against all risks.
(d) For motor vehicles: against various perils, including theft, fire and malicious act.
(ii) The first and second plaintiffs were covered in respect of loss of moneys: against all risks.
(iii) The second plaintiffs were covered in respect of:
(a) The contents, stock-in-trade and cold store stocks at Spinney's Centre: against fire, riot, explosion, and malicious act.
(b) Consequential loss resulting from fire, explosion, riot or malicious act.
(iv) The third plaintiffs were insured in respect of the building comprising Spinney's Centre against: fire, riot, explosion, and malicious act.
The defendants do not deny that prima facie the losses fall within the cover thus conferred, but maintain that they are relieved from liability by one or more of the exceptions contained in the policy. Although the issues raised by this defence are broadly the same in relation to each policy, there are differences in the wording of the various exceptions. The position is complicated, but is very clearly summarised in a schedule presented by the plaintiffs. Although it will be necessary in due course to refer to each policy individually (or, more accurately, to each contract, since certain of the insurances were never made the subject of formal documents, but were effected by means of informal agreements to endorse the cover on to existing policies), it is convenient for the time being to concentrate on the contracts under which the major part of the claim is brought. Fortunately, these are all in the same terms. I will refer to them collectively as ‘the policy’.
The policy is in essence a standard form of fire insurance, to which the remainder of the cover has been added by printed endorsements. The basic fire insurance is made subject, by condition 6, to a series of war and civil strife exceptions. These are different from the exceptions imposed upon the additional cover conferred by the endorsements around which the dispute principally revolves. Unfortunately, condition 6 cannot be left out of account altogether, since there was some fire damage at the Spinney's Centre. 1 will, however, postpone discussion of this comparatively minor issue and will for the time being concentrate on the three endorsements by virtue of which was added the cover against riot, explosions and malicious damage. They were in the following terms:
… It is hereby agreed and declared that notwithstanding anything in the within written Policy contained to the contrary the insurance under this Policy shall extend to cover Riot and Strike damage which for the purpose of this endorsement shall mean (subject always to the Special Conditions hereinafter contained)
Loss of or damage to the property insured directly caused by:
1. The act of any person taking part together with others in any disturbance of the public peace (whether in connection with a strike or lock-out or not) not being an occurrence mentioned in Condition 6 of the Special Conditions hereof.
2. The action of any lawfully constituted authority in suppressing or attempting to suppress any such disturbance or in minimising the consequences of any such disturbance.
…
For the purposes of this Endorsement but not otherwise there shall be substituted for the respectively numbered Conditions of the Policy the following:
…
Condition 6.
This insurance does not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely:
(a) War, invasion, act of foreign enemy, hostilities or warlike operations (whether war be declared or not), civil war.
(b) Mutiny, civil commotion assuming the proportions of or amounting to a popular rising, military rising...
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