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Masefield AG v Amlin Corporate Member Ltd [2011] EWCA Civ 24; [2011] WLR (D) 23; LSG 10 February p18

The insured appealed against a decision that the capture of a vessel by pirates did not create an immediate total loss of the cargo. The appellant’s cargo of biodiesel was captured by Somali pirates in the Gulf of Aden. The shipowner commenced negotiations for the payment of a ransom for the release of the vessel, her crew and cargos, the value of which amounted to some $80m. The claimant served the notice of abandonment on the insurer after about four weeks but the notice was rejected. Proceedings under the policy were by agreement deemed to have been commenced on that day and some 11 days later the crew and cargos were released on payment of a ransom of $2m by the shipowner. The voyage was completed. The claimant contended that capture by pirates created an immediate actual total loss, whatever the prospects of recovery might be, and, in any event, the law should not take account of the payment of a ransom as a reason for calculating the possibilities of recovery; there was no duty on an insured under s78(4) of the Marine Insurance Act 1906 to pay a ransom; therefore, since the cargo had not been recovered by the time proceedings were deemed to have been commenced, the claimant was entitled to succeed on its claim.