Page 37 - The Insurance Times August 2024

Admiralty Judge Mr. Justice David Steel made considerable opportunity of regaining possession (as was the case for the
reference to the general situation of piracy in Somalia both "Bunga Melati Dua").
in relation to "Bunga Melati Dua" as well as other vessel
seizures, taking into consideration past cases as well as The judge commented as follows: "The short answer, in
market intelligence and the defendants’ expert evidence. my judgment, is that an assured is not irretrievably deprived
Steel J. reported that the trend showed that the property of property if it is legally and physically possible to recover
was likely to be released, probably within short order, after it (and even if such recovery can only be achieved by
a ransom payment. In fact the "Bunga Melati Dua", her disproportionate effort and expense)."
crew and cargo were released less than 6 weeks after the
initial seizure of the vessel (and only 11 days after the On appeal, the claimant continued its argument
claimants had submitted their notice of abandonment). that
(i) capture by pirates created an immediate ATL, whatever
In relation to the ransom, Mr Justice Steel noted that
the prospects of recovery might be, and
ransom payments were not illegal under English law. So far
(ii) the law would not or could not take into account the
as being contrary to public policy argument, he referred to
‘Fender v St John Mildmay’ (1938) quoting Lord Atkin: "the payment of a ransom as a relevant and legitimate
reason for calculating the possibility of recovery of the
doctrine should only be invoked in clear cases in which the
cargo.
harm to the public is substantially incontestable and does
not depend upon the idiosyncratic inferences of a few judicial
minds". Lord Justice Rix, giving judgment for the Court of Appeal,
disagreed, holding that:
... piratical seizure in the circumstances of this case,
The court was "wholly unpersuaded" that payment of
where there was not only a chance, but a strong
ransom was contrary to public policy. Although ransom
likelihood, that payment of a ransom of a comparatively
payments made further hijackings more likely, there were
small sum, relative to the value of the vessel and her
few other alternatives and if the payment of ransom was
contrary to public policy, the well-established ‘Kidnap and cargo, would secure recovery of both, was not an actual
total loss”.
Ransom’ policies sold in the London insurance market would,
in effect, be unenforceable. It was further held that it was not an irretrievable
deprivation of property, but rather a wait and see
As a consequence, the claimants failed in their claim for situation.
actual and constructive total loss. It laid down fundamental guidance as to the
circumstances in which public policy could be invoked
To succeed, a claimant needs to show they were by a court.
"irretrievably deprived" of the cargo. In deciding against
cargo claimants, Steel J. concluded the cargo owners were In citing the guidance established by the Court in Fender,
not irretrievably deprived of the cargo because there was the Court of Appeal reiterated that, when determining
reasonable hope that the cargo could be recovered. Further, public policy:
although the cargo owners lost possession, they retained ... the doctrine should only be invoked in clear cases in
title to their property and the fact that negotiations started which the harm to the public is substantially
so soon after the seizure of the vessel and cargo, supported incontestable and does not depend upon the
the proposition that the cargo was neither irretrievably lost idiosyncratic inferences of a few judicial minds’.
nor that a total loss was inevitable.
Rix LJ also noted that Parliament had intervened by way of
Furthermore, ‘Dean v Hornby’ case was not applicable. repeal of the Ransom Act 1782, which in any event only
Although viewed in isolation, that decision might be seen outlawed the payment of a ransom in respect of British ships
to support the claimants’ argument. The post-seizure events taken by the King’s enemies. Notwithstanding legislative
in that case were protracted and complicated, and the ship intervention, the Court of Appeal noted, as had Steel J, and
was never restored to her owners, nor did they have the by way of reference to the decision in Royal Boskalis

34 August 2024 The Insurance Times