Sea Glory Maritime Co & Anor v Al Sagr National Insurance Co & Anor

In a marine insurance claim, an insurer must establish both materiality and actual inducement before avoiding for misrepresentation or non-disclosure. A vessel’s detention history is assessed in context, including the nature and rectification of deficiencies; disclosure of a detention without its outcome may be incomplete and misleading. Online availability of information does not automatically create presumed knowledge or waiver.

A policy warranty that vessels are ISM compliant may require documentary rather than substantive compliance where the wording and commercial context support that construction. The warranty may nevertheless be continuing. Illegality in performing a separate charter does not defeat a hull policy where the insured adventure is different, the claimants need not rely on the illegality, and there is no relevant causative connection or turpitude.

The claimants sought an indemnity under a marine hull and machinery policy after the vessel Nancy became a constructive total loss in a fire. The insurer avoided the policy and disputed liability on grounds including misrepresentation or non-disclosure concerning vessel management, previous port-state detentions, an alleged conflict of interest involving the designated person ashore, breach of an ISM warranty, and illegality under United States law.

The principal issues were whether the defences were established on the facts, whether the insurer was induced to enter the policy, how the ISM warranty should be construed, and whether civil violations arising from United States dollar freight payments affected liability under the English-law hull policy.

1. Management and non-disclosure. Swedish Management retained overall authority and decision-making control. Blue Fleet’s role, although extending beyond charter broking into post-fixture assistance and liaison with classification, was performed as agent and did not constitute management. The representation that Swedish Management was the technical and commercial manager was therefore true. In any event, the insurer failed to prove materiality and inducement.
2. Port-state detentions. The court rejected the contention that the vessel’s entire detention history was material. The relevant assessment was fact-specific. The Suez deficiencies had been rectified, and the insurer’s underwriter would have renewed cover on the same terms if informed of the detentions and their outcome. The non-disclosure defence therefore failed. Online databases formed part of the background but did not automatically establish presumed knowledge or waiver.
3. Conflict of interest. The evidence did not establish that Zervos Shipping Agency was authorised to issue ISM certification or that the designated person ashore lacked independence. No relevant conflict or knowledge of one was proved.
4. ISM warranty. The warranty “Vessels ISM Compliant” required documentary compliance, analogous to a classification warranty, rather than continuous substantive compliance with every aspect of the ISM Code. It was continuing, so withdrawal of the relevant certificate could constitute breach. No breach was proved on the facts. The alleged major non-conformities were not established.
5. United States illegality. The processing bank and, indirectly, the claimants committed civil violations of the applicable United States sanctions provisions. That did not breach the statutory warranty of legality because the insured adventure under a hull policy was the vessel’s exposure to maritime perils, not payment of charter freight. Nor did common-law illegality apply: the claimants did not rely on the unlawful payments, the loss was unconnected with them, and the conduct was inadvertent rather than turpitudinous. The claimants succeeded in the claim.

First-instance decision. The judgment records no appeal or earlier decision in the same proceedings.