3 The NP regulation of detainment by foreign state
The scope of cover in the NP is divided between insurance against marine perils and insurance against war perils. In formal terms, this distinction is made in two stages. The insurance against marine perils is based on the all risks principle, which states that the insurance covers all perils to which the interest is exposed, unless the peril is specifically excluded. Perils covered under the war risk insurance are then excluded from the marine risk cover. The relevant provisions in the NP Version 2016 reads as follows:
Clause 2-8. Perils covered by an insurance against marine perils
An insurance against marine perils covers all perils to which the interest may be exposed, with the exception of:
the perils covered by an insurance against war perils in accordance with Clause 2-9,
intervention by a State power. A State power is understood to mean individuals or organisations exercising public or supranational authority. …
Clause 2-9. Perils covered by an insurance against war perils
An insurance against war perils covers:
war or war-like conditions, including civil war or the use of arms or other implements of war in the course of military exercises in peacetime or in guarding against infringements of neutrality,
capture at sea, confiscation and other similar interventions by a foreign State power. Foreign State power is understood to mean any State power other than the State power in the ship’s State of registration or in the State where the major ownership interests are located, as well as organisations and individuals who unlawfully purport to exercise public or supranational authority. Requisition for ownership or use by a State power shall not be regarded as an intervention,
…
None of the clauses specifically mentions detainment of vessels. Clause 2-8 (b) excludes however “intervention by State power”, which, from a language point of view, includes “detainment” of the vessel by the state. From the wording of Clause 2-8 (b), such interventions are excluded both when made by the vessel’s own state and also if made by a foreign state. However, this issue was disputed, and it could be argued that only interventions by the vessel’s own state were excluded.(1) Wilhelmsen (2019) (n 3) 185-188. If this was correct, intervention by a foreign state was covered unless the intervention constituted a war peril, cf. Clause 2-8 (a).
Clause 2-9 sub-clause 1 (b) covered “similar interventions” to capture at sea and confiscation. It did not follow from the wording that any kind of motive was required for this, but it was stated in the Commentary that the concept of similar interventions required the intervention to be motivated by primarily political objectives and did not include interventions made as part of the enforcement of customs and police legislation.(2) Commentary (2016) to Cl. 2-9 sub-clause 1 (b), Wilhelmsen 2019 (n 3), 179-180. It was disputed if such a motive was also required for capture and seizure.(3) Wilhelmsen (2019) (n 3) 175ff.
In order to clarify the cover for state interventions, both under the marine risk insurance and the war risk insurance, these clauses were amended in the NP Version 2019:
Clause 2-8. Perils covered by an insurance against marine perils
An insurance against marine perils covers all perils to which the interest may be exposed, with the exception of:
perils covered by an insurance against war perils in accordance with Clause 2-9,
capture at sea, confiscation, expropriation and other similar interventions by own State power provided any such intervention is made for the furtherance of an overriding national political objective. …
Clause 2-9. Perils covered by an insurance against war perils
An insurance against war perils covers: …
(b) capture at sea, confiscation, expropriation and other similar interventions by a foreign State power, provided any such intervention is made for the furtherance of an overriding national or supranational political objective. …
The result of the amendment is that detainment by a foreign state is included in the war risk cover for interventions by a foreign state, provided the detainment “is made for the furtherance of an overriding national or supranational political objective”. If the foreign state detains the vessel for another reason, for instance due to breach of trade legislation on import or export, tax law or police regulation, this will be covered by the insurance against marine perils, because the exclusion in Clause 2-8 (b) is limited to interventions made by the vessel’s own state. This means that detainment of vessels by a foreign state is covered by Clause 2-8 unless excluded by Clause 2-8 (a) or (b) or other exclusions not discussed here.
The amendment is, as mentioned, intended to clarify issues which were previously disputed and to make the requirement of an overriding political objective general for all interventions listed in Clause 2-9 subclause 1 (b). Even if it could be disputed whether detainment by a foreign state that was not motivated by an overriding political goal would be covered by the insurance against marine perils under the 2016 Version, it appears that the insurers in the Team Tango case accepted that it was. This issue was not addressed in that case, but it is relevant for the question of causation, see below in 5.
However, there is a very important distinction between war risk and marine risk cover:
Insurance against marine perils covers damage according to the NP ch. 12, total loss according to NP ch. 11, and loss of hire according to NP ch. 16. The characteristic features of these rules are that total loss requires the vessel to be in fact lost to the assured,(4) NP Cl. 11-1. and that cover for loss of hire is triggered by damage to the vessel.(5) NP Cl. 16-1 sub-clause 1. Sub-clause 2 provides cover for a limited number of other circumstances, but they are less relevant here.
In addition to this “normal” cover for marine perils, the war risk insurance provides cover for total loss if “the assured has been deprived of the vessel by an intervention by a foreign State power, for which the insurer is liable under Cl. 2-9”, and the ship is not “released within twelve months from the day the intervention took place”. (6) NP Cl. 15-11 sub-clause 1. In such cases it is “irrelevant for the assured’s claim that the vessel is released at a later time”.(7) NP Cl. 15-11 sub-clause 4. This means that if detainment by a foreign state which is covered by Clause 2-9 sub-clause 1 (b) results either in the assured being deprived of the vessel or else in the vessel being prevented from leaving a port for a period of 12 months, the assured is entitled to compensation for total loss.
There is also additional cover for loss of hire under the war risk insurance. The insurer “is liable for loss due to the vessel being wholly or partly deprived of income because it is prevented from leaving a port or a similar limited area”, regardless of any damage to the vessel.(8) NP Cl. 15-16 sub-clause 2. Thus, if the vessel is detained in port due to a war peril, loss of hire will be covered, even if there is no damage to the vessel.