When Pirates Strike

In a recent judgment arising out of Gulf of Aden piracy, the Commercial Court rejected the proposition that capture by pirates automatically gives rise to a total loss of the insured property.

In Masefield v Amlin (2010), the Commercial Court has confirmed in the context of cargo insurance that capture by pirates is not sufficient to found a total loss claim.

The "BUNGA MELATI DUA' and her cargo of bio-diesel were captured by pirates in the Gulf of Aden in August 2008. One month after capture, while ransom negotiations were progressing well, cargo owners tendered Notice of Abandonment indicating their intention to claim a constructive total loss ("CTL'). Notice was rejected by underwriters. Ransom was subsequently paid and the vessel and cargo were released. The assured nevertheless proceeded with a total loss claim.