Herculito Maritime Ltd & Ors v Gunvor International BV & Ors

Factual and Procedural Background

The vessel was seized by Somali pirates on 30 October 2010 while transiting a known “High Risk Area” in the Gulf of Aden. After ten months in captivity, it was released on 26 August 2011 following the payment of a US $7.7 million ransom funded by or on behalf of the Respondent (the shipowner).

The Respondent declared general average and issued an adjustment claiming approximately US $5.9 million from the Appellants (cargo interests). The Appellants denied liability, asserting that, under the voyage charterparty and incorporated bills of lading, the ransom risk had been shifted entirely to additional war-risk insurance for which the charterer paid the premium.

The dispute proceeded to London arbitration, where the tribunal upheld the Appellants’ position. The High Court (Judge Teare) reversed that decision in part, the Court of Appeal reinstated the tribunal’s result, and the matter came before the Supreme Court. Judge Hamblen delivered the opinion, with Judges Hodge, Leggatt, Rose and Richards concurring.

Legal Issues Presented

1. Whether, on the proper construction of the voyage charter (particularly its war-risk and Gulf of Aden clauses) and/or by necessary implication, the Respondent was precluded from recovering losses covered by additional insurance.
2. Whether all material parts of those charter clauses were incorporated into the bills of lading.
3. Whether, after incorporation, the same preclusion applied against bill-of-lading holders.
4. If not, whether the wording should be judicially “manipulated” to substitute “holders of the bill of lading” for “the Charterers” in provisions allocating responsibility for extra insurance premia.

Arguments of the Parties

Appellants’ Arguments

• The charter created an “insurance code” whereby risks for which extra insurance was procured were to be satisfied solely from that insurance; the Respondent therefore had no recourse in general average.
• All relevant war-risk clauses, including premium-allocation terms, were incorporated into the bills of lading; this barred recovery from cargo interests.
• If necessary, the court should construe the clauses so that the obligation to pay premiums (and the concomitant benefit of immunity) shifted from “Charterers” to bill-of-lading holders.

Respondent’s Arguments

• No complete insurance code was agreed; the right to general-average contribution remained intact.
• Although the war-risk and Gulf of Aden clauses were incorporated, nothing in them (expressly or by implication) barred recovery from bill-of-lading holders.
• Judicial manipulation of the wording would undermine commercial certainty and impose unpredictable liabilities on successive cargo owners.

Table of Precedents Cited

Court's Reasoning and Analysis

The Supreme Court undertook a detailed contractual construction exercise:

• No insurance code in the charter. Applying The Ocean Victory framework, the court held that a complete insurance code arises only when that result is a necessary consequence of the contractual scheme. Unlike The Evia (No 2), the voyage charter lacked joint-names insurance and did not place an “absolute veto” in the Respondent’s hands; therefore no exclusive insurance remedy was intended.
• The Gulf of Aden and War-Risk clauses were incorporated into the bills because they directly affected the vessel’s routing and allocation of war-risk costs—matters “germane” to carriage.
• Once incorporated, those clauses still imposed the obligation to pay extra premiums on “Charterers” alone. As bill-of-lading holders had no such obligation, the rationale for an insurance code did not extend to them.
• Judicial manipulation of wording was rejected. Imposing premium-payment liabilities on unknown future cargo owners would create commercial uncertainty and contradict established limits on adapting incorporated terms (The Miramar).

Holding and Implications

APPEAL DISMISSED.

The Respondent remains entitled to general-average contribution from the Appellants. The decision clarifies that, in voyage charters lacking joint-names insurance, war-risk clauses and premium-allocation provisions do not by themselves create an exclusive insurance regime. The ruling preserves shipowners’ traditional general-average rights and signals that courts will hesitate to infer insurance codes absent clear contractual language.