Richards Butler wins Appeal Court case for insurers against North Star

Richards Butler has won in the Court of Appeal, upholding the case of insurers against a shipowner suspected of scuppering its own vessel.

Richards Butler insurance head Mark Connoley represented insurers led by Sphere Drake Insurance in their landmark case against North Star Shipping.

The insurers were resisting a claim made by North Star under its war risks policy, saying that because co-owner Harry Petrakakos had failed to disclose allegations of dishonesty made against him in Greek criminal proceedings, the law allowed them to refuse to pay out.

The claim was made after the North Star was damaged by a bomb in July 1994 in a Piraeus shipyard. The insurers claimed that Petrakakos had been responsible for procuring, placing and detonating the bomb.

On 7 April the Court of Appeal dismissed North Star’s appeal against the April 2005 judgment of Mr Justice Colman, ruling that the insurers had made the correct decision.

But Lord Justice Longmore raised concerns about the potential ramifications of the current law for insureds, saying it could make it difficult to obtain any insurance cover. However, he added that he hoped the forthcoming review of insurance contract law being carried out by the Law Commission would address the issue.

Connoley instructed Nicholas Hamblen QC of 20 Essex Street. Robert McCunn, a consultant at shipping boutique Davies Johnson & Co, acted for North Star, instructing Quadrant Chambers’ David Goldstone. Davies Johnson replaced Shaw & Croft, which acted for North Star in the High Court.