Relevance Of Insurance Provisions To Cargo Interests' Liability To Contribute In General Average - Herculito Maritime Limited V Gunvor International BV - Paul Toms

• Published date: 17 December 2020
• Subject Matter: Insurance, Transport, Marine/ Shipping, Insurance Laws and Products
• Law Firm: Quadrant Chambers
• Author: Mr Andrew Guy Blackwood QC and Paul Toms

OVERVIEW

On Friday 4 December 2020, Sir Nigel Teare handed down judgment in Herculito Maritime Limited ("Herculito") v Gunvor International BV ("Gunvor"), a s. 69 appeal from an arbitration award of Timothy Young QC, Dominic Kendrick QC and Simon Gault ("the Tribunal"). Guy Blackwood QC of Quadrant Chambers appeared on behalf of Herculito, the successful appellant, instructed by Richard Neylon and Jenny Salmon at HFW.

The case concerned two novels points of law:

1. Whether a War Risks clause (or equivalent) in a charterparty was incorporated into a Bill of Lading by general words of incorporation.
2. Whether provisions concerning responsibility for the payment of insurance premiums in a charterparty could affect the obligation of a Bill of Lading holder to contribute to general average.

Facts

The dispute arose out of the hijacking of the mv Polar ("the Vessel") in the Gulf of Aden by Somali pirates in October 2010 whilst it was performing a voyage from St Petersburg to Singapore pursuant to a voyage charter ("the Charterparty") between Herculito and Clearlake Shipping Ltd ("Clearlake"). Gunvor were the lawful holder of six Bills of Lading issued in respect of the cargo carried on board. The Bills provided that freight was payable as per the Charterparty. The Bills also contained general words of incorporation which purported to incorporate "terms and conditions, liberties and exceptions" of the Charterparty.

The Charterparty had the following relevant clauses:

1. A clause which permitted Herculito not to continue the voyage or to deviate
2. A clause which obliged Clearlake to bear the expenses caused by the exercise of the liberties in 1. above by Herculito.
3. Clauses which required Clearlake to pay for additional War Risks and Kidnap and Ransom ("K&R") insurance to transit the Gulf of Aden.

The Vessel was released in August 2011 following the payment of a ransom of US$7,700,000 by Herculito. General average was declared and, in the usual way, cargo underwriters provided a general average guarantee and Gunvor a general average bond. An adjustment was issued pursuant to which US$4,829,393.22 was held to be the amount of Gunvor's contribution to general average.

Under the terms of the Charterparty referred to above, Herculito had procured War Risks and K&R cover which indemnified them for the entirety of the ransom paid

That claim was met with the defence that the Charterparty provisions which required Clearlake to pay the insurance premiums for the War Risks and K&R cover disentitled Herculito from claiming a contribution to general...