Lloyd's Maritime and Commercial Law Quarterly
JOINT INSURANCE ISSUES IN THE OCEAN VICTORY: THE ROADS NOT TAKEN1
Elizabeth Blackburn* and Andrew Dinsmore†
This paper analyses the obiter decision on the joint insurance issues in The Ocean Victory, with a particular focus on the terms to be implied into the co-insureds’ underlying contract. The paper then deals with three points which were not argued before the Supreme Court, namely (i) the demise charterers’ potential claims based on possessory title; (ii) the possible application of the “transferred loss principle” as developed in The Albazero, Linden Gardens v Lenesta, Darlington v Wiltshier and Alfred McAlpine v Panatown; and (iii) the possible application of the “performance interest principle” as initially developed by Lord Griffiths as his “broader ground” in Linden Gardens, and discussed in Panatown and Swynson v Lowick Rose. The paper concludes that, if such facts arise in future, insurers should advance their claim on the basis of the subrogated actions that arise as a result of the demise charterers’ possessory title.
Introduction
The Ocean Victory
2 is one of a number of interesting Supreme Court judgments to effect shipping and insurance recently.3 The dispute was as follows:
- (i) Demise charterers chartered the vessel on amended Barecon 89 terms from their related head owners on terms containing a safe port warranty.
- (ii) The demise charterer then time chartered the vessel to Sinochart, who in turn sub-chartered her to Daiichi for a time charter trip. The subsequent charters contained a similar safe port warranty.
- (iii) Daiichi gave instructions for the vessel to load an iron ore cargo in South Africa and to discharge it at the port of Kashima in Japan.
* QC.
† Both authors are Barristers of St Philips Stone, London, the international and domestic commercial dispute resolution team of St Philips Chambers.
The following abbreviations are used:
Chitty: HG Beale et al (eds), Chitty on Contracts, 32nd edn (Sweet & Maxwell, London, 2015);
MacGillivray: MacGillivray on Insurance Law, 13th edn (Sweet & Maxwell, London, 2017);
Palmer: Norman Palmer, Palmer on Bailment, 3rd edn (Sweet & Maxwell, 2009).
1. Robert Frost “The Road Not Taken” in the Mountain Interval collection (1916).
2. Gard Marine and Energy Ltd v China National Chartering Co (The Ocean Victory) [2017] UKSC 35; [2017] 1 Lloyd’s Rep 521; [2017] 1 WLR 1793.
3. J Hjalmarsson describes it as “the most important shipping case of the year”: (2017) LLID 4. For a detailed discussion of the position prior to The Ocean Victory, see Ward, “Joint names insurance and contracts to insure: untangling the threads” [2009] LMCLQ 239.
Joint insurance issues
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