Technip Saudi Arabia Limited v The Mediterranean & Gulf Insurance and Reinsurance Co

An existing-property exclusion in a composite insurance policy may exclude claims for damage to property owned by any member of a defined group of principal insureds, rather than only property owned by the insured making the claim. The policy must be construed objectively, giving primacy to its language while considering the policy as a whole, its purpose, relevant background and commercial common sense. A separate-insurance clause does not, without more, give the same defined expression a different meaning in each notional insurance. Where an exclusion is paired with a buy-back for scheduled property, omitted property may remain excluded. Hindsight or an apparently imprudent outcome cannot alter the proper construction.

Technip was insured under a composite offshore construction all-risks policy underwritten by the insurer. A vessel chartered by Technip collided with an offshore platform owned by the Al-Khafji Joint Operation. Technip paid substantial sums in respect of the damage and claimed an indemnity under the policy’s liability section.

Mr Justice Jacobs held that Existing Property Endorsement 2 excluded claims for damage to property owned by any of the Principal Insureds. The platform was not included in the endorsement’s buy-back schedule, so the claim failed: [2023] EWHC 1859 (Comm). The appeal concerned whether the words the Principal Assured referred only to the insured making the claim or to the defined group of Principal Insureds, and whether the composite nature and commercial rationale of the policy affected that construction.

1. Appeal dismissed. The Court of Appeal upheld the decision of Jacobs J that Existing Property Endorsement 2 excluded Technip’s claim for damage to the platform.
2. The proper approach was the objective, unitary process of contractual construction. The court considered the natural and ordinary meaning of the words, the other policy provisions, the purpose and structure of the endorsement, the relevant background and commercial common sense. The primacy of the policy language remained important. The principles in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Arnold v Britton [2015] UKSC 36 and The Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1 were applied.
3. The phrase the Principal Assured admitted two possible meanings. The correct meaning was the defined group of Principal Insureds, including Technip, KJO and the relevant associated companies. The claimant-specific construction inserted words that were absent from the endorsement and failed to work for claims by the policy’s Other Insureds. The composite-policy provision deeming the policy to be a separate insurance for each Principal Insured did not give the phrase a different meaning in each notional insurance.
4. The endorsement’s structure confirmed that it excluded claims for damage to existing property owned by, in the custody of, or subject to relevant contractual liability of the Principal Insureds, unless cover was bought back for specifically scheduled property. The platform was owned by KJO but was not scheduled. Its omission could not be treated as a fortuity changing the meaning of the endorsement.
5. Arab Bank plc v Zurich Insurance [1999] 1 Lloyd’s Rep 262, Alstom Ltd v Liberty Mutual Insurance Company (No 2) [2013] FCA 116 and Corbin & King Ltd v Axa Insurance UK plc [2022] EWHC 409 (Comm) did not establish a general rule requiring the claimant-specific construction. Their materially different circumstances or wording did not assist Technip.

• Court of Appeal (Civil Division): appeal dismissed and the judgment below upheld.
• High Court of Justice, Commercial Court: Jacobs J held that Existing Property Endorsement 2 excluded Technip’s claim because the damaged platform was property owned by a Principal Insured and was not included in the buy-back schedule: [2023] EWHC 1859 (Comm).