Miller's Marine War Risks

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Origin of the capture and seizure perils

11.1 The SG policy, in the form set out in Schedule 1 to the 1906 Act, covered the perils of “takings at sea, arrests, restraints, and detainments of all kings, princes, and people”. The peril of “takings at sea” does not appear1 in the modern clauses, but arrests, restraints and detainments survive. Rule 10 of the Rules for Construction of Policy in Sch 1 provided that the term “arrests, &c., of kings, princes, and people” referred to political or executive acts, and did not include a loss caused by ordinary judicial process. The modern forms continue to exclude ordinary judicial process, and generally cover only political or executive acts. The peril of “seizure” is an important exception (see ). 11.2 When underwriters did not wish to insure war risks, the practice grew up of including an exclusion in the form of a so-called warranty “free of capture and seizure”, known as the “f.c. & s.” warranty.2 Where on the other hand the policy was in respect of war risks alone, the practice was to cover the risks which would be excluded by the f.c. & s. warranty.3 The standard form of exception was that the insured ship or cargo was “warranted free of capture and seizure and the consequences of any attempts thereat” or similar wording. “Warranted free” meant that the insurers were not to be liable for the things to which the warranty applies;4 in other words, an exception and not a promissory warranty. 11.3 New marine policy forms were introduced from 1982. The new forms replaced the traditional exclusion and reinstatement method for insuring war risks with a direct statement of the perils covered. In The B Atlantic, Lord Mance noted5 that while the clauses were freshly drafted, they did not abandon, but sought to bring fresh order and clarity to,

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many of the time-honoured concepts used in the market, such that prior authority on those concepts were therefore potentially relevant.

Capture, etc.: Hull, Freight and Cargo Clauses

11.4 There is a large degree of overlap, but also some important differences, between the clauses for hull, freight and cargo respectively. The scheme for each of these will be described, then the common provisions will be considered, before dealing with aspects which are peculiar to each.

Capture, etc.: Hull Clauses

11.5 The structure of the Hull Clauses is as follows. The perils covered include loss of or damage to the vessel caused by “capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat” (Clause 1.2) and “confiscation or expropriation” (Clause 1.6). There is provision for the Assured to be deemed to have been deprived of the possession of the Vessel without any likelihood of recovery where the vessel has been captured, etc., for a continuous period of 12 months (Clause 3). The most directly relevant exclusions are for: (i) requisition and or pre-emption (Clause 4.1.3); (ii) capture, etc., “by or under the order of the government or any public or local authority of the country in which the Vessel is owned or registered” (Clause 4.1.4); (iii) arrest, etc., “under quarantine regulations or by reason of infringement of any customs or trading regulations” (Clause 4.1.5); and (iv) “the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause” (Clause 4.1.6). 11.6 The risks insured are the perils with the exclusions; together they delimit the risks covered.6 Whilst individual exclusions have different purposes, the purpose of clauses 4.1.5 and 4.1.6 is to preserve the essential meaning of the terms in a war risks policy, which is to cover political and executive acts.7

Capture, etc.: Freight Clauses

11.7 The structure of the Freight Clauses is, with one exception, the same as the Hull Clauses. The one difference is that there is provision (Clause 3) for payment of the amount insured in the event that there is a CTL of the vessel under the Hull Clauses.

Capture, etc.: Cargo Clauses

11.8 The structure of the Cargo Clauses differs significantly from the Hull and Freight Clauses. First, the cover only extends to capture, etc, arising from the war risks strictly so-called, namely “war civil war revolution rebellion insurrection, or civil strife arising

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therefrom, or any hostile act by or against a belligerent power” (Clause 1.2). Second, there is no cover for confiscation or expropriation. Third, due to the limitation on the scope of cover, there are no exclusions matching those set out in paragraph 11.5 in relation to Hull and Freight.

Differences between “capture” and “seizure”

11.9 “Capture” and “seizure” both involve depriving the insured of his property,8 but they are nonetheless distinct and separate insured perils. Channell J., when giving judgment in Andersen v. Marten 9 in 1907 quoted from Arnould when defining “capture” as: “A taking by the enemy as prize, in time of open war, or by way of reprisals, with intent to deprive the owner of all dominion or right of property over the thing taken.”10 11.10 Lord Fitzgerald in Cory & Sons v. Burr 11 contrasted “capture” with “seizure”:

Capture would seem properly to include every act of seizing or taking by an enemy or belligerent. “Seizure” seems to be a larger term than “capture” and goes beyond it, and may reasonably be interpreted to embrace every act of taking forcible possession either by lawful authority or by overpowering force.

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