Greek Bank Denied Insurance Claim on Ship Detained by Venezuela

The UK High Court of Justice, Queen’s Bench Division Commercial Court has ruled against a Greek bank in its claim for USD 71m from Lloyd’s insurer Antares Underwriting for recovery of losses resulting from a ship seized by Venezuelan authorities in 2015 and held for over a year.

The case, Piraeus Bank AE v Antares Underwriting Ltd, centered on whether the prolonged detention of a vessel in Venezuela gave rise to a constructive total loss of that vessel under the owners’ war risks policy and if so, whether the mortgagees under a mortgagees’ interest policy of insurance could recover an indemnity due to their loss as assignees and loss payees under the owners’ war risks policy.

After Venezuelan authorities detained Panama-register tanker, Zouzou, for more than a year over suspicions of diesel oil smuggling, Piraeus Bank mortgaged for USD 55 million the vessel which was insured against war risks 14 months after the ship was detained. The insurance policy included a clause stipulating that “the Owner shall be deemed to have been deprived of the possession of the ship without any likelihood of recovery” if the ship is deprived “for a continuous period of 12 months”.

The court ruled against Piraeus Bank, determining that “there was no prima facie cover for the loss under the War Risks Policy”.