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Law and Sea.
Detention by piracy

Apart of human problem of releasing crews from lengthy captivity there are many complex financial issues related to ship and cargo being out of owners’ hold for significant time.

Last updated: 28-Apr-2016

Per Rix LJ in Masefield AG v Amlin Corporate Member Ltd & Anor [2011] EWCA Civ 24 at paras 49-52:

49. Dawson’s Field (1972) was an arbitration award decided by Mr Michael Kerr QC as sole arbitrator while he was still at the Bar, before he became a judge and then went on to this court. It concerned the hijacking of four aircraft in 1970 by members of the Popular Front for the Liberation of Palestine (PFLP). One was destroyed at Cairo and three at Dawson’s Field in Jordan. The issue was whether the loss of all four aircraft arose out of "one event". The jet at Cairo was blown up first, the other three in Jordan some time later, but within five minutes of one another. Mr Kerr held that the planes were not lost when hijacked, but when destroyed, since "wait and see" is an essential ingredient in a ransom situation. The award entered the public domain with the consent of the parties to it in the course of the hearing in the commercial court in Kuwait Airways Corporation v Kuwait Insurance Co SAK [1996] 1 Lloyd’s Rep 664.

50. Mr MacDonald Eggers relies on Mr Kerr’s analysis, which was considered but distinguished by me in Kuwait Airways Corporation v Kuwait Insurance Co SAK [1996] 1 Lloyd’s Rep 664 (at 685/689), and again considered and applied by me in Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] EWCA Civ 688, [2003] 2 All ER (Comm) 190 (at [76]).

51. Mr Kerr said (in a passage cited in Kuwait Airways Corporation v Kuwait Insurance Co SAK [1996] 1 Lloyd’s Rep 664 at 688):

Having reconsidered all the relevant authorities I am convinced that passages such as these [Lord Blackburn in Cory & Sons v Burr (1883) 8 App Cas 393] cannot be applied literally to facts such as those in the present case, for the following reasons. First, they all occur in the context of a loss resulting from a specifically defined peril such as "capture" or "pirates", and in situations in which the persons who deprived the owners of possession clearly intended there and then to deprive him of possession and ownership forever, if they could. "Deprivation of possession" as such was not an insured peril, let alone a term of art to describe a case of total loss. This expression only took on the semblance of having this effect when it was used as part of the definition of a constructive total loss in section 60 of the Marine Insurance Act 1906. It is therefore dangerous to treat deprivation of possession simpliciter as a cause of total loss subject only to being turned into a partial loss by subsequent recovery. Secondly, even in the Act of 1906 this concept is only a prima facie basis for a case of total loss. It is qualified by unlikelihood of recovery (for which I substitute uncertainty of recovery in the present [non-marine] context) and, as shown by Polurrian v Young, this in itself is qualified by the notion of non-recovery within a reasonable time. "Wait and see" is therefore to some extent always an essential ingredient of a claim for a total loss in circumstances involving deprivation of possession, unless (perhaps) there is a deprivation within the terms of specifically enumerated perils such as "capture" or one can infer from the circumstances that there was a clear intention at the time of the dispossession permanently to deprive the owner of possession and ownership. This is quite different from a "ransom" situation such as in the present case One must consider the facts concerning the dispossession, the apparent intention of the person or persons concerned, whether or not or to what extent the whereabouts of the subject-matter are known, and allow for a lapse of a period of time to form a view about the prospects of recovery; i.e. whether the loss is total or partial.

52. In the light of Dawson’s Field I ventured to make the following among other observations in Kuwait Airways Corporation v Kuwait Insurance Co SAK [1996] 1 Lloyd’s Rep 664. At 687 I said:

In Rodoconachi v Elliott, (1873) L.R. 9 C.P. 649 at p. 670 Mr Justice Brett described capture as "the hostile seizure of goods with intent to deprive the owner of them". In case of capture, because the intent is from the first to take dominion over a ship, there is an actual total loss straightaway, even though there later be a recovery: see Dean v Hornby, (1854) 3 El. & Bl. 179 (a case of piratical seizure), and Andersen v Marten, [1908] A.C. 334.

That might, in the light of the submissions made in this appeal, be too broad a statement, but in its context I had in mind a form of capture in which there was an intention from the first to take dominion over an insured property, such as the Kuwaiti aircraft in that case.

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