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On appeal from: [2016] EWCA Civ 808

This appeal considered whether clause 4.1.5 of the standard form Institute War and Strikes Clauses 1/10/83, which excludes losses arising from detainment by reasons of infringement of customs regulations, operates to exclude a claim where the infringement of customs regulations occurred due to an insured peril.

The Supreme Court unanimously dismissed the appeal. The Court held that the attempted smugglers were not ‘acting maliciously’ within Clause 1.5 because their actions cannot be regarded as aimed at the detention of or any loss or damage to the Vessel or any property or person. The Court considered that the detection of the smuggled drugs and any consequent loss or damage to the Vessel were the exact opposite of the unknown smugglers’ aim.

The Supreme Court then held that, even if the attempted smugglers had been ‘acting maliciously’ within Clause 1.5, the appellant’s claim was still excluded under Clause 4.1.5 as arising, at least concurrently, from detainment by reason of infringement of customs regulations. The Court held that, neither as a matter of causation nor as a matter of construction, is it possible to treat Clause 4.1.5 as inapplicable by drawing some distinction between the malicious act and the infringement of customs regulations as the proximate, real or effective cause of the loss. The Court concluded that where an insured loss arises from the combination of two causes, one insured, the other excluded, the exclusion prevents recovery.

For judgment, please download: [2018] UKSC 26
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (20 Mar 2018 morning session) (20 Mar 2018 afternoon session)