Facts
This decision arose out of an application for leave to serve proceedings out of the jurisdiction in Thailand.

Nima purchased a cargo of rice that was to be shipped on the "Prestrioka" from a port in Thailand for carriage to Dakar, Senegal under a CIF contract. The vessel was chartered by the sellers of the cargo on an amended Gencon voyage charter. Shipment of the cargo was acknowledged by two Congen bills of lading. The vessel left Thailand, but never arrived in Dakar.

Nima claimed against insurers for the loss of the cargo but insurers (who were based in Thailand) denied liability, so Nima issued proceedings and obtained permission to serve a claim form in Thailand. Insurers applied to set aside the order but were unsuccessful in the first instance and now appealed to the Court of Appeal on the grounds that there was no serious issue to be tried between the parties; alternatively, that Thailand was the more appropriate forum.

The cargo had been insured under an all risks Marine Cargo Policy incorporating Institute Cargo Clauses (A). These provided:
"8.1 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either
8.1.1 On delivery to the Consignee or other final warehouse or place of storage at the destination named herein,
8.1.2 On delivery to or any other warehouse or place of storage, whether prior to or at the place of destination named herein which the Assured elect to use…".

Insurers' principal defence was that the "Prestrioka" had all the hallmarks of a phantom vessel (a vessel which has no valid classification, is not registered with any recognised ship registry and is used as a vehicle for fraud on cargo owners). Under section 44 of the UK Marine Insurance Act of 1906 (‘MIA’):
"Where the destination is specified in the policy and the ship, instead of sailing for that destination, sails for any other destination, the risk does not attach".
If this was a phantom vessel, the owners of the vessel had never had any intention of sailing to Dakar. Consequently, the risk never attached.

Nima argued that clause 8 (the warehouse-to-warehouse clause) of the Institute Clauses took precedence over section 44, so that cover had attached when the goods left the warehouse and could not subsequently become "unattached" because the vessel sailed for another destination.

At first instance, the judge decided that the understandable suspicions raised by the disappearance of the vessel were not sufficient to conclude that this was a phantom vessel case. Insurers had not, therefore, proved that the claim stood no reasonable prospect of success.

Since that hearing, insurers had come up with more evidence to support their contention that this was a phantom vessel. In light of this, the Court of Appeal was prepared to conclude, even at this preliminary stage, that the shipowners had had criminal intent from the outset not to follow the specified route.

Judgment
The crucial issue, therefore, was whether section 44 prevented the risk from attaching. Rule 2 of the "Rules for the Construction of Policy" in the first schedule to the MIA, provides that (save where the context otherwise requires) "where the subject matter is insured "from" a particular place, the risk does not attach until the ship starts on the voyage assured."

Did the incorporation of the warehouse-to-warehouse clause displace this rule? The Court of Appeal held it did not.

A contract of marine insurance may be extended to protect against losses on any land risk that may be incidental to any sea voyage (section 2(1) MIA). The modern warehouse-to-warehouse clause is an example of this. But the extension does not alter the fundamental nature of a marine insurance policy, which is a policy covering interests of the insured in a marine adventure which, in the case of a voyage policy, is from port A to port B.

In construing the policy, the starting point is the definition of the insured voyage. If, as here the insured voyage never began, the risk never attached (Simon Israel [1892] 62 LTMS 352, Kallis Manufacturers -v- Success Insurance [1985] 2 Lloyd's Rep 8).

When an insurer invokes section 44, the court has to determine, retrospectively, not just the contractual but the actual destination of the ship at the time of sailing, taking into account the actions and intentions of the owners and/or master at the time of departure. If it finds that the vessel was not bound for the specified destination, section 44 applies, so that where, as here, there was a warehouse-to-warehouse clause, the risk which prima facie attached when the goods left the warehouse will be found not to have attached.

The Court of Appeal was satisfied, therefore, that insurers had shown that Nima's case had no real chance of success and the order granting leave to serve proceedings in Thailand was overturned.

Comment
This decision raises an interesting problem. What would happen if the goods were lost or stolen by a third party en route from the warehouse to the ship? Lord Justice Potter thought the answer might be that, since the vessel had not, in fact, sailed for another destination at the time of the loss, section 44 would have no application and the risk which had attached to the goods on leaving the warehouse could not be invalidated as the result of an event (the beginning of the voyage) which had not yet occurred at the time of the loss. But the issue was not one which he had to address and he left it at that.