Marine insurance—Actual or constructive total loss of cargo—Piracy

Queen’s Bench Division, Commercial Court, David Steel J,
18 February 2010

The seizure of a vessel by pirates does not of itself constitute an actual total loss (ATL) or a constructive total loss (CTL) for the purposes of ss 57(1) and 60(1) of the Marine Insurance Act 1906 (MI 1906), although the issue is fact-sensitive.

Sir Sydney Kentridge Q.C. & Andrew Henshaw (instructed by Arbis LLP) for the claimant, Peter MacDonald Eggers & Sarah Cowey (instructed by Waltons & Morse LLP) for the defendant

In August 2008, a vessel was seized by Somali pirates in the Gulf of Aden. The claimant was the owner of two parcels of bio-diesel which had been shipped on board the vessel. The defendant was the insurer of the cargo under an open cover contract covering, inter alia, both piracy and theft. Shortly after the seizure, negotiations between the pirates and the owners began.

On 18 September, during the course of the negotiations,