In Elafonissos Fishing and Shipping Company v Aigaion Insurance Company SA  EWHC 1512 (Comm), the High Court found that the defendant insurer must pay for losses suffered by the claimant's fishing vessel as a result of Cyclone Bondo in Madagascar in 2006.
Aigaion Insurance Company SA (Aigaion) denied liability on the basis that Elafonissos Fishing and Shipping Company (Elafonissos) had breached a warranty to lay up the vessel in port from November 2006 to February 2007. It was agreed that the vessel had been laid up in port for the correct amount of time, but Aigaion claimed that a 'true construction' of the warranty, or by way of an implied term, the vessel should have been laid up in accordance with the port regulations, which it claimed had not been done.
Aigaion failed to prove the factual basis of its breach of warranty argument, as it was unable to produce the written regulations, or sufficient evidence to show that the vessel had failed to comply with the regulations which it claimed applied.
The judge also rejected Aigaion's assertion that the warranty should be construed broadly to include compliance with the port regulations, as a matter of law. Mr Justice Blair said that the serious consequences of a breach meant that warranties should be construed narrowly. He stated that if the underwriters had wanted the additional protection of compliance with port regulations then it was up to them to stipulate for it in clear terms.
This case shows the evidentiary difficulties that arise where formalities and record-keeping are not prioritised. It also highlights the need for careful policy wording to ensure protection is provided where intended, as this decision shows that warranties are to be construed narrowly.