12-month detention claim under War and Strikes is a legal nightmare

If there was one clause over the past 10 years that had caused grief for Richard Neylon, London-based partner at legal firm HFW, it would be the ILU War and Strikes Detainment Clause, he said yesterday September 18th.

Speaking at the IUMI 2018 conference in Cape Town, South Africa, on the topic of security risks and the complications for insurers, Neylon said that the clause (In the event that the Vessel shall have been the subject of capture seizure arrest restraint detainment confiscation or expropriation, and the Assured shall thereby have lost the free use and disposal of the Vessel for a continuous period of 12 months then for the purpose of ascertaining whether the Vessel is a constructive total loss the Assured shall be deemed to have been deprived of the possession of the Vessel without any likelihood of recovery”) enabled a claim for a Constructive Total Loss if the vessel was detained for more than 12 months, but then applies an array of exclusions and exceptions.

Neylon said: “In nearly every case I have been involved in there has been a dispute. The underwriters say it is not a war risk, that drugs, or smuggling, was involved in the detainment. Meanwhile the Owners say that it is a fortuity and it isn’t their fault. He noted one possible example where a dispute could arise between owners and – detention by a Libyan Coast Guard acting outside 12-mile waters.

Neylan said that the only reason that there weren’t more legal disputes over the detainment clause was that not many vesseols were detained for longer than 12 months.