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Joint insurance issues in The Ocean Victory: the roads not taken

Andrew Dinsmore has co-authored an article with Elizabeth Blackburn QC, titled “Joint insurance issues in The Ocean Victory: the roads not taken” in the Lloyd’s Maritime and Commercial Quarterly 2018, the citation for which is (2018) L.M.L.C.Q. 50.

The article considers the difficult issue of whether an insurer should be able to bring a subrogated action against third parties where the policy is one of joint insurance. 

It is well-established that a co-insured cannot bring an action against their fellow co-insured where they have taken out a joint insurance policy; however, the juridical basis for such is unclear which presented difficulties in this case where an insurer wished to subrogate into the position of one co-insured to bring a subrogated action against a third party. 

The Supreme Court’s analysis was obiter because, on the facts, it held that charterers were not in breach of the safe port warranty such that even if the insurer could subrogate, there was no liability owed to either of the insureds. The judgment is, nevertheless, interesting because the Court split was 3 v 2 and, within the minority, Lord Sumption and Lord Clarke took different approaches. 

The article focuses on their Lordship’s implied term analysis before considering the further arguments open to the insurers, namely (i) an action based on the proprietary interest in the vessel, (ii) the possible application of the “Transferred Loss Principle” as developed in The Albazero, Linden Gardens Trust v Lenesta Sludge Disposals, Darlington Borough Council v Wiltshier Northern, and Alfred McAlpine Construction v Panatown; and (iii) the possible application of the “Performance Interest Principle” as initially developed by Lord Griffiths as his “broader ground” in Linden Gardens, and discussed in Panatown and Swynson v Lowick Rose. 

The article concludes that if such facts arise in future, insurers should advance their claim on the basis of the subrogated actions that arise as a result of the demise charterers’ possessory title.

Please contact Andrew with any questions on the issues raised.

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