HERCULITO MARITIME LTD AND OTHERS V GUNVOR INTERNATIONAL BV AND OTHERS (THE “POLAR”)

[2021] EWCA Civ 1828, Court of Appeal (Civil Division), Lord Justice Peter Jackson, Lord Justice Males and Sir Patrick Elias, 1 December 2021

General average bond – General average guarantee – Recovery under general average bond – Incorporation of charterparty terms into bill of lading – Whether bill of lading holders able to rely on charterparty insurance terms to refuse payment under general average bond – Contracts – Bill of lading – Charterparty – Charterparty containing agreement as to insurance – Kidnap and ransom insurance – War risks insurance – Shipowner having paid ransom to pirates

The mv Polar had been seized and held by pirates in the Gulf of Aden from October 2010 to August 2011. Upon arrival in Singapore, general average was declared. Based on the adjustment, the shipowners claimed under the general average bond from cargo owners and the guarantee from cargo underwriters. The cargo interests argued that the shipowners could not recover the ransom from them, because under the charterparty the shipowner must take out kidnap and ransom (K&R) insurance and war risks insurance, the premium for which was to be paid by charterers up to a capped amount, and those charterparty provisions had been incorporated into the cargo interests’ bills of lading.