The words "customs regulations" in the exclusion in clause 4.1.5 Institute War and Strikes Clauses, Hulls-Time of 1.10.83 were wide enough to include provisions having the force of law in the country concerned as to the import or export of controlled drugs so that the detention of a vessel under Greek criminal law where cocaine was discovered on board was excluded from cover under the insurance policy.Appeal by the claimant insured from a judgment of Cresswell J that the defendant underwriters were not liable on a marine insurance policy. The claimants' vessel "Kleovoulos of Rhodes" was insured by the defendants under the terms of war risks insurance that included the Institute War and Strikes Clauses, Hulls-Time of 1.10.83. Clause 4.1.5 of the Institute Clauses excluded loss arising from detainment by reason of infringement of customs regulations. The vessel sailed from Colombia to Greece where she was detained following the discovery of cocaine in a sea chest below the waterline. The master and crew were charged with drugs offences but eventually acquitted. Meanwhile the vessel was detained under the provisions of Greek criminal law long enough to become a constructive total loss ('CTL') under the policy. The claimants claimed on the policy. The judge held that the loss was excluded by clause 4.1.5. The claimants appealed arguing that the judge should have defined "customs regulations" before deciding whether it included a prohibition against importation and in any event that he was wrong as a matter of causation to hold that the CTL of the vessel was a loss arising from her detention by reason of an infringement of customs regulations.HELD: (1) The question was whether "customs regulations" in clause 4.1.5 was wide enough to include prohibitions on imports. Clause 4.1.5 had to be construed in context. The judge was right to approach the question in that way. (2) The Institute Clauses were drafted for use in insurance contracts throughout the world and in that context the natural meaning of "customs regulations" was not limited to dutiable goods but extended to goods whose import was prohibited. That was the naturally wide meaning given to the words in The Anita (1971) 1 Lloyd's Rep 487. Giving the words a businesslike interpretation there was no difference between smuggling and infringement of customs regulations. The fact that particular regulations were or were not enforced by the relevant Customs authorities was not determinative of the question whether those regulations were customs regulations within the clause. Further, the meaning of clause 4.1.5, as including laws prohibiting the import of goods, was settled by The Anita (supra) which the court would follow for the reasons given in Re Hooley Hill Rubber and Royal Insurance Co (1920) 1 KB 257. (3) As a matter of causation the judge was right to hold that the detention was by reason of the infringement of customs regulations even though the crew were acquitted. The proximate cause of the initial detention was the unlawful importation of drugs into Greece. The detention under Greek law continued so long as the investigation continued and that was still continuing when the six month period required for the vessel to be deemed a CTL expired.Appeal dismissed.

[2003] EWCA Civ 12

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