Vessel detention clauses need to be rewritten, underwriters told

Under the current formation of war and strike clauses if a vessel is detained for over 12 months, the owner can claim a constructive total loss of the vessel. Credit: Videotel

Marine insurers have been warned they need to address the current formation of war and strike clauses in an effort to halt the tide of litigation.

Speaking at the International Union of Marine Insurance (IUMI) annual conference in Cape Town, Richard Neylon, partner in the marine practice at law firm HFW, said there needed to be greater clarity in the clause.

“Under the clause, if a vessel is detained for over 12 months, the owner can claim a constructive total loss of the vessel,” he said. “Currently we are seeing cases in Libya, Algeria, Nigeria, and Europe where vessels have been detained for extensive periods.

“While we make every effort to recover the vessels, those that have been detained for 12 months, or in some cases that period can have been negotiated down to six months by the owner, are declared a constructive total loss.

“In every one of these cases there have been disputes. The reasons we have not seen more disputes is the fact that there are not more vessels detained. I find that in every case under these clauses and a claim is made we see a dispute,” Neylon explained.

“What we need is greater clarity of the clause and a greater degree of information and definition on what constitutes a reason for detention that would trigger the clause. I would really like to see us get away from having to fight these battles again and again.”

Contact: Jon Guy