On a trial of preliminary issues on the interpretation of cl.4.1.5, the assureds raised three arguments. First, insurers had to prove privity or complicity on the part of either the insured owners or their servants or agents in an infringement of customs regulations. Factually, it was the assureds’ contention, to be raised at trial, that the master and second officer were in fact innocent and that the drugs had been attached to the vessel by an unknown third party. Secondly, cl.4.1.5 constituted an exclusion only of losses that would otherwise be covered under cl.1.2 or cl.1.6 of the policy, which contemplate a deprivation of possession. The exclusion could consequently be avoided if the claim, even if falling within either of those clauses, could also be brought under any other policy provision. On the facts, the assureds contended it could rely, inter alia, on cover against persons acting maliciously. Thirdly, cl.4.1.5 applied only if an infringement of customs regulations was at least reasonably arguably a ground for the detainment under the relevant local law. In this connection, the assureds contended that the continued detention was not only unjustifiable under local law but in fact politically motivated or an act of malice.

Decision: The first two arguments were rejected. The third did not have to be decided.

Held: (1) A requirement of complicity of the assured or its agents in a customs regulation infringement would be rejected for the following reasons: (a) it was neither suggested by the wording of the clause nor necessary to render it workable; (b) liability in the absence of such complicity had been accepted by insurers in The Kleovoulos of