Bitesize know how from the English Courts
Knowledge Counsel London
"…privity cannot mean something more favourable to the insurers under the MII Policy than it means in the general common law…"
Mortgagee’s interest insurance
The Commercial Court has considered the proximate cause of the loss of a vessel that was hit by a mine whilst in Ukrainian waters. The insurance claim arose under the financier’s MII policy (mortgagee’s interest insurance), which responds when the vessel’s primary insurance cover does not due to breaches of the underlying policies. The financier/mortgagee had consented to the vessel going to Ukraine after being presented with a cover note for additional war risks cover that turned out to be forged. The vessel was therefore in breach of trading warranties in the underlying policies and there was no additional war risks cover in place. The court held that the proximate cause of the loss of the vessel was the fact that it was hit by a mine, not the fact that the additional cover had turned out to be a forgery. The mortgagee had only consented to the vessel going into Ukrainian waters if additional cover was in place and so was not privy to the breach of trading warranties. The mortgagee was therefore entitled to be indemnified under the MII policy. However, the Commercial Court judge gave permission for an appeal, given that this was the first reported decision on the IMIC 1997 MII policy wording (Institute Mortgagees’ Interest Clauses – Hulls (1/3/97 CL337-1997).
For a more detailed discussion of the decision, please see our article by London partner Charles Buss here.
Aviation
The Commercial Court has handed down the latest decision in the ongoing disputes between Fibula Air Travel and Just Us Air that arose during the Covid-19 pandemic. Just Us was lessor and Fibula was described as Charterer under the leases (there were also two lessees). Fibula sought return of the security deposit after cancellation of the leases and Just Us counterclaimed for rental payments for the whole term. The court considered two defences brought by Fibula who contended that it was not required to pay the sums where certain condition precedents to payment relating to an audit and the obtaining of regulatory approvals had not been satisfied. After detailed consideration of the terms of the lease, the court held that Just Us’s claim succeeded.
Fibula Air Travel SRL v Just Us Air SRL [2025] EWHC 3259 (Comm), 12 December 2025
Adjudication
The Technology and Construction Court has upheld and ordered the enforcement of an adjudication award arising out of a JCT design and build subcontract for the design and installation of mechanical works. The dispute related to payment no. 8 and an initial adjudication required the employer, POL, to pay the contractor, VMA. POL referred the issue to a true value adjudication which decided in POL’s favour. VMA’s challenge to the decision alleged various breaches of natural justice as a result of the adjudicator taking points which had not been raised, using unsupported guesswork and applying a blanket level of reduction. The judge rejected these arguments and concluded that the adjudicator had done his best with the imprecise evidence before him, using his experience, to achieve the rough justice that adjudication requires. The adjudicator did not go outside the boundaries of what was permissible when considering an interim application such as this one.
Project One London Ltd v VMA Services Ltd [2025] EWHC 3304 (TCC), 18 December 2025
Arbitration
Two companies have successfully challenged an arbitration award on the basis that they were not party to an agreement with a company, P, that provided intelligence gathering services to support legal proceedings. P commenced arbitration against the companies (together with a third company) alleging that sums were outstanding under the agreement. The agreement had been entered into with P by a US law firm that was acting for the companies in a dispute. The court held that the law firm did not have implied actual or ostensible authority to bind the companies to the agreement, nor was it part of a solicitor’s usual authority to bind its client to such agreements. The court distinguished between the solicitor having a remit to enter into a contract as principal with a service provider where the costs are then passed on to the client as a disbursement and whether the solicitor has authority to bind the client as principal to the contract with the service provider. Solicitors do not have usual authority to do the latter. The challenge under section 67 of the Arbitration Act 1996 was successful and the award was set aside as the tribunal had no jurisdiction over the two companies (although it remained in place against the third company).
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