Brillante Virtuoso – Ruling on Attempted Maritime Insurance Fraud

October 07: Between 2008 and 2011, nearly 200 vessels were taken by Somali pirates around the Gulf of Aden. The hull market has been exposed to many such claims and the vast majority have been resolved successfully and efficiently (albeit not without some tragic loss of life and considerable distress for the crews). Very few vessels were substantially damaged.

The alleged Somali pirate attack on the Brillante Virtuoso – some 10-12 miles off Aden on the night of 5-6 July 2011 was no such thing.

The original account from owners was that in an attack by Somali pirates, the vessel had been hit by RPGs and caught fire. Later investigations established that an “improvised explosive incendiary device” (IEID) had been detonated in the purifier room, within the vessel’s engine room. There is no reported Somali pirate case involving the detonation of an IEID.

More recently, it was suggested that renegade members of the Yemeni navy or coastguard masqueraded as pirates and speculated that they might be able to ransom the vessel or trade it with Somali pirates. There is no reported case of a Yemeni navy/coastguard pirate attack on a commercial vessel.

The legal dispute which followed owners’ and their mortgagee bank’s claim against war risks underwriters started in 2012 and has occupied more than 20 weeks of court time since then.

On 7 October 2019, the Admiralty Judge and Judge in Charge of the Commercial Court, Mr Justice Teare, handed down his judgment following a trial which lasted some 52 days. This judgment establishes that underwriters’ initial scepticism about the claim and their later allegation of fraud against owners were entirely vindicated.

The judge, in a careful and considered judgment, found that the vessel’s beneficial owner, Mr Marios Iliopoulos, was the “instigator of the conspiracy” to destroy the vessel in order to commit insurance fraud. The judge was not “left in any doubt as to [that] conclusion”.

The vessel was insured for US$77 million. An earlier judgment of the Commercial Court had found the vessel to be a CTL on figures, with owners entitled to an additional US$8 million in expenses (some which is still subject to appeal).

Source: Kenneys Law