Marine insurance

‘Phantom ships’

It is apparently all too common, particularly in the Far East, for cargo owners to be defrauded by shipowners operating ‘phantom ships’. The essence of the fraud is that the cargo owner enters into a contract of carriage with a shipowner for his goods to be transported from A to B. The goods are loaded on board the vessel, which sets sail for C: the goods are sold by the shipowner at C, and the vessel is then reported missing. The question for the Court of Appeal in Nima SARL v Deves Insurance plc [2002] EWCA Civ 1132, forthcoming in [2002] Lloyd’s Rep IR, was whether a cargo owner defrauded in this fashion has any claim against his cargo insurers under the ordinary terms of the Institute Cargo Clauses. As will be seen, the Court of Appeal has answered this question in the negative.