AMLIN CORPORATE MEMBER LTD AND OTHERS V ORIENTAL ASSURANCE CORPORATION

[2014] EWCA Civ 1135, Court of Appeal, Lord Dyson MR, Lord Justice Davis and Lady Justice Gloster, 7 August 2014

Reinsurance - Marine policy - Warranty in reinsurance against leaving port or adopting intended route where a typhoon or storm warning was in force - Construction of warranty - Whether warranty broken

Amlin were the reinsurers of Oriental under a policy governed by English law and subject to exclusive English jurisdiction. Oriental had insured Sulpicio, a Philippine shipping company, in respect of liability for cargo claims. The reinsurance contained a warranty under which an insured vessel was not to sail out of sheltered port when there was a typhoon or storm warning at that port, nor when the destination or intended route may be within the possible path of the typhoon or storm announced at the port of sailing, port of destination or any intervening port. The original policy contained a warranty in similar terms. The vessel Princess of the Stars was lost when she sailed into the eye of a typhoon. Amlin sought a declaration that the departure of the vessel constituted a breach of warranty. At the time of the proceedings no claim had been brought against Oriental by Sulpicio, but earlier the Court of Appeal had refused a stay of Amlin's action even though it was pre-emptive ([2013] Lloyd's Rep IR 131). The Court of Appeal, upholding the first instance judgment of Field J, held that the warranty was to be construed as applying where there was a typhoon warning even though the warning did not advise against setting sail. On that basis there was breach of warranty. There was a further breach of warranty in that there was a typhoon warning on the intended route, that route being the usual route which was intended to be taken subject only to the possibility of a change of course if the weather was bad.