The WIN WIN - Court of Appeal agrees US$37.5 million insurance payout to vessel interests

This article was co-authored by Kat Velasco Boyer, Trainee Solicitor.

Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors [30.07.2025]

This Court of Appeal decision provides insurers with clarity and caution in highlighting the importance of carefully worded exclusion clauses, and reinforcing the position around the duty of fair presentation under the Insurance Act 2015.

Background

In February 2019, the Indonesian navy arrested a number of vessels, including the WIN WIN, for anchoring without permission inside Indonesian territorial waters, just outside the port limits of Singapore.

Following the prolonged detention of the WIN WIN, and the vessel’s subsequent designation as a constructive total loss (CTL) under a war risks policy, the vessel interests were successful in bringing a claim against insurers in the High Court.

Court of Appeal decision

The insurers appealed the decision at first instance and raised the following arguments.

That the exclusions under the American Institute Hull War Risks and Strikes Clauses (1977) (the AIHC) exclude loss caused by, resulting from or incurred as a consequence of “arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments not arising from actual or impending hostilities”, and that the policy wording should be interpreted widely to cover instances of detention as a result of a sudden change in government policy.
Notwithstanding the exclusion outlined above, the policy was void as the vessel interests had breached the duty of fair presentation under the Insurance Act 2015 by failing to disclose that the company director of the registered owner of the vessel was the subject of criminal charges in Greece.

The three-justice panel at the Court of Appeal rejected the insurers’ arguments and upheld the Judge’s decision at first instance.

The Court of Appeal held that the policy wording did not exclude instances of vessel detention as a result of a sudden change in government policy.

It further held that the detention of the WIN WIN was “completely unconnected” with the import of goods (customs regulations), the protection of health (quarantine regulations) or similar, and the exclusion clause did not therefore avail the insurers. In fact, on this point, Males LJ made clear that if it was the intention of the drafters to exclude detainment in accordance with the wider interpretation of the AIHC clause, “they expressed themselves in an extraordinarily obscure way”.

As to the second point, Males LJ concluded that the High Court correctly held at first instance that there was no breach of the duty of fair presentation and entitlement for insurers to reject liability.

The Court of Appeal confirmed that the director in question was not a part of the insured’s senior management nor an individual who played a significant role in the making of decisions about how the insured’s activities were carried out.

Accordingly, the Court of Appeal upheld the decision at first instance on the basis that it was irrelevant as to whether the vessel interests actually knew about, ought to have known about, or disclosed the criminal implications of the director in question. The director was not deemed to come within “senior management” as per the definition provided for in Section 4(3) of the Insurance Act 2015. Therefore, insurers could not rely on the breach of the duty of fair presentation for an individual that did not come within the 2015 Act.

Consequently, the appeal was dismissed and insurers lost their bid to avoid the US$37.5 million detention payout, resulting in somewhat of a win-win for vessel interests.

Comment

The Court of Appeal ruling acts as a salient reminder for insurers to carefully review their policy terms and interpret any exclusion clauses within the context of the policy and the provisions of the 2015 Act as a whole.

The 2015 Act has, in recent months, been considered on a number of occasions by the courts who are keen to uphold the new provisions of proportional remedies that the 2015 Act brought in.

The Marine Insurance Act 1906 was seen as draconian and arbitrary, providing no requirement for a link to exist between the loss and the non-disclosure or misrepresentation. The Insurance At 2015 Act changed that landscape and insurers now need to appreciate that a nuclear “it’s not covered” stance no longer cuts it.