A. Introduction
1. On 17 December 2025, judgment was handed down by the Commercial Court in Oceanus Capital SARL v Lloyd’s Insurance Company [2025] EWHC 3293 (Comm) (“M/V ‘VYSSOS’”). The case concerned the scope of coverage under a mortgagee’s interest insurance policy in respect of a Vessel which was damaged by a mine strike in Ukrainian waters.
2. Sue Prevezer KC (siting as a Judge of the High Court) resolved the dispute in favour of the Claimant. The judgment is of wider practical importance for insurance practitioners both in (i) its interpretation of mortgagee’s interest insurance policies using the standard Institute Mortgagee’s Interest Clause wording and (ii) its examination of the concept of “privity” in the insurance context.
B. Factual Background
3. The M/V Vyssos (the “Vessel”) was a cargo ship whose owners had taken out a war risks insurance policy (“War Risks Policy”). That policy provided cover worldwide subject to various exceptions known as trading warranties. Those warranties included that the Vessel would not enter (amongst other waters) the territorial waters of Ukraine unless otherwise agreed with the insurer. If the insured was in breach of those trading warranties, they would not be entitled to any cover under the policy.
4. In 2022, the Claimant company provided financing to the shipowners in exchange for a mortgage over the Vessel, the assignment of various rights in her, and endorsement of the owner’s insurances, including the War Risks Policy. In addition, the Claimant also took out a mortgagee’s interest insurance policy (the “MII Policy”) from the Defendant .
5. The case primarily turned on the interpretation of Clause 1.1 of the MII Policy. That clause provided that the Claimant was entitled to be indemnified for any “loss resulting from loss of or damage to or liability of” the Vessel which would have prima facie been covered by the owner’s insurance policies but in respect of which payment had not been made due to an “insured peril”, provided always that such insured peril occurred or existed “without the privity” of the Claimant. The relevant “insured perils” were defined as including any breach of any trading warranties under the owner’s policies.
6. In December 2023, the Claimant was informed that the Vessel’s sub-charterers at the time intended to trade her into Ukrainian waters. The Claimant insisted that appropriate additional war risk cover be put into place for that trade. On 26 December 2023, the Claimant was provided by the Vessel’s charterer with a copy of what appeared to be the requested cover note, but what was in fact a forgery (the “Forged Cover”). The mortgagees then dropped their objections to the Vessel entering Ukrainian waters. On 27 December 2023, the Vessel was damaged by a mine strike in Ukrainian waters and, after various attempts to save her, declared a constructive total loss.
7. The mine strike having taken place in Ukrainian waters, there was no cover under the owner’s war risks policy. The Claimant therefore claimed under the MII Policy but the Defendant MII insurers declined the claim.
8. The Claimant sought a declaration from the Court that it was entitled to an indemnity unot der the MII policy, or alternatively damages for its breach.
C. The Issues
9. Coverage was denied by Lloyd’s on three principal bases which in turn formed the three key issues for consideration at trial. They were (at [27]):
9.1. Whether the proximate cause of the Claimant’s loss was the loss of or damage to the Vessel or the Forged Policy;
9.2. Whether the breach of the trading warranties in the owner’s war risks policy occurred or existed “without the privity” of the Claimant; and
9.3. Whether the existence or occurrence of the breach of the trading warranties was fortuitous.
10. A further issue – i.e. whether there was any mechanism by which the Claimant could have prevented the Vessel from trading into Ukraine and thereby acting in breach of the trading warranties – was conceded to be essentially a non-issue by the time of trial, and the Judge accepted that there was in practice nothing the Claimant could have done to prevent the trade (see [53] to [55]).
D. The Decision
Causation
11. On the first issue, the judge was satisfied that the proximate cause of the Claimant’s loss was the mine strike and not the Forged Policy. The loss would have prima facie been covered by the owner’s policies, the relevant policy for those purposes being the War Risks Policy (and not the Forged Policy which did not exist as a true policy in any sense). The loss was also “loss resulting from loss of or damage… to the Vessel” because the Claimant was claiming the loss of the damaged Vessel (as it would reasonably expect would prima facie be covered by the owner’s policies) and not the loss of its interest as assignee or loss payee. In that regard, the judge distinguished the Piraeus Bank case which concerned a policy with different wording (at [44] to [52]).
Privity
12. On the second issue there was no prior authority on what “privity” meant in the context of an MII policy. However, the judge was satisfied that analogies could be drawn with Section 39(5) of the Marine Insurance Act and the existing jurisprudence in relation to the concept of privity in that statute (at [71]). The relevant question was therefore whether the Claimant “consented to or concurred in” the breach of the trading warranties: meaning, in other words, whether it had agreed to or approved of that action (at [73]). Although the Claimant mortgagee had in a sense consented to the Vessel sailing into Ukrainian waters, it had only done so after it was lied to about the Forged Policy. As a consequence, the Court was not persuaded that the Claimant had so consented or concurred, because any such consent or concurrence had been obtained by fraud (at [75]). Moreover, it would upend the purpose of such a policy to leave the Claimant without cover where the loss was due to misconduct on the part of the charterer (at [76]).
Fortuitous Loss
13. To recall, it is well-established in English law that insurance will only cover losses which are fortuitous (i.e. which are not the inevitable consequence of voluntary or deliberate conduct by the insured). On this final issue, the Court was satisfied on the facts that the mine strike was clearly fortuitous (at [82]). This defence therefore failed.
E. Conclusion
14. In light of the above findings, the Court found in favour of the Claimant and granted the indemnity requested. However, Sue Prevezer KC granted permission to appeal to the Court of Appeal.
15. The case provides yet another example of the range of disputes in the English courts arising out of the ongoing Russo-Ukrainian military conflict. Members of 4 Pump Court continue to be instructed in a wide variety of cases in this area including shipping, insurance and reinsurance, and sanctions disputes.
Nicholas Vineall KC and Neil Dowers (instructed by Wikborg Rein LLP) of 4 Pump Court acted on behalf of the successful Claimant.
Oceanus Capital SARL v Lloyd’s Insurance Company [2025] EWHC 3293 (Comm).
Article written by Aphiwan Natasha King.