'Brillante Virtuoso' Held To Have Been A Constructive Total Loss

The High Court recently held that the "Brillante Virtuoso" (the "Vessel") was a constructive total loss ("CTL") following an attack by pirates in July 20111. Mr Justice Flaux made important key findings in the CTL claim, which totalled over US$80m. This case has been closely followed and widely discussed by the London insurance market.

The claim is pursued by the Owners (Suez Fortune Investments Ltd) and their Bank (Piraeus Bank AE). The Defendants in the case are a panel of ten Lloyd's of London insurers led by Talbot Underwriting.

The Vessel had hull insurance for US$55m, with US$22m of increased value cover on top. She was sailing from the Ukraine to China with a cargo of fuel oil when the Vessel was boarded by pirates off Aden who approached the Vessel under the guise of being the port authorities. The armed gang overpowered the crew, ordered the master to sail to Somalia and after the engine stopped and could not be restarted set off an explosion that engulfed the engine room and accommodation.

Matters at issue

The trial has been split into two stages. Judgment in relation to the first stage of the trial was handed down by Mr Justice Flaux on Thursday 15 January. The main issue in relation to the first stage of the trial Claimants' case was whether the Vessel had been a CTL. The further issue arose of whether, by selling the Vessel, the owners had acted inconsistently with a continued intention to abandon the Vessel to the insurers and had thereby lost the right to claim for a CTL. The defences of the insurers have been reserved for determination at a second stage of the trial.

Mr Justice Flaux's rulings

In relation to this first stage of the trial, Mr Justice Flaux has made the following crucial rulings in favour of the Claimants.

On the evidence, taking into account the cost of repairs, the Vessel was a CTL. Further, in selling the Vessel the owners had been acting in the interests of both themselves and the insurers, so that no question of revocation of the notice of abandonment or of loss of the right to claim for a CTL could arise. Subject to the defences of the insurers, the Claimants were entitled to an indemnity on that basis, as well as an indemnity in respect of salvage and in respect of standby tug costs and agents' fees until the date of issue of the claim form. Issues of note addressed in Mr Justice Flaux's judgment

Cost of repairs in the Middle East vs. China The appropriate place of repair will not necessarily be the...