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Lloyd's Maritime and Commercial Law Quarterly

JOINT INSURANCE ISSUES IN 
THE OCEAN VICTORY: THE ROADS NOT TAKEN1

Elizabeth Blackburn* and Andrew Dinsmore

This paper analyses the obiter decision on the joint insurance issues in The Ocean Victory, with a particular focus on the terms to be implied into the co-insureds’ underlying contract. The paper then deals with three points which were not argued before the Supreme Court, namely (i) the demise charterers’ potential claims based on possessory title; (ii) the possible application of the “transferred loss principle” as developed in The Albazero, Linden Gardens v Lenesta, Darlington v Wiltshier and Alfred McAlpine v Panatown; and (iii) the possible application of the “performance interest principle” as initially developed by Lord Griffiths as his “broader ground” in Linden Gardens, and discussed in Panatown and Swynson v Lowick Rose. The paper concludes that, if such facts arise in future, insurers should advance their claim on the basis of the subrogated actions that arise as a result of the demise charterers’ possessory title.

Introduction

The Ocean Victory 2 is one of a number of interesting Supreme Court judgments to effect shipping and insurance recently.3 The dispute was as follows:
  • (i) Demise charterers chartered the vessel on amended Barecon 89 terms from their related head owners on terms containing a safe port warranty.
  • (ii) The demise charterer then time chartered the vessel to Sinochart, who in turn sub-chartered her to Daiichi for a time charter trip. The subsequent charters contained a similar safe port warranty.
  • (iii) Daiichi gave instructions for the vessel to load an iron ore cargo in South Africa and to discharge it at the port of Kashima in Japan.


Joint insurance issues

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