In Engelhart CTP (US) LLC v Lloyd’s Syndicate for the 2014 year of account [2018] EWHC 900 (Comm) the cif buyer claimed under an all risks open policy when containers were found not to contain the copper ingots it had traded, only slag of nominal value. It was assumed that no copper was ever shipped and that the claimant in good faith has paid for and taken up fraudulent bills of lading and other shipping documents. Sir Ross Cranston held that the purpose of all risks marine cargo insurance, was to cover loss of or damage to property. In this case, there was no physical loss of or damage to property as there never was any cargo of copper ingots, and, consequently, no cargo to be physically lost or damaged. Something must exist to be physically lost.
The scope of the policy was extended by additional clauses but these were all suggestive of physical loss. The first was a Container clause which provided that the policy “is also to pay for shortage of contents…notwithstanding that seals may appear intact”. The word “shortage” in the clause bore its ordinary meaning and could not cover a situation where there were no goods in the first place. The second was a Fraudulent Documents clause which was expressly provided to cover a physical loss of goods through acceptance of fraudulent documents of title. Neither clause extended the scope of the policy beyond physical loss of or damage to goods.