The High Court in London has ruled in favour of Nicholas G Moundreas Shipping (NGM) in a $37.5m case against an array of top insurers including Allianz, Axa and Generali.
Unless the decision is reversed on appeal, the Greek company will be compensated for the 170,100-dwt Win Win (built 2001), a capesize immobilised in Indonesia for 18 months, five years ago.
The insurers did not challenge the fact that the Indonesian Navy’s action to detain the ship constituted a constructive total loss by virtue of the agreed insurance policy.
However, they still refused to pay out, claiming wrongdoing by the ship’s managers.
Arguments by the insurers cut no ice with Justice Julia Dias, who found testimony by insurers’ witnesses Jean de Lavergnolle and Frederic Denefle of French war risk underwriter Garex to be at times “incoherent”, “illogical” or “confused”.
The insurers first claimed it was NGM’s fault that the Win Win dropped anchor just inside Indonesian waters in February 2019, prompting the navy to board the vessel and seize it for stopping there without permission.
Justice Dias did not share that view.
She ruled that Indonesia’s action against the Moundreas vessel, as well as a “large number” of other ships in the same month, came out of the blue in what had been, at that time, a widely used anchorage area near the Straits of Singapore.
TradeWinds reported in May 2019 that nine ships were held as part of Indonesia’s action. It is understood now that even more vessels faced the same problem, probably about 20.
“Shipowners might reasonably have expected some advance warning of the Indonesian government’s change of policy … immediate arrest and detention were therefore unexpected,” Dias ruled.
She then rejected the insurers’ argument that the detention was “similar” to “arrests, restraints or detainments under customs or quarantine regulations”, which were not covered by the policy.
Dias focused next on the trickier claim that NGM and its protection and indemnity provider, North of England, allowed themselves to be sidetracked into lengthy talks with the Indonesian Navy to settle the matter out of court, thus neglecting their duty to sue and work towards minimising eventual loss.
In the same vein, insurers argued that by engaging in these talks and then withdrawing, claimants enraged the local authorities and caused them to hold the vessel longer than they otherwise might have.
“If the claimants chose to tweak a tiger by the tail, they should not be surprised if it turned around,” a lawyer for the insurers was quoted in the ruling as saying.
Justice Dias, however, did not find anything wrong in NGM and co-claimants FML Ship Management and the National Bank of Greece exploring every reasonable option to extricate the ship.
“In the peculiarly difficult situation in which the club and the claimants found themselves, it was not unreasonable to continue discussions until they were sure of the position,” she wrote.
NGM pulled the plug on the talks on 25 March 2019, when it became clear in the company’s view, and that of its partners, that Indonesian officials were asking for a bribe to resolve the matter quickly.
George Moundreas, who supervises NGM’s day-to-day activities, explained that P&I clubs were the natural actors to take the lead in these talks.
“If you ask my opinion whether I thought I had a better solution than the International Group and my P&I club, my answer is no, I did not have a better solution,” he told the court.
In a last-ditch attempt to bolster their case, insurers then claimed they were entitled to avoid the policy because NGM failed to disclose that the Piraeus lawyer acting as nominee director of the Win Win’s registered one-ship owning company was the subject of criminal proceedings in Greece in an unrelated case six years ago.
However, the judge threw this argument out as irrelevant, given that the lawyer was performing just administrative functions, NGM had no actual knowledge of the proceedings concerning him and the company had in any case “no cause to doubt his probity”.
Claimants NGM, FML and the National Bank of Greece were represented by Hill Dickinson International.
Adams & Moore Solicitors represented defendants Allianz Global Corporate & Specialty, Axa Corporate Solutions Assurance, Generali IARD, Helvetia Assurances, Mapfre Global Risks and Societa Italiana di Assicurazioni e Riassicurazioni.
Denefle, whose company Garex provided war risk for the Win Win, is also president of the International Union of Marine Insurance.
The Win Win left Indonesia in August 2020, one-and-a-half years after the Indonesian Navy boarded it.
The arrest that led to a $37.5m insurance dispute eventually ended after the ship’s Indian master received a suspended prison sentence of seven months and a $7,000 fine.
NGM sold the ship for scrap in the summer of 2021.
