Masefield AG V Amlin Corporate Member Ltd [2010] 1 Lloyd's Law Reports 509

• Author: Ashwin Nair
• Position: Student editor, A&NZ Mar LJ 2010
• Pages: 138-143

(2010) 24 A&NZ Mar LJ

MASEFIELD AG V AMLIN CORPORATE MEMBER LTD [2010] 1 LLOYD’S

LAW REPORTS 509

Ashwin Na ir*

The UK High Court (Commercial Court) held that seizure by Somali pirates would not constitute actual

total loss or constructive total loss pursuant to the Marine Insurance Act 1906 (Imp) (‘MIA’). As the

relevant provisions are replicated in the Marine Insurance Act 1909 (Cth) and the Marine Insurance Act

1908 (NZ), the decision of the court is equally relevant to both Australia and New Zealand.

Crucially, the court also declared that ransom payme nts were congruent with public policy.

Fac ts

The claimant was the owner of two parcels of biodiesel on board the Bunga Melati Dua and had insured its

cargo under an open cover policy all risks with the defendants on ICC(A) terms.1

The policy covered loss

due to piracy. Clause 6 read:

6. In no case shall this insurance cover loss, damage o r expense caused by ...

6.2 capture, seizure, arrest, restraint or detainment (piracy excepted), and the consequences thereof or any

attempt thereat.

Further, clause 13 provided:

13. No claim for Constructive Total Loss shall be recoverable hereunder unless the subject-matter insured is

reasonably abandoned either on account of its actual loss appearing to be unavoidable or because the cost of

recovering, reconditioning and forwarding the subject-matter to the destination to which it is insured would

exceed its value on arrival.2

This clause generally replicates the provisions in s 60(1) of the MIA3 but it importantly excludes the

operation of s 60(2)(i)(a)4 which provides for constructive total loss (‘CTL’) where the assured is deprived

of its property and it is unlikely that it can recover that property.5

Pirates seized the vessel on 19 August 2008 in the Gulf of Aden while it was on its way from Malaysia to

Rotterdam and brought it to Somali waters off the town o f Eyl.6 During the course of the capture, one of the

crew members was sadly killed and this prevented military and diplomatic efforts to secure the release of

the vessel.7 The shipowners, therefore, entered into negotiations with the pirates soon after seizure

following a ranso m demand in excess of US$2 million for the release of the vessel, its crew and cargo.8

While negotiations were underway, on 18 September 2008, the claimant served a notice of abandonment on

the defendant insurers. The defendant declined the notice of abandonment but the parties agreed that

proceedings should be deemed to have commenced on the date of issue. Within six weeks of the seizure,

and about 10 days after the date of the notice of abandonment, a ransom was paid and the vessel, its crew

and cargo were released.9

The claimant had seemi ngly taken no part in the negotiations or payment.

* Student editor, A&NZ Mar LJ 2010.

1 Masefield AG v Amlin Corporate Member Ltd [2010] EWHC 280, [1].

2 Ibid [6].

3 See also Marine Insurance Act 1909 (Cth) s 66(1); Marine Insurance Act 1908 (NZ) s 60(1).

4 See also Marine Insurance Act 1909 (Cth) s 66(2)(a)(i); Marine Insurance Act 1908 (NZ) s 60(2)(i)(a).

5 Masefield AG v Amlin Corporate Member Ltd [2010] EWHC 280, [8].

6 Ibid [1] and [14].

7 Ibid [9].

8 Ibid [2] and [14].

9 Ibid [2].

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