Ince partner Carrie Radford and senior associate Lucy Espley comment on the extraordinary Brillante Virtuoso case
In 2011, the 1992-built Suezmax tanker Brillante Virtuoso was within Yemeni waters waiting for a security team. A small boat approached carrying seven armed persons. The master allowed them to board, apparently believing they were the security team. The ‘security team’ hijacked the ship and within hours set the vessel on fire. The ship was abandoned, the crew was rescued by a passing ship and Brillante Virtuoso was later sold for scrap.
The vessel’s owner, Suez Fortune Investments Limited, and mortgagee bank, Piraeus Bank AE, brought a claim on the vessel’s war risks policy for a constructive total loss, totalling US$77M, claiming that the loss of the vessel was caused by piracy or hijacking. The owner’s claim was struck out in 2016 but the bank continued to pursue its claim. The underwriters’ defence was that the hijacking had been staged and the fire deliberately started with the connivance of the beneficial owner, Mr Iliopoulos.
In the English Commercial Court, Judge Teare carefully unpacked the leading authorities on establishing wilful misconduct, and the large volume of witness and expert evidence, in coming to his clearly articulated judgment in favour of the war risk underwriters. In particular, Judge Teare found it improbable that:
For war risk underwriters, this will be a very pleasing result following a hard-fought dispute. The Judge’s decision endorses the underwriters’ concerns about the claim as well-founded and confirms that the questions they and their advisors asked from the very early days after the casualty were justified.
The judgment is one of common sense and makes plain, when looking at the story as a whole, that the number of improbable events surrounding the ‘hijacking’ could not have been coincidences. Mr Justice Teare weighed up the body of expert evidence, across many fields, and gave reasons for preferring the explanation offered by the underwriters’ experts. The Judge was unpersuaded by evidence from the chief engineer, whose story changed and by the master, who failed to answer difficult questions and whose answers sometimes had no basis in reality.
While owners normally give evidence in scuttling cases, the Judge noted that Mr Iliopoulos had not been called in this trial to give evidence, because his counsel had advised that he should not give evidence in light of the ongoing investigation by the City of London Police. No inference could be drawn against the bank in that regard, but Mr Iliopoulos’ earlier attendance in the action, where he showed that he was capable of deliberate and planned dishonesty in relation to this very case, allowed the Judge to draw an adverse inference which strengthened the underwriters’ case. The soundness of the judgment in fully considering the detailed factual and expert evidence and attributing weight accordingly should make it hard to appeal.
Carrie Radford co-leads the firm’s marine insurance practice in London. Lucy Espley is a qualified insurance litigation lawyer.
* Headline quote taken from “The Hijacking of the Brillante Virtuoso”, by Kit Chellel and Matthew Campbell, 27 July 2017, Bloomberg Businessweek