High Court Justice Nigel Teare’s judgment on Monday that shipowner Marios Iliopoulos orchestrated an attempted $77m scuttling fraud appears to have brought to end an a legal battle that has at times been as dramatic as the night an explosion destroyed the ship at the centre of the dispute.
The case over the 150,000-dwt Brillante Virtuoso (built 1992) stretched out over seven years. And an extraordinarily long, by commercial civil case standards, 50-day trial in the London rang up legal costs well in excess of $13m for each side.
But by this summer’s hearing, the Greek shipowner — who was a central figure in submitted evidence and the judgment — was no longer part of the claim.
Instead, the case had boiled down to a legal battle among underwriters.
On one side were the claimants, Piraeus Bank and its marine mortgage interest insurance (MII) providers, which had already paid out to the bank for the loss of the ship.
They were attempting to recover the insured value of $77m from the defendants, which were a syndicate of London war-risk underwriters.
The claim made by Piraeus Bank and its mortgage insurers rested on proving the explosion on the vessel that led to it being written off was a genuine pirate attack and, as such, was covered by war-risk insurance.
“The principal dispute of fact is whether or not [the] Brillante Virtuoso was scuttled,” Justice Teare said in his judgment.
After hearing the evidence, Justice Teare took the side of the war-risk underwriters, which included Talbot, Hiscox, QBE, Chaucer and others.
He said the evidence suggested it was an attempted fraud and, as such, was not covered by war-risk insurance.
Insurance company Markel Capital has had a particularly close relationship with Iliopoulos. Its logo has adorned the Greek owner’s racing cars as a corporate sponsor.
But this time around Markel found itself sitting among the war-risk underwriters contesting the case.
So far Piraeus Bank’s legal team has not requested an appeal to Justice Teare’s judgment and, by this stage, is not expected to do so because of the backlog of cases at the appeals court.
Suez Fortune Investments, the registered owner of the Brillante Virtuoso, said it was disappointed to learn of the judgment and is considering what steps are available to take.
“The court accepted there was no direct evidence of the involvement of Mr Iliopoulos and that the decision was reached on the balance of probabilities,” the company said.
The outfit added that the court’s decision appears to have relied on circumstantial evidence.
“This is not the first time that the international shipping market has recorded unfair attacks on businessmen by insurers who had no hesitation in using unfair means to avoid their contractual obligations,” the company said.
But Justice Teare’s judgment also raises the question as to whether a criminal fraud investigation could follow.
Iliopoulos was questioned by police in London following a previous court hearing on the Brillante Virtuoso.
However, none of the parties involved are aware of an ongoing criminal investigation or believe one could be a likely outcome of the civil case.
Question mark over case
And observers say there is a question mark over whether there is enough hard evidence to justify a criminal investigation.
Justice Teare also admitted there were areas of “blank canvas” in the case linking Iliopoulos to the fraud. And he pointed out that scuttling cases typically lack such evidence.
“There is rarely direct evidence of fraud,” he said in his judgment. “If a finding of fraud is made, it is usually an inference drawn from a large number of matters connected with the event which befell the ship, the events leading up to the casualty, the events after the casualty and the conduct of the owner’s business as a shipowner.”
The trial was also unable to shed any light on the so far unexplained death of ship surveyor David Mockett, who was killed in a car explosion in Yemen shortly after inspecting damage to the Brillante Virtuoso.
A UK coroner reached a verdict of “unlawful killing” over his death but it has never been investigated by police.
Mockett’s widow, Cynthia, was a regular visitor to the Brillante Virtuoso High Court trial but his death was never raised because it was not considered by claimants or defendants to be significant to the case.
Any link of Mockett’s death to the loss of the Brillante Virtuoso has always been strongly denied by the vessel’s owner, Suez Fortune Investments.
