Moral hazard, impecuniosity and war risks

The lengthy judgment of Colman J in North Star Shipping Ltd v Sphere Drake Insurance plc [2005] EWHC 665 (Comm), forthcoming in [2006] Lloyd’s Rep IR, is devoted to two issues: did the assured deliberately scuttle its own vessel; and did the insurers have the right to avoid the policy by reason of the failure by the assured to disclose a variety of facts ranging from outstanding criminal charges, overvaluation of the insured vessel and the assured’s own impecuniosity? Colman J held that the underwriters were entitled to rely on both the scuttling and good faith defences.