Shipping And Insurance Update – Piracy

Is a vessel, or cargo, lost immediately when it is captured by pirates? This and other issues relevant to piracy and the payment of ransom have been considered recently by the Court of Appeal in Masefield v Amlin [2011] EWCA Civ 24.

The facts

On 19 August 2008, the chemical / palm oil tanker 'Bunga Melati Dua', together with her crew and cargo, was seized by Somali pirates in the Gulf of Aden during a voyage from Malaysia to Rotterdam.

Two parcels of bio-diesel carried on the vessel were insured by the defendant Underwriter under an open cover contract that covered loss by both piracy and theft. About a month after the seizure (while negotiations for the release of ship and cargo were continuing) the claimant cargo owners tendered a Notice of Abandonment to the Defendants, which was declined. Within about 10 days of the Notice of Abandonment a ransom was agreed with the pirates and paid. The vessel, crew and cargo were subsequently released and arrived at