5.7 Measures by own and foreign state
As is demonstrated above, the concept of war risk has developed from capture at sea, condemnation of prize, and looting of neutral commercial vessels, to include perils attributable to war or warlike conditions or other implements of war.(1) NMIP 1964 § 16 letter a, NMIP 1996 § 2-9 letter a, and NP 2013 § 2-9 letter a. The content of this clause was mapped out in court cases, in particular during World War II, and mentioned in the Commentaries as being relevant for the interpretation of the provisions,(2) Motiver NMIP 1964 p. 18, Commentary NMIP 1996 Version 1999 pp. 39–41, see also Brækhus/Rein pp. 58 ff. with extensive references. but it appears to cause fewer problems in more modern times, although the wars in Ukraine and Gaza may give raise to further cases.
In the period after World War II, another issue has caused difficulties in the Nordic marine insurance market, and that is intervention by own and foreign state in cases of political unrest or war. NMIP 1930 § 4 had no exclusion for intervention by own state power, but covered the classic war interventions as a war peril. In April 1940 the Norwegian Shipping and Trade Mission (Nortraship) was established to administer the Norwegian fleet outside German territorial waters, being those requisitioned by the Norwegian government to support the allied war efforts. The ships were insured with the Norwegian War Risk Association but with an addendum that the UK took over the insurance if the vessels sailed to allied ports.(3) Motiver NMIP 1964 pp. 19–20.
There was never any question of the marine risk insurer paying for the requisition of the Norwegian fleet, but the issue was addressed in the 1964 revision. The cover for interventions by foreign states, including requisition, was retained.(4) NMIP 1964 § 16 letter a first sentence. However, an exclusion was inserted in the all risk cover for “measures taken by Norwegian or allied State authorities”.(5) NMIP 1964 § 15 letter b. It was argued that such cover was possible, but that the war risk insurer did not want to offer it, because such cover could influence the position of the assured against the authorities, who, according to ordinary principles of expropriation, should pay for the goods that were requisitioned.(6) Motiver NMIP 1964 pp. 19–20.
Under the 1996 revision two major changes were made to this cover. First, requisition by a state power was excluded from the war risk cover.(7) NMIP 1996 § 2-9 sub clause 1 letter b last sentence. The reason for this was that the reinsurance market was not prepared to cover this risk.(8) Commentary NMIP 1996 Version 1999 p. 45. Even so, such cover was included in the cover of the Norwegian War Risk Association.(9) NMIP 1996 § 2-9 sub clause 3 letter a, Commentary NMIP 1996 Version 1999 p. 45.
Second, the 1964 exclusion, for “measures taken by Norwegian or allied State authorities”,(10) NMIP 1964 § 15 (b), Motiver NMIP 1964 p. 15. The following is based on Wilhelmsen, Marine insurance intervention by State power – The Nordic perspective, SIMPLY 2018 (Wilhelmsen 2018), p.153 ff. at p.158 ff. was broadened to “intervention by a State power”, including both own and foreign state power. This exclusion was meant to include requisition by own State power.(11) Commentary NMIP 1996 Version 1999 p. 45. The interpretation is not obvious, see further Wilhelmsen 2018 pp.183–185. The result was that interventions by a State power not covered by the war risk insurance would not be covered by marine insurance at all. This amendment was probably not analysed thoroughly and turned out to be a problem in various different directions.(12) See further Wilhelmsen 2018 pp. 172–188.
In particular, the concept of “other similar interventions” raised problems in situations where vessels were detained in foreign ports in unstable countries and kept there for a long period without a clear legal basis. The problems are demonstrated by several arbitration awards.(13) See further Wilhelmsen 2018 p. 180–181, Brækhus/Rein pp. 73–76 and Wilhelmsen/Bull 2017 pp. 94–97. The Germa Lionel award (unpublished) and ND 1988.275 NA Chemical Ruby both concern detainment in port:(14) Referred from Wilhelmsen 2018 p. 180–181.
Germa Lionel was on a voyage from London to discharge her cargo first in Tripoli, thereafter in Benghazi in Libya. During the approach to the port of Tripoli the vessel had problems with the electric wiring which caused a lamp to blink. The Libyan authorities suspected that the vessel was communicating with groups in Libya which were opposed to the President, Colonel Ghaddafi. When the vessel had berthed, Libyan troops boarded the vessel. The crew was interrogated. One of the crew members died of mistreatment. The authorities checked the cargo and the vessel, but it appeared that the suspicions were without any foundation. The vessel’s agents in the port incurred some costs, and the question was if these costs were covered by the war risk insurance. The main issue for the arbitrator was whether the Libyan authorities’ action could be seen as a reasonable action as part of enforcing Libyan laws. The interrogation of the crew and the harshness shown were found to be of a nature which constituted a war peril under the Plan.
In the Chemical Ruby case the vessel was detained for about 6 months by Nigerian authorities based on an unfounded suspicion that the vessel had tried to ship contaminated soya oil into the country. The starting point was that it was an enforcement of Nigerian legislation, and thus not a war risk. Even though it took about 6 months for the vessel to be released, this was not so extraordinary as to constitute a war risk. The detainment was not made to achieve some political gain or motivated by purposes which would be typical for war and war-like conditions, as opposed to a State’s right to enforce compliance with national laws.
The decisions in these two cases, are further analyzed in ND 2016 s. 251 NA Sira:(15) See further Wilhelmsen/Bull 2017 pp. 98–99, Wilhelmsen 2018 p. 181–183. The case is referred from Wilhelmsen 2018 pp. 181–182.
Sira arrived at Lagos, Nigeria, 1 February 2015 for discharge of palm oil, and was boarded the same day by a security team engaged by the ship-owner, consisting of an unarmed British security advisor and four armed men from the Nigerian Navy. Permission had been obtained in advance from the immigration authorities for the advisor to visit Sira for inspections. Between 2 and 14 February, Sira and its documents were inspected several times by the Nigerian Maritime Administration and Safety Agency (NIMASA), whose task it is to secure safety at sea. On 5 February there were two attempts to board Sira, presumably by Nigerian pirates, which were stopped by the security guards on board. On 14 February the cargo was discharged and Sira was ready to sail. However, the captain was told by NIMASA that Sira could not sail before this had been clarified with the Commanding Officer. On 13 March NIMASA formally arrested the ship because it had a foreign security advisor on board, which was claimed to be «illegal and unacceptable as it is not supported under our constitution». Sira was released on 31 March after having signed a letter of indemnity holding NIMASA harmless for losses caused by the detainment. The owner argued that the detainment of Sira constituted a war peril according to NP Cl. 2-9 letter (b), whereas the insurer argued that the detainment was outside the scope of this provision.
The arbitrator made the following summary on the cover for “war risk” interventions:
“For the intervention to be covered under the war risk insurance, the intervention must be made for the furtherance of overriding political goals. Such interventions are interventions typical for war and times of crises, and can often be explained by foreign policy considerations. The reason for the intervention may be a warranted or unwarranted suspicion that the ship has breached rules to protect the security of the State involved. It is not decisive that the general political situation in the State involved has been contributory to the intervention.
A State intervention which is tied to regulation or control of normal commerce and shipping is not covered by war risk insurance. Relevant interventions will first and foremost be tied to breach or suspicion of breach of customs, currency, or police legislation. It is normally not decisive if such intervention due to its duration represents misuse of power. However, this can be different if the misuse of power takes the form of a regular police act or similar act, but which in reality is part of an action motivated primarily by overriding political objectives.”
The arbitrator found, based on these guidelines, that the detention of Sira did not constitute “other similar interventions” with regard to NP Cl. 2-9 sub-clause 1 letter (b). Even if a detention of 1 ½ months did constitute an “intervention”, it was not documented as to whether the action was motivated primarily by political objectives. Such objectives would typically be decided by the central authorities, such as the president, the parliament, the government at large, or a particular ministry, whereas NIMASA was an organ at a lower level in the State hierarchy, which exercised its agency within a legal framework and in conformity with political guidelines provided by others.
The detainment of Sira in Nigeria was one of several examples of vessels being detained in port in cases involving political unrest and instability. Other examples were the vessels B Atlantic in Venezuela and Poavosa Ace in Algeria. Such cases often included some fraudulent or criminal behaviour by a third party, for instance by the charterer or the receiver of the goods.
Under the 2019 revision it was therefore agreed that the cover for state-intervention had to be amended, both to clarify the concepts and to provide a better cover in cases where vessels were detained in port. The main results of the discussions were as follows:(16) Wilhelmsen 2018 pp. 189 ff.
Requisition by state power is not covered by any insurance;(17) NP 2013 Version 2019 Cl. 2-8 c, Cl. 2-9 sub clause 2 c.
the marine risk insurance excludes certain qualified interventions by own state power, provided these have been made for the furtherance of overriding national political goals,(18) NP 2013 Version 2019 Cl. 2-8 b.
the war risk insurance does cover such interventions by foreign State power or by a supranational power;(19) NP 2013 Version 2019 Cl. 2-9 sub clause 1 b.
the all risks cover in NP Cl. 2-8 first part covers interventions by own and foreign state power and supranational powers that are neither excluded in Cl. 2-8 b and c, nor covered by Cl. 2-9 sub clause 1 b, i.e. interventions other than requisitions that are not made for the furtherance of overriding political goals.
The result of the amendment is that the war risk cover for interventions by a foreign state power is clarified, whereas the marine risk cover for state interventions is made significantly broader. It should be noted, however, that the distinction between marine and war risk cover is maintained with regard to the losses covered.