Lloyd's Maritime and Commercial Law Quarterly
ENGLISH MARINE INSURANCE AND GENERAL AVERAGE LAW
James Davey*
CASES
96. Amlin Corporate Member Ltd & Ors v Oriental Assurance Corp (The Princess of the Stars) 1
Reinsurance—express “Typhoon” warranty—interpretation
The claimant reinsured the defendant insurers in respect of the cargo losses of a Philippines shipping company. The reinsurance policy was subject to English law and jurisdiction and contained an express “Typhoon warranty”: “Notwithstanding anything contained in this policy or clauses attached hereto, it is expressly warranted that the carrying vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port nor when her 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 point. Violation of this warranty shall render this policy void.”
In 2008, the Princess of the Stars was lost in Typhoon Frank with the death of most of its crew and passengers and loss of a substantial amount of insured cargo. The vessel had left port despite a “severe weather warning” active at the time of sailing and for the area through which the vessel was scheduled to sail. Sailing was not expressly prohibited by the Coast Guard Circular then in force.
Field J2 held that the “Typhoon warranty” in the reinsurance policy was breached and the contract was therefore “avoided” (as per the express terms of the contract). The claimant appealed.
Decision: The reinsurer was not liable by virtue of a breach of warranty. Appeal dismissed.
Held: (1) Any argument that the Typhoon warranty in the reinsurance policy should be interpreted so as to ensure consistency with the warranty in the underlying insurance agreement(s) failed in the absence of detailed evidence as to the law of the Philippines.
(2) The construction of the Typhoon warranty was to be made in line with well-established principles of interpretation, and this included consideration of the commercial purpose of the warranty and the avoidance of commercial absurdity.
* Professor of Insurance & Commercial Law, University of Southampton.
1. [2014] EWCA Civ 1135; [2014] 2 Lloyd’s Rep 561; [2014] Lloyd’s Rep IR 645 (Gloster LJ, Lord Dyson MR and Davis LJ agreeing).
2. [2013] EWHC 2380 (Comm); [2014] 1 All ER (Comm) 415; [2013] 2 Lloyd’s Rep 523; [2013] Lloyd’s Rep IR 644, noted at [2014] IMCLY § 142.
ENGLISH MARINE INSURANCE AND GENERAL AVERAGE LAW
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