The claim in Delos Shipping SA & Ors v Allianz Global Corporate and Specialty SE & Ors [2024] EWHC 719 arose from what was described as “illegal parking” of the Capesize bulk carrier “WIN WIN” (“the Vessel”) within Indonesian territorial waters. For this parking infringement, the Vessel was detained for nearly a year and her Master was imprisoned and fined. During this period, the Vessel became a constructive total loss. A claim was brought against the insurers for war risks, including the risk of detention.
Background
In resisting the claim, the insurers raised four arguments: (1) the arrest was not fortuitous; (2) an exclusion clause in the policy applied; (3) there was a breach of the sue and labour clause; and (4) there was a breach of the duty of fair presentation.
In this article, we consider insurers’ first argument on fortuity. In short, the insurers allege that it should have been known that the Vessel was anchored in Indonesia’s waters and the anchorage was illegal as no clearance was obtained. As it was this voluntary conduct that led to the arrest, the insurers argued that it could not be said to be fortuitous. The judge rejected the insurers’ argument based on the evidence.
High Court’s reasoning on fortuity
The judge set out the two aspects of fortuity. First, there must be some choice by the assured which implies that a decision is made between two or more options. On the evidence, the court found that the Master was not subjectively aware that he was anchoring within Indonesian territorial waters as such, he could not have “chosen” to do so.
Second, the consequences must be such as to flow in the ordinary course of events. On the facts, the court found that area was commonly used for anchorage (without obtaining clearance) and there had been no previous occasions of arrests. The arrest of the Vessel was considered “an unheralded change in attitude for which there was no precedents” and would not be objectively considered an inevitable consequence of the “illegal parking” of the Vessel.
Conclusion
The court found that the arrest was fortuitous and found in favour of the Vessel. This decision reiterates some of what is required for a loss to be fortuitous. Parties should be mindful of the evidence required to prove fortuity. As illustrated by this case, the evidence will not only have to show the insured’s subjective state of mind at the material time, it will also have to address the ordinary consequences of the insured’s conduct.
Authors:
- Nicholas Sykes, Partner
- Thy Nguyen, Legal Director