The insured vessel (Win Win) was detained by the Indonesian authorities inside Indonesian territorial waters in February 2019 when she was at anchorage off the island of Bintan without the approval of the authorities. The infringement was one which might ordinarily lead to a fine but, instead, the vessel was detained by Indonesian authorities for more than a year while her master was prosecuted, eventually receiving a suspended sentence of seven months’ imprisonment and a fine of around US$7,000.

The vessel was insured under a war risk policy on the American Institute Hull War Risks and Strikes Clauses (1977). The assured claimed that the vessel became a constructive total loss under the policy’s Detainment Clause and sought to recover the insured value of US$27.5 million. It was common ground that the vessel was a constructive total loss, but the insurers denied the claim on several grounds. It was argued by the insurer that: (i) the detainment was not fortuitous since the master and/or one or more of the claimants knew or should have known that the vessel had anchored in territorial waters and the arrest was the consequence of their voluntary conduct in so doing; (ii) the claim fell within the exclusion to the policy; (iii) the delay was materially caused by the claimants’ unreasonable conduct in breach of their duty to sue and labour; and (iv) they were entitled to avoid the policy for material non-disclosure of the charges against Mr Bairactaris (the director of one of the assureds).

The assured asserted that, if the indemnity claim succeeded, they were entitled to damages under the Insurance Act 2015, s.13A by reason of the insurers’ failure to pay the insurance proceeds within a reasonable time.

Decision: The assured’s claim for indemnity was successful but the damages claim for late payment of the claim was rejected.