Vessel detentions: a reoccurring misery

By Richard Neylon (Partner), Michael Ritter (Partner) and Simon Maxwell (Associate), HFW

Vessels can be legitimately detained. This can be for safety concerns, environmental violations or for a multitude of other lawful and appropriate reasons. Increasingly, however, vessels are exposed to illegitimate detentions including instances where a State may seek to use the vessel (or crew) as leverage.  

Owners and their insurers have recently faced problematic detentions at the hands of State actors in the Straits of Hormuz, the Black Sea, the Gulf of Guinea and the South China Sea.  Whether the resulting losses are borne by owners or insurers is often a complicated question. 

Marine Hull & Machinery policies do not commonly offer detention cover. Whereas War Risks policies routinely provide cover for detention, usually triggered after 6 or 12 months.  However, War Risk policies also contain powerful exclusions such as "ordinary judicial process" and "infringement of any customs and trading regulations".

These exclusions have their limitations. For example, "ordinary judicial process" is considered to apply only to civil proceedings. As such, should the detention arise in criminal or public law proceedings the exclusion may not be triggered. Similarly, the exclusion may not apply where State officials act for their own purposes or beyond their lawful powers.

Consequently, detentions starting life as a seemingly excluded reason may ultimately fall within cover. For example, if the State's action in detaining the ship proceeds beyond lawful authority and takes on an overtly and substantive political dimension.

Establishing and evidencing the true reason for the detention – especially if it is alleged to have developed and progressed into something different, can be very challenging. Official justifications for a detention can be inaccurate, deliberately opaque or absent entirely. Early engagement with the problem by trusted personnel who can obtain a granular understanding of the local environment is recommended.

HFW's Complex Environments [] team specialise in advising those operating in high-risk jurisdictions and have extensive, recent experience in dealing with detained vessels.  The team will be attending the IUMI 2023 conference in Edinburgh and will be happy to discuss these issues further.