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Arrest by Indonesian navy for illegal anchoring leads to a constructive total loss claim under the war risk policy

The Win Win [2024] joins The Afra Oak [2023] as another case involving ship arrest by Indonesian navy for illegal anchoring. In this case, the lengthy detention prompted the owners to claim constructive total loss (CTL), but their war risk insurers rejected the claim.

Win Win was detained by the Indonesian navy in late February after anchored in 01 21.89N, 104 41.96E, which was well within Indonesian territorial waters. Neither the Master nor the owners were aware of this. They even contacted the Singapore Navy for assistance, believing the vessel to be in Singaporean territory. With the detention dragging on, the owners notified their war risk insurers of vessel abandonment. Although the insurers accepted that requirements for CTL were met, the claim was rejected for two main reasons:

  • Lack of fortuity: The insurers argued the detention wasn't unforeseen. They believed the captain and owner should have known anchoring there would lead to arrest.

  • Breach of duty to sue & labour: The insurers claimed the owners' discussions with the Indonesian navy for a "commercial settlement" breached their "sue and labour" duty. They felt these discussions, ultimately unsuccessful, gave the navy false hope and delayed the release.

 

The court disagreed with the insurers on both points. In February 2019, immediate vessel arrests for such reasons were uncommon, and the navy's response was unprecedented. The owners and Master couldn't have reasonably anticipated this. Therefore, the loss was considered fortuitous. Regarding the discussions with the navy, the court ruled that any prudent, uninsured owner would attempt to negotiate a quicker release, at least until it became clear the navy demanded illegitimate payments. The court determined these discussions didn't hinder the release as Indonesian legal proceedings were ongoing simultaneously. Owner’s claim for CTL therefore succeeded.

 



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