The conspirators purchased and manned a tanker, The Salem. They chartered her to an innocent charterer, Pontoil SA, for a voyage to Europe carrying a cargo of oil which Pontoil acquired from Kuwait Oil Co in Mina al Ahmadi and agreed to resell to Shell, whose interest was insured with the defendant and other insurers for some USD56m. Instead of performing the chartered voyage, the conspirators procured the tanker to enter Durban, where most of its cargo (some 180,000 mt) was discharged and delivered to the South African Strategic Fuel Fund Association in return for payment to the conspirators of a price of over USD32m. They then took the vessel to sea again with a residue of the cargo (some 15,000 mt), and had her scuttled to conceal what had happened.
Lord Denning said: ‘The judge held ante that the crooks were not acting maliciously, i.e. out of spite, ill will or the like, but for their own gain. The judge’s ruling on this point was accepted by Shell.’
and: ‘In this case ‘the destination specified in the policy’ was North Europe. That was the destination specified as the place to which the cargo was to be carried.
On the facts as I see them, instead of ‘sailing for’ that destination, the ship ‘sailed for’ Durban. As soon as she moved off from Mina al Ahmadi (Kuwait) her Master intended to take her to Durban and discharge the oil there. Durban was the place to which the shipowners and the Master intended to carry the oil and deliver it there.
… Shell never relied on the ‘held covered’ clause and never gave notice of it to the underwriters. They did this for tactical reasons – because they did not want to concede that the vessel ever sailed for Durban. Their case was that she sailed for North Europe and afterwards changed course for Durban. If they had conceded that she had sailed for Durban, they would have been defeated by section 44.’
Kerr LJ, Lord Denning MR, May LJ
[1982] QB 946
Marine Insurance Act 1906 44
England and Wales
Citing:
Appeal from – Shell International Petroleum Co Ltd v Gibbs (The ‘Salem’) QBD 1981
Conspirators disposed of a cargo of oil dishonestly, in South Africa, in breach of sanctions and with a view to profit. Mustill J. considered whether this loss was caused by persons acting maliciously, that is out of spite or ill-will or the like. . .
Cited by:
Cited – Navigators Insurance Company Ltd and Others v Atlasnavios-Navegacao Lda SC 22-May-2018
The vessel had been taken by the authorities in Venezuela after drugs were found to have been attached to its hull by third parties. Six months later it was declared a constructive total loss. The ship owners now sought recovery of its value from . .
Lists of cited by and citing cases may be incomplete.
Updated: 26 July 2021; Ref: scu.666170