4.3 The exclusions
Cl. 5.1.2 excludes “requisition or pre-emption”. This is similar to NP Cl. 2-8 letter c and Cl. 2-9 sub-clause 2 letter c and not problematic in the context of this article.
“Requisition” refers to a formal act, rather than to the temporary occupation of a vessel and must usually import the compulsory taking-over of a vessel on the part of a government acting in a formal manner, which may involve either a transfer of property or title or hiring of the vessel to the government.(1) Arnould p. 292, see also Hudson et. Al p. 364-365, Miller p. 225. It is suggested that requisition is normally made by the vessel’s flag State, as a State normally does not have authority to requisite a foreign vessel, but this is not clear.(2) Miller p. 189.
Cl. 5.1.3 excludes “capture seizure arrest restraint detainment confiscation or expropriation by or under the order of the government or any public or local authority of the country in which the Vessel is owned or registered”.(3) It was a supposed rule of UK law that a marine insurance policy subject to that law would not cover the risk of British capture, on the grounds of public policy. However, once the House of Lords had decided that such cover was afforded if recovery could not be denied due to illegality or war-related public policy, a specific exclusion was included to secure this result, cf. British and Foreign Marine Insurance Co v. Sanday, (1916) 21 Com Cas 154, Hudson et al p. 365. This is similar to NP Cl. 2-9, as measures taken by the vessel’s own state will not be covered by war risk insurance. The exclusion is also parallel to NP Cl. 2-8 letter b in situations where the mentioned interventions are made for the furtherance of overriding political objectives. On the other hand, if such interventions are made with other objectives, for instance due to breach of trade regulations, they will be covered as a marine risk by the all-risk principle in Cl. 2-8.
Cl. 5.1.4 excludes “arrest restraint detainment confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations”. This exclusion applies to both own and foreign states, but is limited to interventions based on certain regulations.
According to court practice, the expressions “customs or trading regulations” are to be given a “businesslike interpretation in the context in which they appear”, in light of the fact that the clauses are to be used worldwide and are intended to cover laws in force anywhere in the world without turning on niceties of local law.(4) Panamanian Oriental SS Corp v Wright (Anita) [1970] 2 Lloyd’s Rep 365, Atlasnavios Navegacao Lda v Navigators Insurance Co Ltd (B Atlantic) (2019) A.C. 136 (2018) 2 Lloyd’s Rep 1, Sunport Shipping Ltd V Tryg-Baltica International (Kleovoulos of Rhodes) [2003] EWCA Civ 12, [2003] 1 All ER (Comm) 586, para 38, EWHC 802 (Comm), [2012] 1 Lloyd’s Rep 629, paras 22 and 23, Aliza Glacial [2002] EWCA Civ 577, [2002] 2 All ER (Comm) 39. The decisive issue is therefore whether the regulation concerns trade or customs, not how the regulation is structured. This means, for instance, that the term “customs regulation” refers to laws in force in the country concerned, whatever their form, which deal with smuggling or other offences in the field of customs.(5)Anita, Arnould p. 294-295. It includes smuggling of narcotics, even if beyond the scope of UK customs legislation.(6)Kleouvoulos of Rhodes, Hudson et al. p. 365-366, Arnould p. 294. Where a court purported to condemn a vessel on account of smuggling activities by the crew, the assured would have the burden of displacing the prima facie application of the exception by establishing a break in the chain of causation, which he could only do by showing either that the court which ordered the confiscation of the vessel for smuggling had knowingly acted outside its jurisdiction, or else that the court had acted in response to some political intervention unconnected to the offence.(7)Anita, Arnould p. 294. It does not matter whether or not the owner is acting in good faith.(8) Hudson et al. p. 366, Arnould p. 295.
The concept of “trading” refers to regulations forbidding, controlling or otherwise regulating the sale or importation of goods into a country and the carriage of goods for that purpose.(9) Arnould p. 296. This would mean that arrest of the vessel due to lack of necessary permission for loading oil, which was the situation in the Heroic Idun case, would be excluded from the UK war cover.
The concept of trade does not, however, include regulations prohibiting or controlling fishing for the purposes of conservation.(10) Arnould p. 296. This appears to be different from the NP regulation, as the Commentary emphasizes that: “If the ship is arrested/captured at sea by the Coast Guard or representations of the police or customs authorities to hinder or investigate illegal fishery, import or export or breach of trade regulations, this will not be covered.”(11) Commentary 2023 p. 58 to Cl. 2-9 sub-clause 1 letter b.
There are no authorities on the meaning of the words “quarantine regulations”, but in a recent case concerning a similar term in the American conditions, and applying the same approach for interpretation, the judge stated that “it is clear that quarantine regulations are laws concerned with the protection of health, whether of people or animals.”(12)Win Win, Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors [2025] EWCA Civ 1019 para 53.
In the same case, the judge found that detainment of the vessel by the Indonesian government for anchoring without permission in Indonesian territorial waters “had no relevant similarity to an arrest or detention under customs or quarantine regulations. It was completely unconnected with the import of goods (the vessel was in ballast) and with health (there was no question of any cargo being infected, as there was none, and no suggestion of any member of the crew having any disease) and there was no suggestion that the crew was engaged in smuggling.”(13)Win Win para 58.
Win Win dropped anchor in a position just inside Indonesian territorial waters on 14 February 2019. This was within an area, partly inside and partly outside Indonesian territorial waters, which was generally understood to be Eastern OPL Singapore and which had for many years been used as an anchorage by hundreds, perhaps even thousands, of vessels without any problem. Many other vessels were also anchored in the vicinity when Win Win arrived and, prior to February 2019, there had been no known instances of any vessel being detained or reprimanded by the Indonesian authorities simply for anchoring within territorial waters.
This all changed very suddenly in February 2019. Starting from around 8 February 2019, the Indonesian Navy arrested a large number of ships for anchoring in territorial waters without permission. On 17 February 2019, Win Win was boarded by armed personnel from the Indonesian Navy, who demanded and removed all her documents and told the Master that the vessel was being detained because it had entered Indonesian waters illegally. The Navy ordered the vessel to shift to a different location in the port of Batuampar under threat of seizure of the vessel and the arrest of the captain. Win Win dropped anchor on 18 February 2019. Attempts were made over the following weeks to obtain the release of the vessel, but the authorities would not release the vessel unless the assured paid a bribe. The vessel was formally redelivered to the assured on 9 January 2020.(14)Win Win para 11-17.
The vessel was insured on American war risk conditions which covered “Capture, seizure, arrest, restraint or detainment, or any attempt thereat” with an exclusion for “Arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments not arising from actual or impending hostilities”. The agreed value in case of total loss was US $37.5 million. Detainment of the vessel for six months constituted total loss, and the assured claimed the agreed value as the vessel was detained for more than that period. The insurers denied cover and argued that the detainment was under “similar” arrests as for that of customs or quarantine regulations. The court interpreted the conditions “as it would be understood by commercial people in the shipping and marine insurance industry”, which was the same approach as that used to interpret the UK clauses. The claim was granted.(15)Win Win para 39-40.
Whether the detainment in this case would be covered by the NP Cl. 2-9 sub-clause 1 letter b is not clear. The Indonesian Law on Shipping records stated that “Every vessel that sails is obligated to possess a PortClearance issued by the Harbour master”, and the reason for the detainment was a breach of this rule. The purpose of the law was to “strengthen national resilience, to provide for a national transportation system to support economic growth and regional development, and to strengthen state sovereignty”.(16)Win Win para 18 and 21. It may be argued that exercising the right to control the entry into a country is a political decision and that to strengthen state sovereignty is an overriding political objective, but there was no mention in the case of war and times of crisis. The NP Commentary also mentions that “interventions in accordance with applicable law for the purpose of enforcing customs-, police-, safety- or navigation-regulations or any private law rights against the insured vessel are outside the scope of the war risks insurance cover.”(17) Commentary 2023 p. 58 to Cl. 2-9 sub-clause 1 letter b. The Indonesian regulation could be qualified as a rule on navigation in Indonesian territorial waters.
The link between the regulation and the interventions is worded differently in the clause, cf. “under” as opposed to “by reason of infringement”. In the Win Win case, however, the judge argues that the term “under” means the same as “by reason of”, with regard to breach:(18)Win Win para 55.
“In my judgement, and in agreement with Lord Justice Lloyd in The Wondrous [1992] 2 Lloyd’s Rep 566, 571, I consider that there is no significance to be attached to the fact that in the English clause the detention in one case must be ‘under’ a particular kind of regulation and that in the other case it must be ‘by reason of’ a different kind of regulation. … I consider the better view to be that these are equivalent wordings and would be so understood by business people.”
The expression in Cl. 5.1.3 is that the detainment must be “by reason of” infringement. This suggests a causal link between the actual infringement and the detainment.(19) Michel p. 191. In the UK regulation, this issue is regulated through the principle of “proximate cause”.(20) Wilhelmsen and Bull, p. 128; Miller ch. 28, Arnould ch. 22. The question here is thus whether the expression “by reason of” involves a question of proximate cause. This issue was discussed in the B Atlantic case:(21) Here referred from Miller p. 154, 191.
The case concerned a substantial quantity of narcotics that was deliberately planted on board a vessel in harbour in Venezuela. On discovery of the drugs, the vessel was impounded as part of judicial proceedings.(22) Miller p. 154. It was argued that the secreting of drugs constituted a malicious act that was covered by the war risk insurance clause 1.5, which provided cover for ‘any terrorist or any person acting maliciously or from a political motive’. If so, the question was whether this malicious act was the proximate cause of the loss, and not the detention by reason of infringement of customs regulations, which was excluded. The Appeal Court considered whether the phrase ‘by reason of’ the infringement involved a question of proximate cause, but argued that ‘by reason of’ then begged the question of ‘why’ the vessel was detained, and that this question was not identical to the question of proximate cause.(23) Miller p. 191. The Supreme Court rejected the argument that the proximate cause was the malicious act rather than the infringement, as the malicious act could not be distinguished from the infringement. The court further stated that as ‘a matter of construction, the analysis of the present Clauses falls into three stages. The first stage, if clause 1.5 is capable of applying at all, is that there was a loss caused by a “person acting maliciously”. Assuming that there was, the second stage is that the means by which loss arose was the vessel’s consequent detainment and the fact that this lasted for a continuous period of six months. Only on this basis were the owners able to treat the vessel as a constructive total loss under clause 3. The third stage involves the question whether such detainment was by reason of any infringement of customs regulations within clause 4.1.5.’(24)B Atlantic para 41. See also Miller p. 191. It is ‘possible that a loss may both be caused by a person acting maliciously within clause 1.5 and at the same time arise from detainment by reason of infringement of customs regulations within clause 4.1.5.’(25)B Atlantic para 42. ‘[W]hile the general aim in insurance law is to identify a single real, effective or proximate cause of any loss, the correct analysis is in some cases that there are two concurrent causes. This is particularly so where an exceptions clause takes certain perils out of the prima facie cover’.(26) Ibid para 43. The court concluded that even ‘if it had been possible to view the loss as caused by a person acting maliciously within clause 1.5, it would still have been excluded by clause 4.1.5 as arising, at least concurrently, from detainment by reason of infringement of customs regulations.’(27) Ibid para 55.
It appears from this that a loss can be proximately caused, both by a peril insured against and by a peril that is excluded, and that in such case, the exclusion prevails. Applied to the Heroic Idun case, the seizure was caused by a breach of trading regulation, which is excluded. Even if a subsequent state act intervened, the loss would be excluded as “arising, at least concurrently”, by reason of breach of trade regulation. This appears to be similar to NP Cl. 2-14. Even if – as noted by the Tribunal in the Heroic Idun case – a subsequent state action may constitute a dominant cause for prolonged detention, the main rule is that the casualty constitutes the dominant cause.
In general, the exclusion in Cl. 5.1.4 would also follow from the requirement in NP Cl. 2-9 sub-clause 1 letter b that the intervention is made for the furtherance of overriding political objectives, and where the Commentary expressly delimits against interventions regarding customs and trading regulations. However, the requirement for overriding political objectives will bar cover for breaches of several types of legislation that are not excluded in Cl. 5.1.4, thus providing a much narrower war risk cover for such breaches. On the other hand, similarly to what is stated on Cl. 5.1.3, such interventions will be covered by marine insurance pursuant to the all-risk principle in NP Cl. 2-8. This cover does not, however, contain a total loss clause for seizure, detainment or blocking and trapping.
Cl. 5.1.5 excludes the “operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause”. This conforms to the exclusions in NP Cl. 2-8 letter d and Cl. 2-9 sub-clause 2 letter a.