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$55 Million Oil Tanker Hijacked and Bombed by Pirates

The owners of a $55 million oil tanker, who claim that she was attacked in the Gulf of Aden by a band of pirates who set off a bomb in her engine room, leaving her dead in the water, have convinced a High Court judge that she was a constructive total loss (CTL).

The vessel, which was carrying 141,000 tons of fuel oil, was en route to China but had moored off Aden in order to pick up a security team. It was the owners’ case that a group of armed and uniformed men appeared in a small boat, describing themselves as the ‘port authorities’. They were in fact pirates who threatened the master and demanded that he sail to Somalia.

After the main engine stopped and could not be re-started, the pirates were said to have detonated a bomb in the engine room and made their getaway. As fire raged through the vessel, the crew had to be rescued by the US Navy. The ship was severely damaged and its owners ultimately sold her for scrap for $700,000.

The vessel’s insurers disputed the extent of the damage and the costs of repair and argued that the owners had forfeited any right they might have had to declare her a CTL by selling the hulk. However, the judge ruled the latter argument ‘misconceived’ and found that the costs of repair would have been at least $59.6 million.

Subject to a number of other defences put forward by the insurers – which had yet to be considered – the judge’s decision entitled the owners to full compensation for the loss of the vessel and to be indemnified in respect of salvage and other costs.