Office: +44 203 968 0500
24/7 Emergency Response: +44 7887 710 950
Select Page

The Court of Appeal rules that standard war risks policies provide no cover for Vessels involved in drug smuggling

On 13 August 2007, the “B Atlantic” had completed loading a cargo of coal in Venezuela when, during a customary underwater survey, around 130kg of cocaine was discovered strapped to the vessel’s hull.  The vessel was detained and subsequently abandoned by her Owners.  The Owners brought a claim under their war risks insurance policy for a constructive total loss and for sue & labour expenses.

At first instance, Mr Justice Flaux upheld the claim, holding that the detention of the vessel was caused by an insured peril, malicious acts of the drugs smugglers.  He rejected the insurers’ principal defence that the standard war risk exclusion for ‘detainment by reason of infringement of customs regulations’ (clause 4.1.5 of the Institute War & Strikes Clauses) applied to a situation where the ‘infringement’ relied on (the attempted smuggling of drugs by their attachment to the vessel’s hull) was no more than the very manifestation of the third parties’ insured malicious acts.

On 1 August 2016 the Court of Appeal handed down judgment unanimously overturning Flaux J.  The Court of Appeal held that the loss was caused by both the concealment of the drugs and the detention.  The Court also held that clause 4.1.5 should not be read as being subject to the “mere manifestation” limitation imposed by Flaux J. The Court of Appeal decision reconfirms that smuggling of drugs or contraband is not a war risk.

Atlasnavios v. Navigators Insurance (the “B Atlantic”) [2016] EWCA Civ 808, Court of Appeal.

BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please follow us on social media by clicking below.

Other Recent Blogs

  • Tendering NOR does wirelessinclude email | BDM Blog | BDM Law
    November 21, 2022

    Tendering NOR – does “wireless” include email?

    In a recent arbitration under the LMAA Small Claims Procedure (1) the Tribunal had to determine the validity of a Notice of Readiness (“NOR”) which had been tendered by email. The NOR is one of the most important documents for ship owners because it acts as a trigger to [...]

    Read more >
  • Delivery without original bills – an example of what can go wrong | BDM Blog | BDM Law
    November 7, 2022

    Delivery without original bills – an example of what can go wrong

    Readers of our blog may recall an article we released back in November 2020 in which we highlighted the risks that a ship owner is required to undertake when accepting a letter of indemnity (LOI) in exchange for releasing the cargo without the production of an original bill [...]

    Read more >
  • Supreme Court gives permission to appeal in The Polar | BDM Blog | BDM Law
    October 31, 2022

    Supreme Court gives permission to appeal in “The Polar”

    We previously reported on the High Court and Court of Appeal’s decisions in one of the last Somali ransom cases still in the Court system. The Court of Appeal held that a war risks provision in a charterparty did not constitute an agreement that the owners would not claim [...]

    Read more >
+44 203 968 0500
+44 7887 710 950