ABN AMRO BANK NV V ROYAL & SUN ALLIANCE INSURANCE PLC AND OTHERS

[2021] EWCA Civ 1789, Court of Appeal, Sir Geoffrey Vos MR, Lady Justice Andrews and Lord Justice Edis

Insurance (marine) – Misrepresentation and non-disclosure – Construction – Meaning of transaction premium clause – Effect of non-avoidance clause – Estoppel

The claimant (the Bank) was insured under a marine policy placed with fourteen subscribing underwriters led by Royal & Sun Alliance Insurance plc (RSA) for the period 1 February 2016 to 31 January 2017, a renewal from the previous year. The policy was written on Institute Cargo Clauses A terms covering physical loss or damage to cargo. There was a transaction premium clause (TPC) providing coverage for financial losses suffered from the resale of cargo held as collateral for financing provided by the Bank. The policy also included a non-avoidance clause (NAC) under which the policy could be avoided and claims could be refused only for fraud, a due diligence clause imposing an obligation on the Bank to take reasonable steps in good faith to prevent clams and a suing and labouring clause. Two of the borrowers became insolvent, and the goods held by way of security proved to be substandard and of little resale value. The Bank sought to recover its losses under the TPC. The underwriters denied liability under the policy.