Insights / Marine
The Polar: Cargo Liable for General Average Ransom
Herculito Maritime Ltd and others v Gunvor International BV and others [2024] UKSC 2, UK Supreme Court, 17 January 2024 (Lord Hamblen) · Judgment on Find Case Law
Facts
The tanker MT Polar, voyage chartered to Clearlake Shipping Ltd, was seized by Somali pirates in the Gulf of Aden on 30 October 2010 and held for ten months. She was released after a ransom of US$7.7 million was paid on the shipowner's behalf. The shipowner declared general average, and the adjustment found US$5,914,560 due from cargo interests.
Cargo interests refused to contribute. They argued that the charter's war risk clauses, under which the charterer paid for additional war risks and kidnap and ransom cover, created an "insurance code": the shipowner's only recourse for ransom was that insurance, not general average.
Issues
- Whether the charter terms prevented the shipowner claiming against the charterer for losses covered by the additional insurance.
- Whether the relevant charter clauses were incorporated into the bills of lading.
- Whether the shipowner was likewise barred from claiming general average from the bill of lading holders.
Decision
The Supreme Court dismissed the cargo interests' appeal. The charter did not create an insurance code or exclusive insurance fund. The war risk clauses were incorporated into the bills of lading, but nothing in them prevented the shipowner from recovering general average, including the ransom, from cargo.
Why it matters
- Paying the premium is not enough. A charterer funding additional war risk or K&R cover does not, without clear words, displace the shipowner's general average rights.
- Wording decides. Parties who intend insurance to be the sole remedy must say so expressly in the charterparty and bills of lading.
- For cargo underwriters, general average exposure on piracy losses remains, even where the owner holds separate K&R cover.
General information only, not legal advice. Read the full judgment before relying on it.