The recent Singapore Court of Appeal decision in Agroglobal Underwriting Asia Pte Ltd v Oversea-Chinese Banking Corp Ltd [2026] SGCA 14 provides importance guidance on claims for loss caused by perils of the seas and constructive total loss.
This case arose from the capsize of the jack-up rig TERAS LYZA (the “vessel”) during a wet tow voyage. The vessel mortgagee, as co-insured, sought recovery from H&M insurers, on the basis that the vessel was a constructive total loss.
It was common ground that the vessel capsized due to seawater ingress. A key issue was whether loss by perils of the seas was proved – as no steps had been taken to investigate the cause of the seawater ingress, despite the vessel remaining afloat for several weeks before being scuttled, and the insured did not advance any explanation at trial for the seawater ingress.
The High Court initially found in the insured’s favour, leaving insurers liable for a USD 56m claim. However, in a decisive reversal, the Court of Appeal overturned that judgment. We focus on the main issue on appeal – proving that the loss was caused by perils of the seas.
The Singapore courts applied English law (the governing law of the policy).
Loss by perils of the seas
The Court found that the insured had not discharged its burden of proof either on the basis of:
- Direct proof – Putting forward a cause attributable to perils of the seas; or
- Circumstantial proof – Relying on a rebuttable presumption that the vessel was lost by perils of the seas, by showing that the vessel was seaworthy and lost in wholly unexplained circumstances.
On direct proof, as the insured did not adduce any evidence at trial on the cause of the seawater ingress, the insured had to argue that where a vessel is lost by seawater ingress, it need not prove what caused the ingress provided it can demonstrate fortuity. The Court disagreed – seawater ingress is not ipso facto fortuitous and the insured must identify a cause (or possible causes) to prove fortuity.
On circumstantial proof, the Court explained that the presumption was intended to assist an insured where the cause cannot be discovered (e.g., the vessel is lost at sea), not where the loss is capable of being explained but the available evidence was simply not pursued. This case fell within the latter – the vessel remained available for inspection after capsizing, yet no meaningful investigation was undertaken to determine the cause. Accordingly, the presumption was inapplicable.
Conclusion
This decision underscores the strict evidential burden on insureds seeking recovery under marine insurance policies. It highlights the importance of taking investigative steps to ascertain the cause of loss as far as possible, even before any dispute has arisen. For mortgagees, this may mean getting involved at an earlier stage to ensure future claims are not prejudiced.
For a detailed analysis, see Helmsman’s full case update here.
