5.4 Was the detainment caused by a war peril or a marine peril?
There are no cases concerning NP Clause 2-14 according to the NP or NMIP 1996, but there are two relevant arbitration cases concerning the similar clause in the NMIP 1964, both concerning the Iran-Iraq war. According to the Commentary, these cases are relevant for the assessment, according to the NP 2016/2019.(1)Commentary (2019) 86.The first case is ND 1989.263 NA Scan Partner.(2)Here referred from the translated version in Wilhelmsen and Bull (n 4) 125-126, which is based on the presentation in Brækhus and Rein (n 4) 270-271.
The supertanker Barcelona, which was employed as a storage ship at an Iranian oil terminal in the Persian Gulf, was hit by several bombs when the terminal was attacked by Iraq. Scan Partner, a towing and fire extinguishing ship chartered by the terminal, attended the fire extinguishing two days after the bombing. Twenty hours later, Scan Partner was sprayed with oil resulting from an explosion onboard the Barcelona. The oil started burning, and Scan Partner sustained a total loss in the fire. It was not clear whether the explosion on Barcelona was due to the detonation of a blind shell from the air attack, a bomb explosion following a gas explosion, or a gas explosion.
Scan Partner was insured against marine perils and war perils according to the NMIP 1964. The marine insurer claimed that the loss was caused by a war peril, and that, if the loss was caused by a combination of a war peril and a marine peril, the war peril constituted the dominant cause of the loss, cf. NMIP 1964 § 21 second sentence.
The arbitration tribunal emphasized that if the explosion was caused by the detonation of a blind shell from the air attack 14 May, the war risk insurer would be liable for the loss, cf. NMIP § 16 (a), cf. § 22 (a). The result would be the same if it was a blind shell that first exploded 17. May and immediately resulted in a gas explosion onboard Barcelona. However, the tribunal did not find it probable that the explosion onboard the Barcelona was caused by a bomb, or a combined bomb/gas explosion that would constitute a war risk.
The fact that the vessel was situated in a war area was not per se sufficient for the loss to be caused by a war peril. The bombing of Barcelona constituted a war peril, and this bombing was a necessary condition for Scan Partner to be present at the site. However, the chain of causation from this peril had to be limited, i.a. based on the closeness in time and place between the bombing and the total loss. The distance in time between the two occasions was three days and during this period many other events occurred. Therefore, it was not straightforward to state that the total loss of Scan Partner was caused by a war peril. The tribunal also argued that Scan Partner was lost during the extinguishing of the fire, in which the vessel had a duty to participate in accordance with the charter party. In this respect, it was not relevant whether the fire was caused by bombing or was due to another cause. Thus, the marine peril constituted the dominant cause.
This case is comparable to our situation, as the bomb damage to Barcelona was caused by a war risk and this was a necessary condition for Scan Partner to be present at the site, i.e. there is a chain of causes resulting in the casualty. The tribunal brings forward two arguments: firstly, the closeness or distance in time and space between the first and the second causes, and secondly, that fire extinguishing was in any case Scan Partner’s normal working risk, and that it was irrelevant whether the fire was caused by a bomb or was due to other reasons. The distance in space seems less relevant in the Team Tango case, but the other arguments may still be applied.
It was not clear in the Team Tango case exactly when the ban on import of urea was first instigated, but the first enclosed letter referring to suspension of the End Users Certificate is dated 13 August 2015. Without such an EUC, the import of urea was illegal. The temporary embargo on importation of urea is mentioned in minutes from a meeting dated 3 December 2015. Import of urea to Nigeria was therefore suspended from 13 August 2015 and upheld throughout 2015 and until Team Tango arrived in Lagos. However, Elephant had import permission and apparently a EUC for 2015. It is not clear whether the import and EUC ban applied to existing permissions, but these permissions expired in January 2016. Elephant did not apply for new permissions until April 2016, at which point in time the ban had been in place for 8 months. Elephant also received the refusal of the application at a point in time when it would still have been possible to reroute the vessel. The required closeness in time thus does not seem to be fulfilled.
In addition, it can be argued that it was part of Elephant’s business to import fertilizers and that a general part of such activity was to have the necessary permissions to receive the cargos. In this capacity, Elephant should be able to cope with changes in the regulation and prevent detainment of vessel and cargo. According to the legislation, any breach of the import regime could result in sanctions, regardless of the political security considerations. It was thus not relevant for Elephant’s situation whether the ban was caused by a war consideration or a marine consideration.
Based on the criteria from the Scan Partner case, it may therefore be argued that the marine peril was the dominant cause in the Team Tango case.
The other case concerns a collision between two tankers in the Persian Gulf during the Iran-Iraq war, cf. ND 1993.464 NA Nova Magnum:(3)Here referred from the translation in Wilhelmsen and Bull (n 4) 125, which is based on the presentation in Brækhus and Rein (n 4) 270.
The two super tankers Nova and Magnum collided between Kharg Island and Sirri Island. Both vessels sustained severe damage. Nova had marine risk insurance and war risk insurance based on the NMIP 1964. The marine risk insurer compensated the losses Nova had sustained and claimed 50 % of this compensation repaid from the war risk insurer according to NMIP 1964 § 21 second sentence, which is identical to NP Clause 2-14 second sentence.
The collision was caused by a combination of both ships sailing with no light, which constituted a war peril, and gross errors of navigation on both parts, which was a marine peril. In particular, Nova sailed with one instead of two sets of radar, and due to insufficient training, the second mate was unable to make use of the information provided by the radar immediately before the collision.
The question was thus whether the element of war risk was sufficiently significant to justify application of the equal influence rule. The court referred to several cases from the Second World War, where no light or reduced light had been given decisive weight. However, the importance of the use of lanterns had been significantly reduced in the period since these decisions were made, due to the development of advanced radar systems, which the assured had a duty to install onboard. This radar equipment provided a navigation tool which was far more efficient than conventional lanterns. The tribunal assessed the war risk caused by sailing with reduced light against Nova’s negligent use of radar, failure to change the course and failure to call for the captain in time, and in addition navigational errors made by Magnum, and found that the nautical errors – i.e. the marine peril – constituted the dominant cause of the loss.
In the Nova Magnum case, the war peril and the marine peril constituted two independent causes interacting before the casualty occurred, which is different from the situation in the Team Tango case. Even so, it is interesting to see if the arguments are relevant for our case. The general starting point when two independent causes interact and lead to a casualty is that the direct cause shall be given more weight than a previous indirect cause, unless the former indirect cause has increased the probability of the subsequent loss. The greater the risk, the greater the importance to be attributed to the earlier cause.(4)Wilhelmsen and Bull (n 4) 121, similar Commentary (2019) 84. Both are based on Brækhus and Rein (n 4) 262 ff. where a large number of arbitration cases with a combination of war risk and marine risk from the first and second world war is analyzed.In line with this, the court points to an assessment of the risk created by the war peril. However, contrary to previous cases where the war risk created by sailing with no lights was given decisive weight, with modern navigation equipment less sight caused by no light could be handled with prudent use of radar. The serious nautical errors that were made were therefore given decisive weight.
Applied to the Team Tango case, it can be argued that the direct cause of the intervention was the breach of the import regime, whereas the political security consideration was the previous and indirect cause.
The overriding political security goal that resulted in several measures – hereunder a stricter import regime for urea – was to control the use of raw material for IEDs and to prevent Boko Haram from obtaining this material. This created a risk for anyone who would be producing, trading with or transporting urea. However, this risk could have been avoided if Elephant had accepted the ban on import and EUCs and thus prevented the vessel from arriving in Lagos with the prohibited cargo.
It may be argued that in the Nova Magnum case, it was the equipment of the vessel and the use of the equipment that failed, whereas in the Team Tango case, the marine peril was caused by a third party. But intervention due to breach of trading regulation will normally be the responsibility of the sender or receiver of the cargo, and the point here is that such breaches constitute a marine peril, not a war peril. It is therefore not – as the assured seemed to claim in the Team Tango case – a question of identification between the owner and the receiver, but instead a question of how to treat regulatory breaches as a legal basis for detainment.