Sunport Shipping Ltd and Others v Tryg-Baltica International (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Clarke |
| Judgment Date | 24 January 2003 |
| Neutral Citation | [2003] EWCA Civ 12 |
| Docket Number | Case No: A3/2002/0599 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 January 2003 |
[2003] EWCA Civ 12
Lord Justice Peter Gibson
Lord Justice Clarke and
Lord Justice Scott Baker
Case No: A3/2002/0599
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
Mr Justice Cresswell
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Stephen Morris QC and Mr Andrew Baker (instructed by Clyde & Co) for the Claimants/Appellants
Mr Michael Thomas QC and Miss Philippa Hopkins (instructed by Ince & Co) for the Defendants/Respondents
INTRODUCTION
This is an appeal from an order dated 27 February 2002, in which Cresswell J dismissed the claimants' claim with costs. He also refused permission to appeal, although I myself subsequently granted permission on 17 April, albeit with less enthusiasm on the issue of causation than on the issue of construction. The appeal raises two issues. The first is a question of construction of clause 4.1.5 of the Institute War and Strikes Clauses, Hulls – Time of 1.10.83 ('the Institute Clauses') and the second is an issue of causation.
The appellant claimants were insured under the terms of a war risk insurance which included the Institute Clauses. The defendant respondents were the underwriters and one of the 16 vessels insured was the KLEOVOULOS OF RHODES. Although the precise date on which the contract of insurance was made was not in evidence, it appears to have been in early 1998 because the insurance was to provide cover for 12 months from 15 March 1998. The vessel sailed from Colombia to Greece, where she was detained on 20 August 1998 following the discovery of cocaine in a sea chest below the waterline. Her master and crew were charged with drugs offences, although they were all acquitted in January 2000.
In the meantime the vessel was detained long enough to be deemed a constructive total loss ('CTL') under the terms of the insurance. The insured value of the vessel was agreed to be US$8,000,000. It was common ground that after her release the vessel was sold for a net sum of US$1,362,573 and that the quantum of the respondents' liability, if any, for a CTL was therefore US$6,637,427 plus interest. In these circumstances it was and remains common ground that the respondents are liable in that amount unless their liability is excluded by clause 4.1.5.
In the event the judge held that the claim failed because the loss arose from detention of the vessel by reason of loss arising from "detainment … by reason of infringement of customs regulations" and was excluded by clause 4.1.5 of the Institute Clauses. His judgment is reported as [2002] EWHC 235 (Comm) in [2002] 2 Lloyd's Rep 277, to which detailed reference should be made.
THE FACTS AND INSURANCE
The primary facts are common ground and are set out, together with the relevant terms of the policy, in paragraphs 9 to 26 of the judgment. I shall refer to only a few of them here. The judge set out some of the provisions of clauses 1, 3 and 4 of the Institute Clauses, as amended by the express terms of the policy, in paragraph 13. For present purposes it is sufficient to quote only these, which appear under the heading "This insurance is subject to English law and practice":
"1 PERILS
Subject always to the exclusions hereinafter referred to, this insurance covers loss of or damage to the Vessel caused by
…
1.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat
…
1.6 confiscation or expropriation
…
3 DETAINMENT
In the event that the Vessel shall have been the subject of capture seizure arrest restraint detainment confiscation or expropriation, and the Assured shall thereby have lost the free use and disposal of the Vessel for a continuous period of 6 months then for the purpose of ascertaining whether the Vessel is a constructive total loss the Assured shall be deemed to have been deprived of the possession of the Vessel without any likelihood of recovery.
4 EXCLUSIONS
This insurance excludes
4.1 loss damage liability or expense arising from
4.1.4 capture seizure arrest restraint detainment confiscation or expropriation by or under the order of the government or any public or local authority of the country in which the Vessel is owned or registered
4.1.5 arrest restraint detainment confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations
4.1.6 the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause
…"
On 19 August 1998 the vessel arrived in the port of Aliveri in Greece in order to discharge her cargo of coal which had been loaded in Colombia. On the next day, during an underwater inspection of the vessel required by the port authority, a large quantity (188.9 kg) of cocaine was discovered in waterproof packaging behind a grill in a sea chest on the starboard side of the vessel, well below the waterline.
The officers and crew were immediately charged with drugs offences under Greek criminal law and the vessel was detained pursuant to the provisions of the Greek Narcotics Act, no 1729 of 1987, as amended. The judge quoted part of the Report on Seizure of the vessel, which was signed by the examining magistrate, as follows (in translation):
"Aliveri … Thursday 20 th August 1998 … enquiring into the transportation of drugs, an investigation which took place on 20.8.98 in relation to the crew of the "Kleovoulos of Rhodes", a vessel sailing under the flag of Cyprus, we proceeded to take into possession –
1. the vessel above described and its certificates of seaworthiness … as these items have a bearing on the above offence, and we appoint as custodian and sequestrator the Port Authority of Aliveri …"
On 17 September 1998 the first appellant, as owner of the vessel, formally applied to the Halkida District Court Committee for the release of the vessel, but the application was dismissed by a decision published on 30 November 199On 25 January 1999 the Halkida District Court acceded to an application that the vessel be moved to Piraeus for her own safety.
On or about 25 February 1999 the appellants gave notice of abandonment to the respondents, who did not accept it. As at that date, the vessel had remained under detention (or, in the words of the Institute Clauses, detainment) for a continuous period of over six months and the claimants had not had the free use and disposal of the vessel during that six month period.
On 17 March 1999 the Public Prosecutor of the Athens Court of Appeal indicted the members of the crew with the same drugs offences. The appellants did not make a further application for the release of the vessel until 5 April 1999. However, on that date they applied to the Athens Court of Appeal for her release. As a result, the vessel was released on 13 May 1999, subject to the provision of bail in the sum of Dr 500 million. On 7 June the appellants applied for the bail to be lifted and that application was granted on 6 July 1999. The trial of the officers and crew was concluded on 10 January 2000, when they were all acquitted.
THE JUDGMENT
The judge summarised first the issues between the parties at paragraphs 27 to 30 and then the appellants' and the respondents' submissions at paragraphs 31 to 48 and 49 to 60 respectively. Finally, between paragraphs 61 and 82 he set out his own analysis and conclusions.
As already indicated, the judge held that the respondents were not liable by reason of clause 4.1.5 of the Institute Clauses. His conclusions may be summarised as follows:
i) The respondents must discharge the burden of bringing themselves within the clause. (Paragraph 62)
ii) The words "detainment … by reason of infringement of any customs or trading regulations"
a) must be construed in accordance with English law;
b) must be given a businesslike interpretation (see Panamanian Oriental Steamship Corporation v Wright (The Anita) [1971] 1 Lloyd's Rep 487 per Lord Denning MR at p 492 and see also The Aliza Glacial, unreported, 11 Mar 2002, where Toulson J held that the expression "trading regulations" in the same clause should be given a "businesslike interpretation");
c) must be given a wide meaning to the extent that they are intended to cover laws in force, not in a particular country, economic union of countries or geographical area, but in the particular country concerned, which could be anywhere in the world (see The Anita and Arnould on the Law of Marine Insurance 16 th edition volume II 1981 para 906 and volume III 1997 para 357); and
d) must be construed in a reasonable manner (see the decision of the US Court of Appeals in Blaine Richards & Co v Marine Indemnity Insurance Co [1981] AMC 1. (Paragraphs 63 and 65 to 70).
iii) The court should follow the settled meaning given to clauses of this kind in the interests of commercial certainty and should not alter or narrow the meaning to take account of subsequent events such as the development of European Community customs law. (Paragraph 68)
iv) In the light of The Anita the expression 'customs regulations' in clause 4.1.5 should not be narrowly construed as meaning rules of law concerned with duties levied on imports but as wide enough to include provisions having the force of law in the country concerned (i) as to import or export duties and licences and (ii) as to import or export of...
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