apply to a case where the fraudulent shipowners destroyed or stole the cargo owned
by the assured, because the destruction or theft of the cargo was “simply a
by-product of an operation carried out for the purposes of gain”, and no malice
was directed against the cargo or the assured. Conversely, in Strive Shipping Corp
v. Hellenic Mutual War Risks Association (Bermuda) Ltd (The Grecia Express),
21
Colman, J, was of the view that the words “any person acting maliciously”, cover
casual or random vandalism and do not require proof that the person concerned had
the purpose of injuring the assured or even knew the identify of the assured.
22
Recently, the Supreme Court in Atlasnavios-Navagação, LDA v. Navigators Insurance Co Ltd (The B Atlantic),
23 having reviewed various judicial opinions on the
subject, concluded that Colman, J’s interpretation went too far. According to Lord
Mance a “malicious act” relates to situations where a person acts in a way which
involves an element of spite or ill-will or the like in relation to the property insured,
or at least to other property or perhaps even to a person.
24 Based on that interpretation, in the scenario set above the assured would not be able to recover for the loss
sustained as long as the insurer could prove that the perpetrator (i.e., whoever
circulated the malicious code or software which disabled the ECDIS) was a commercial rival who with “spite” or “ill-will” intended to cause damage on the insured
vessel. It should be noted that in a case where the source of the code/programme
could not be identified, given that Colman, J’s broad interpretation of the term
“malicious act” is now jettisoned, the loss caused as a result of malfunction of the
ECDIS system in this scenario will be covered under the hull & machinery policy. In
other words, there will be silent cyber cover for the collision caused by the malfunction of the ECDIS even though the source of malfunction is a cyber attack.
Let us consider another example which relates to P & I cover by borrowing the facts
of a recent judgment mentioned earlier. In MSC Mediterranean Shipping Co SA
v. Glencore International AG,
25 the cargo was stolen by unauthorised recipients who
managed to obtain pin codes sent to the consignee by the carrier for the electronic cargo
release system that operated at that port of discharge. When the legitimate holder of the
bill of lading showed up and the carrier failed to deliver the cargo, the bill of lading
holder sued the carrier for breach of contract, bailment and conversion on the basis that
the cargo should have been delivered against bills of lading and delivering the cargo
against the presentation of a pin code to an unauthorised third party amounted to breach
of the carriage contract. The first instance judge, Andrew Smith, J, gave judgment in
favour of the holder of the bill, stressing that delivery under a contract of carriage meant
21 [2002] EWHC 203 (Comm); [2002] 2 Lloyd’s Rep 88, at 96–97.
22 Colman, J, repeated this view in North Star Shipping Ltd v. Sphere Drake Insurance plc [2005]
EWHC 665 (Comm); [2005] 2 Lloyd’s Rep 76 [81–3]; aff’d [2006] EWCA Civ 378; [2006]
Lloyd’s Rep IR 519.
23 [2018] UKSC 26; [2018] 2 WLR 1671.
24 Ibid. at [22]. Cf the judgment of Flaux, J, [2014] EWHC 4133 (Comm); [2015] 1 Lloyd’s Rep
117.
25 [2015] EWHC 1989 (Comm); aff’d [2017] EWCA Civ 365.
Cyber Risks Insurance in the Maritime Sector: Growing Pains and Legal Problems
635
by the assured, because the destruction or theft of the cargo was “simply a
by-product of an operation carried out for the purposes of gain”, and no malice
was directed against the cargo or the assured. Conversely, in Strive Shipping Corp
v. Hellenic Mutual War Risks Association (Bermuda) Ltd (The Grecia Express),
21
Colman, J, was of the view that the words “any person acting maliciously”, cover
casual or random vandalism and do not require proof that the person concerned had
the purpose of injuring the assured or even knew the identify of the assured.
22
Recently, the Supreme Court in Atlasnavios-Navagação, LDA v. Navigators Insurance Co Ltd (The B Atlantic),
23 having reviewed various judicial opinions on the
subject, concluded that Colman, J’s interpretation went too far. According to Lord
Mance a “malicious act” relates to situations where a person acts in a way which
involves an element of spite or ill-will or the like in relation to the property insured,
or at least to other property or perhaps even to a person.
24 Based on that interpretation, in the scenario set above the assured would not be able to recover for the loss
sustained as long as the insurer could prove that the perpetrator (i.e., whoever
circulated the malicious code or software which disabled the ECDIS) was a commercial rival who with “spite” or “ill-will” intended to cause damage on the insured
vessel. It should be noted that in a case where the source of the code/programme
could not be identified, given that Colman, J’s broad interpretation of the term
“malicious act” is now jettisoned, the loss caused as a result of malfunction of the
ECDIS system in this scenario will be covered under the hull & machinery policy. In
other words, there will be silent cyber cover for the collision caused by the malfunction of the ECDIS even though the source of malfunction is a cyber attack.
Let us consider another example which relates to P & I cover by borrowing the facts
of a recent judgment mentioned earlier. In MSC Mediterranean Shipping Co SA
v. Glencore International AG,
25 the cargo was stolen by unauthorised recipients who
managed to obtain pin codes sent to the consignee by the carrier for the electronic cargo
release system that operated at that port of discharge. When the legitimate holder of the
bill of lading showed up and the carrier failed to deliver the cargo, the bill of lading
holder sued the carrier for breach of contract, bailment and conversion on the basis that
the cargo should have been delivered against bills of lading and delivering the cargo
against the presentation of a pin code to an unauthorised third party amounted to breach
of the carriage contract. The first instance judge, Andrew Smith, J, gave judgment in
favour of the holder of the bill, stressing that delivery under a contract of carriage meant
21 [2002] EWHC 203 (Comm); [2002] 2 Lloyd’s Rep 88, at 96–97.
22 Colman, J, repeated this view in North Star Shipping Ltd v. Sphere Drake Insurance plc [2005]
EWHC 665 (Comm); [2005] 2 Lloyd’s Rep 76 [81–3]; aff’d [2006] EWCA Civ 378; [2006]
Lloyd’s Rep IR 519.
23 [2018] UKSC 26; [2018] 2 WLR 1671.
24 Ibid. at [22]. Cf the judgment of Flaux, J, [2014] EWHC 4133 (Comm); [2015] 1 Lloyd’s Rep
117.
25 [2015] EWHC 1989 (Comm); aff’d [2017] EWCA Civ 365.
Cyber Risks Insurance in the Maritime Sector: Growing Pains and Legal Problems
635