Subrogation: risk allocation

The Supreme Court in Herculito Maritime Ltd v Gunvor International BV [2024] UKSC 2; [2024] 1 Lloyd's Rep 85 has affirmed the judgment of the Court of Appeal, [2022] 1 Lloyd's Rep 375, which itself upheld the first instance judgment of Sir Nigel Teare, [2021] 1 Lloyd's Rep 150. The Supreme Court decision is now the leading authority on issues arising out of the insurance arrangements in a charterparty.

The main questions were: had the shipowners agreed to grant immunity to the charterers for general average contributions by accepting an obligation to insure against piracy risks with the charterers paying the premiums; and if there was such immunity, did it extend to the holders of the bills of lading? The decision potentially marks something of a shift in the principles thought to be applicable to subrogation claims in charterparty cases.