Amlin Corporate Member Ltd v Oriental Assurance Corp (The Princess of the Stars) [2014] EWCA Civ 1135

The Appellant Insurer had insured the owner of certain vessels. The policy contained a typhoon warranty, which contained two limbs:

  1. that “the vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port…”; and
  2. that “the vessel shall not sail or put out of Sheltered Port … when her destination or intended route may be within the possible path of the typhoon or storm announced at the port of sailing, port of destination or any intervening point”.

A breach of this clause rendered the policy void.

The Appellant reinsured the policy with the Respondent Reinsurers. There was no material difference in the wording of the typhoon warranty clause.

The Vessel set sail from Manila, in the Philippines, when a number of storm and typhoon warnings had been issued by the relevant Philippine agency. The vessel sailed into the eye of the tropical depression which was the subject of those warnings. She was subsequently abandoned and capsized, with severe loss of life and all cargo.

First Instance

The Reinsurers pre-empted a claim by the Insurers to be indemnified in respect of any liability under their original policy with the owners. The Reinsurers obtained a declaration that the insured had breached both limbs of the typhoon warranty, and the Insurers appealed.

Appeal

The first instance decision was upheld. The Court considered both limbs of the warranty.

The words used by the parties in limb 1 of the warranty were clear. There was no ambiguity as to the type or level of warning. The warranty had to be construed in such a way as to prevent the vessel from sailing when there was any possibility of an encounter with a typhoon or storm. Limb 1 had clearly been breached when the vessel set sail from Manila while a storm warning was in place.

In respect of limb 2, the relevant intention was the Master’s intention as to the route to be taken at the time of departure. The intended route had been the usual route, which would take the vessel into the possible path of the typhoon, with a back up plan to change to an alternative route if the weather deteriorated. This amounted to a breach of limb 2.

Comment

In construing the typhoon warranty, the Court considered the parties’ intentions and the plain meaning of the words used, which did not provide any basis for the application of conditions or provisos. When construing such a clause, no assumptions should be made which seek to limit or extend the application of the clause beyond its plain meaning.