A "Business-like" Approach to Insurance Interpretation: Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors [2025] EWCA Civ 1019

The judgment is available here: https://caselaw.nationalarchives.gov.uk/ewca/civ/2025/1019

Introduction

The Court of Appeal’s decision in Delos & Ors v Allianz provides valuable guidance on two crucial points of insurance law: the interpretation of exclusions in war risk policies, and the scope of the duty of fair presentation under section 3 of the Insurance Act 2015. Despite its roots in the marine sector, the reasoning is likely to shape insurance practices more broadly.

This dispute arose from the detention of the Capesize bulk carrier Win Win by Indonesian authorities between February 2019 and January 2020. The detention followed the vessel anchoring inside Indonesian territorial waters without clearance, an “illegal parking,” as the judge put it. The vessel’s owners claimed a constructive total loss under their war risk cover, but insurers resisted liability on two grounds. The first ground was that the detention fell within an exclusion clause, known as Exclusion 1(e). The second ground was that the insured had failed to comply with the duty of fair presentation by not disclosing criminal proceedings against their nominee director. The Commercial Court rejected both arguments, and the Court of Appeal has now upheld that decision.

Exclusion 1(e) and “Businesslike Interpretation”

The war risk policy incorporated the American Institute Hull War Risks Clauses (1977) with the 1984 Addendum. Exclusion 1(e) attempted to cover for “arrest, restraint or detainment under customs or quarantine regulations and similar arrests… not arising from actual or impending hostilities.”

The central question was whether the Indonesian authorities’ actions fell within this wording. At first instance, Dias J concluded that the detention under Indonesian territorial and shipping laws was not “sufficiently similar” to customs or quarantine regulations. On appeal, Males LJ stressed the importance of a “businesslike interpretation” of policy wording, understood through the eyes of commercial actors in shipping and insurance. He held that “customs regulations” should be understood to mean laws concerned with regulating imports and smuggling, while “quarantine regulations” naturally referred to public health measures. For the “and similar” wording to apply, the detaining regulation must pursue a similar purpose. Because the detention here arose from an anchoring offence, not from trade or health concerns, it was not caught by the exclusion.

Exclusions, therefore, must be given their proper, but not artificially broad, effect. The Court rejected the insurers’ attempts to extend Exclusion 1(e) to all peacetime detentions, making it clear that a similarity of purpose is required. As a result, the insured’s claim for constructive total loss was not excluded.

The Duty of Fair Presentation

The second issue was whether the insureds breached their duty under section 3 of the Insurance Act 2015 by failing to disclose that Mr Bairactaris, their nominee director, faced criminal charges in Greece shortly before policy renewal.

Section 3 requires insureds to disclose every material circumstance they know or ought to know, or enough to put a prudent insurer on notice to make enquiries. A circumstance is material if it would influence a prudent insurer’s judgment on whether to accept the risk and on what terms. The duty is judged against what senior management or those arranging insurance know, and also what would have been revealed by reasonable enquiries. Breach leads to proportionate remedies depending on whether it was deliberate, reckless, or innocent.

Mr Bairactaris had broad powers on paper as sole director, but in practice acted only on instructions from the beneficial owners. He played no role in the management of the vessel or in assessing the risk. Both the judge and the Court of Appeal found that he was not part of the company’s “senior management” for the Act. His knowledge of the charges was therefore not automatically attributable to the insured.

Insurers also argued that reasonable enquiries would have uncovered the charges. The courts disagreed, noting that he was a nominee with no operational role, that general risk-based questioning would have been futile, and that there was no established industry practice of interrogating nominee directors. On this basis, the insureds had not failed in their duty of fair presentation.

Even had there been a breach, the judge considered (obiter) that insurers would still have accepted the risk on the same terms, subject only to a condition that Mr Bairactaris be replaced, which would have been met. That conclusion would have left insurers with no substantive remedy.

Key Lessons

The decision carries broader significance for insurers and insureds alike:

Clauses must be construed in their commercial context. “Similar” wording has meaning, but should not be stretched to catch all peacetime regulatory action.

Titles alone are not determinative. For disclosure purposes, what matters is real decision-making authority and involvement in risk management.

Insurers cannot assume that all potential sources of knowledge must be interrogated. The scope of the enquiry depends on the context, roles, and industry practices.

The 2015 Act ensures that even if nondisclosure occurs, insurers do not automatically secure avoidance. Alternative remedies reflecting the actual underwriting response are possible.

Conclusion

Delos v Allianz highlights how courts will balance precision in policy interpretation with fairness in disclosure duties. For insurers, it serves as a reminder to draft exclusions carefully and to recognise the limits of what insureds can reasonably be expected to know. For insureds, it demonstrates the importance of transparent internal processes and honest communication with underwriters. The judgment strengthens the modern approach: a fairer, more commercial framework for allocating risk in the insurance market.