Case Alert - [2018] EWHC 900 (Comm)

Court holds that all risks cargo policy did not cover fraudulent documents for a non-existent cargo

The claimant bought copper ingots and re-sold them the same day. However, when some of the containers arrived for transhipment, it was discovered that they contained only slag of nominal value. It was assumed for the purposes of this case that no copper was ever shipped and that the claimant had, in good faith, paid for and taken up fraudulent bills of lading and other shipping documents. The claimant sought an indemnity under its All Risks marine cargo insurance policy and some of the insurers denied liability on the basis that the loss did not fall within the scope of the policy cover.

Sir Ross Cranston has now held that the loss was not covered under the policy. He found that prior caselaw requires a starting position that the purpose of an All Risks marine cargo policy is to cover loss of, or damage to, property. Here, there had been no physical loss of goods: instead, there had never been a cargo of copper ingots. The judge said that "Something must exist to be physically lost. There was no difference between what was loaded and what was discharged".

The judge also noted that "Since an All Risks marine cargo policy is generally construed as covering only losses flowing from physical loss or damage to goods, there must be clear words indicating a broader intention". No such clear wording existed here. The use of the phrase "the broadest coverage shall apply" in the opening clause to the commodity-specific insuring conditions meant only that the broader of the operative conditions and the commodity-specific conditions applied. Nor did any of the specific clauses provide cover for paper losses and fictitious goods, even though the policy was very much broader than the Institute's all risks policy.