The dispute concerned the detention of the insured vessel (the Win Win) by the Indonesian navy in February 2019. The vessel had anchored unlawfully within Indonesian territorial waters off Singapore. Although the breach was relatively minor, the Indonesian authorities adopted a strict approach: they detained the vessel for more than a year and prosecuted the master, who was subsequently convicted under Indonesian shipping law.

The vessel was insured against war and political risks with agreed values of US$25 million (Hull and Machinery), US$6.25 million (Increased Value) and US$6.25 million (Disbursements and Additional Owners’ Interest). The policy incorporated the American Institute Hull War Risks and Strikes Clauses (1/12/77) with the Addendum dated (1/4/84). After more than six months of detention, the vessel qualified as a constructive total loss (“CTL”) under the Detainment Clause. The assured sought indemnity from insurers.

The insurers rejected the claim, relying on multiple grounds (absence of fortuity, operation of policy exclusions, breach of the duty to sue and labour, and unfair presentation of the risk). All of these arguments were dismissed at first instance. On appeal, the insurers pursued two of these points: (i) misconstruction of the policy’s exclusion clause, cl.1(e), which excluded “any loss, damage or expense caused by, resulting from, or incurred as a consequence of … Arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments not arising from actual or impending hostilities …” and (ii) misapplication of the IA 2015 provisions on fair presentation of the risk.

Decision: Appeal dismissed. The assured’s claim for indemnity was successful.

Held: (1) The starting point in construing the exclusion clause was to ascertain the meaning of the phrase “customs or quarantine regulations”. Once that meaning was established, the court could address whether the regulation pursuant to which the vessel