Sun Alliance & London Insurance Plc & Ors v PT Asuransri Dayin Mitra TBK

Marine insurance cover described as being subject to the vessel being in class refers to the particular classification stated in the policy, rather than to any classification. A warranty that the vessel is in a specified class must be literally fulfilled.

Where voyage insurance is expressed to be from a particular place, the risk does not attach until the vessel starts the insured voyage. The court may grant negative declarations where the parties have agreed an exclusive English jurisdiction and English governing law, and the declarations will resolve issues properly before the court.

The defendant insurer, PT Asuransri Dayin Mitra TBK, brought Part 20 proceedings against the Indonesian ship operator, P.T. Pelumin and/or the owners of the No 1 Dae Bu. The claim concerned liability under marine insurance for damage caused when the vessel grounded at Yeo Su, South Korea, after being struck by a typhoon.

The insurance covered the vessel’s delivery voyage from Korea to Indonesia. The vessel’s Korean classification had been suspended and cancelled before the loss, although the endorsement stated “Class: KR” and made the delivery voyage cover subject to the vessel being in class. The issues included the effect of the class warranty, the scope and attachment of the voyage cover, an automatic termination clause, and the court’s discretion to grant negative declarations.

1. Declarations granted. The court declared that the insurer was not liable to indemnify the insured for the grounding loss. The agreed exclusive jurisdiction clause and express choice of English law applied to the insurance and endorsement.
2. The endorsement’s reference to “Class: KR” was a warranty. It required the vessel to be in KR class and had to be literally fulfilled. The vessel was not in KR class when the relevant cover was agreed and when the loss occurred. The insurer therefore succeeded on the warranty issue.
3. The delivery voyage cover was expressly subject to the vessel being in class and crewed to class standards. Properly construed, “in class” referred to the declared KR class, not to any classification. The insurer was consequently off-risk under that cover.
4. The automatic termination clause in the Institute Time Clauses—Hulls addressed a change in class after inception. It did not apply to the pre-inception suspension of KR class, and the later cancellation did not alter the result.
5. The delivery voyage cover was expressed to be “from Yeo Su”. Under Marine Insurance Act 1906, Schedule 1 paragraphs 2 and 3(a), risk under “from” cover attaches only when the vessel starts the insured voyage. The vessel was still at Yeo Su and had not begun the voyage when it grounded. There was therefore no cover.
6. The seaworthiness issue did not arise for decision. The evidence nevertheless showed that the vessel was not seaworthy when the typhoon struck.
7. Following the factors identified in New Hampshire Insurance Company v Phillips Electronics [1999] Lloyd’s Rep IR 58 and Dornoch v Mauritius Union [2000] Lloyd’s Rep IR 127, the court exercised its discretion to grant negative declarations. English law governed, England was the agreed forum, and an English judgment would assist in the related Indonesian proceedings.

First instance decision. The judgment does not state any prior appellate history.