This blog post is by James Beeton of 12 King’s Bench Walk.

In this short but interesting judgment, Knowles J considered the liability of insurance underwriters in the context of sums paid out by a cruise company following a sickness outbreak on a cruise ship. His judgment emphasises the centrality in disputes of this nature of the contractual relationship between the various parties and the wording of the relevant policy.

This case involved an outbreak of norovirus on a cruise ship in July 2009, which was significant enough that the voyage had to be cut short. The head charterers of the vessel held a policy of insurance underwritten by the Defendant. The Claimant cruise company was named as a co-insured under that policy. The affected passengers were told that they would receive payments from their various tour operators to cover the amount they had paid for the cruise along with other sums. The Claimant agreed to meet those costs and then sought an indemnity against the liabilities it claimed to have incurred as the ‘contracting carrier’ under the Athens Convention 1974.

Liability Under Athens Convention

Knowles J rejected the argument that the Claimant was a ‘contracting carrier’ for the purposes of the Athens Convention. The passengers had contracted not with the Claimant, but with their respective tour operators. Those contracts were not simply ‘booking contracts’ (i.e. arranging a cruise for the passenger with the cruise provider which would then be subject to a separate contract) – they were contracts to provide the cruise itself. The evidence also showed that the Claimant had not considered itself to have a direct contractual relationship with the passengers at the time of the outbreak. Finally, the passengers’ claims, including under the Athens Convention, lay solely against the tour operators with whom they had contracted.

The Policy

Knowles J went further in rejecting the argument that the liability relied on by the Claimant fell within the covered category under the insurance contract of ‘losses, costs and expenses incurred as Charterers.’ The simple point was that the Claimant was not a Charterer of the vessel – it was a general sales agent appointed to market cruises on the vessel. It also did not hire out the vessel or any part of it, nor was the vessel under its orders. In practice, Knowles J concluded, the Claimant’s name had been added to the policy without any real thought and such addition ‘did not add anything material, at least in the circumstances of this case.’

Payment to Passengers

Whilst it was accepted that the Claimant had made available some money and discounts on future cruises for passengers, Knowles J was not satisfied that they had been made available to the passengers directly rather than to the tour operators, so that they could be passed on to the passengers. Properly understood, the decision by the Claimant was not based on a potential liability to the passengers, but was motivated by a desire to preserve its commercial relationship with the tour operators.

Fault or Neglect

Knowles J did not feel it necessary to reach a view on whether or not there had been fault or neglect on the part of the Claimant. Little evidence had been adduced of any quality on that issue in any event – in particular the Claimant’s vessel outbreak protection plan had not been provided.

James Beeton Insurance

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