Claim No: CFI 013/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

AL BUHAIRA NATIONAL INSURANCE COMPANY

Claimant

and

ARAB WAR RISKS INSURANCE SYNDICATE

Defendant

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JUDGMENT OF H.E. JUSTICE MICHAEL BLACK KC

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UPON the Part 7 Claim Form dated 14 February 2024 (the “Claim”)

AND UPON the Defendant’s Acknowledgement of Service dated 20 March 2024

AND UPON the Defendant’s Amended Defence without counterclaim dated 3 September 2024

AND UPON the Claimant’s Amended Reply to Defence dated 20 September 2024

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant in a Trial held before H.E. Justice Michael Black dated 7 April to 10 April (the “Trial”)

IT IS HEREBY ORDERED AND DECLARED THAT:

1. It is an implied term of the Reinsurance Contract made between the Claimant and the Defendant that the Defendant is liable to indemnify the Claimant against costs and expenses properly incurred in defending claims brought by or against Horizon Energy LLC and Al Buhaira International Shipping Inc arising out of or in connection with Marine Hull War Policy No.: SH-HULL/000114/18/SH.

2. The remainder of the Claimant’s claims are dismissed.

3. The Defendant shall pay to the Claimant its costs of the proceedings, immediately assessed in the sum of AED 4,563,051.74 within 14 days of the date of this Judgment.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 9 September 2025
At: 8am

SCHEDULE OF REASONS

THE PARTIES

1. The Claimant (“ABNIC”) is an insurance company incorporated in Sharjah, United Arab Emirates. It has been in business for over 45 years. It has branches throughout the UAE. ABNIC writes both personal and commercial lines of business. Amongst its commercial lines is Marine Hull Insurance.

2. The Respondent (“AWRIS”) is a syndicate of over 194 insurers from the MENA Region (including ABNIC) incorporated in the Kingdom of Bahrain. It has been in business for a similar period of time. AWRIS sees its objective as protecting the interests of Arab insurance markets for Marine War Risks (amongst others). It offers reinsurance cover on both a treaty and facultative basis for marine war and related perils, including terrorism and piracy, which are normally excluded from a standard Marine Hull and Machinery policies. Its products are based on recognized international conditions such as the Institute War and Strike Clauses.

THE BACKGROUND FACTS IN OUTLINE

3. ABNIC entered into 2 insurance policies: (1) a Marine Hull & Machinery Policy No.: SH-HULL/000113/18/SF (“the Hull Policy”) and (2) a Marine Hull War Policy No.: SH- HULL/000114/18/SH (“the War Policy”). The insured under the Underlying Policy was Horizon Energy LLC (“Horizon”), a company incorporated in Dubai, together with its subsidiaries and/or affiliated companies and/or other interests as named for their respective rights and interests, which included Al Buhaira International Shipping Inc, a Liberian company (“ABIS”). ABIS was the owner of a tanker, the m/t "BETA" (the “m/t BETA”). The War Policy insured the m/t BETA against Hull War Risks, Hull War Protection and Indemnity and Crew War Protection and Indemnity for the period from 10 June 2018 to 9 June 2019. The sum insured was USD 70 million.

4. AWRIS entered into a Reinsurance Contract with ABNIC covering the period from 10 June 2018 to 9 June 2019 (“the Reinsurance Contract”) on a facultative basis in the 100% reinsurance of the War Policy.

5. On 18 November 2020, Horizon and ABIS advised ABNIC of a claim under the Hull Policy, stating, among other things, that the m/t BETA had disappeared "within the insurance cover period." This document together with those attached to it were sent to AWRIS under cover of an email dated 6 January 2021.

6. By letter dated 25 October 2021, Horizon gave formal notice of a claim in respect of the loss of the m/t BETA (“the Notice”).

7. ABNIC says that the Notice was sent to AWRIS by email on 3 November 2021.

8. On 10 November 2021, Solicitors acting for ABNIC wrote to Horizon notifying it that ABNIC was avoiding both the Hull and War Policies.

9. The same day ABNIC commenced the DIFC Court Proceeding against Horizon and ABIS (“the Defendants”) seeking a declaration that it was entitled to avoid both the Hull Policy and the War Policy (“the DIFC Proceedings”). The Defendants challenged the jurisdiction of the DIFC Courts, but on 27 April 2022 the DIFC Court of First Instance dismissed the jurisdiction challenge.

10. On 7 July 2022, Horizon and ABIS initiated proceedings against ABNIC in the Sharjah Court of First Instance (Case No. 5182/2022 Civil Plenary - the “Sharjah Proceedings”).

11. On 19 April 2023, the DIFC Court of Appeal dismissed the Defendants’ challenge to the 27 April 2022 decision of the DIFC Courts.

12. On 20 September 2023, the Sharjah Court stayed the Sharjah Proceedings in favour of the DIFC Proceedings.

13. On 12 October 2023, the DIFC Court of Appeal dismissed an application by the Defendants to refer the DIFC Proceedings to the Union Supreme Court.

14. On 14 February 2024, ABNIC commenced these proceedings against AWRIS seeking amongst other things:

15. On 26 September 2024, H.E. Justice Robert French gave judgment in the DIFC Proceedings. The Defendants did not appear. His Excellency held (Al Buhaira National Insurance Company v (1) Horizon Energy LLC (2) Al Buhaira International Shipping Inc [2021] DIFC CFI 098, 29 September 2024 [135]-[136]):

16. Notwithstanding the Judgment of H.E. Justice Robert French, on 31 March 2025 Horizon applied to the Sharjah Court to lift the stay ordered on 20 September 2023 on the basis that the DIFC Courts had issued a final and binding judgment in Case No. CFI-098-2021 and “the Plaintiffs do not have any legal impediment to resume the current claim”. On 7 April 2025, ABNIC requested that the Sharjah Court lift the stay and dismiss the claim. The Sharjah Court fixed a hearing for 30 April 2025.

17. ABNIC summarises its claim in these proceedings as seeking declarations against AWRIS under the Reinsurance Contract that it is entitled to be indemnified against:

RELEVANT PROCEDURAL HISTORY

18. AWRIS submitted its Defence on 26 April 2024. ABNIC filed its Reply on 17 May 2024.

19. On 25 June 2024, AWRIS made an application to the Court that:

20. On 6 August 2024, I allowed the application in part, striking out certain paragraphs of the Particulars of Claim with permission to amend, but denying the application to stay or adjourn the proceedings.

21. ABNIC served Amended Particulars of Claim on 20 August 2024, AWRIS served an Amended Defence on 3 September 2024 and ABNIC served an Amended Reply on 20 September 2024. Pleadings therefore closed shortly before the judgment in CFI- 098-2021.

22. It is unnecessary to record the other steps in the proceedings leading up to the trial.

23. The trial took place between 7 and 10 April 2025. ABNIC was represented by Mr Nicholas Craig KC and AWRIS by Mr Alex Potts KC.

24. I heard the following witnesses:

25. I consider that all of the written evidence of all of the fact witnesses bore the fingerprints of the legal teams that drafted them. Mr Hamama, for example, referred to “the parties’ pleadings” in his second witness statement but admitted in answer to a question from me that he did not know what a pleading was. I do not single out Mr Hamama, all the written evidence displayed the same vice – it bore no resemblance to the manner in which the witnesses expressed themselves orally. I have no hesitation in disregarding the witnesses’ written evidence save where it is corroborated by contemporaneous documents or where it has been credibly reasserted under cross-examination.

26. I have to say that I am disappointed that two such experienced law firms as those representing the parties in this case should both have treated the witness statements as secondary pleadings.

THE FACTS IN DETAIL

27. Mr Al Shaikh said that the general procedure followed when an insured approached ABNIC to purchase war cover was that ABNIC would request information from the underlying insured and perform a risk assessment exercise to decide whether or not the risk is one which ABNIC wishes to insure, at the direct level. If so, ABNIC will approach AWRIS (being ABNIC's long-standing preferred reinsurance partner for 100% facultative placements of this type), provide the relevant underwriting information and a draft quotation slip (which contains the proposed terms, conditions, limits and deductibles of the direct cover) and request AWRIS's agreement to provide 100% facultative reinsurance support. In so doing, ABNIC will typically request a commission measured by a percentage of the total premium, in exchange for introducing the business to AWRIS.

28. Mr Al Shaikh continued that if AWRIS agrees to provide 100% facultative reinsurance support, this will be confirmed in writing by AWRIS. Thereafter, ABNIC will issue the premium closings and facultative placement slip and AWRIS will issue a cover note to ABNIC either by email, in hard copy or a combination of the two. Mr Hamama did not accept that AWRIS would issue or sign a “facultative placement slip" of the sort prepared by ABNIC, (which AWRIS would consider to be a facultative premium closing as it does not contain any policy terms or conditions).

29. After AWRIS has agreed to provide 100% facultative reinsurance support, and confirmation that cover has been bound has been received, ABNIC will issue the corresponding direct policy, on back-to-back terms, to the underlying insured.

30. When it comes to renewals, the established practice was for the cover note issued in the first year to simply be renewed 'on expiring terms' (i.e., on the basis of the expiring terms of the applicable cover note). It is only if material changes to the terms, conditions or limits of cover are requested by the underlying insured that a new cover note or an addendum might be issued, to reflect these, if necessary and if specifically agreed between ABNIC and AWRIS. Otherwise, renewals are dealt with solely by correspondence, with AWRIS's agreement to provide 100% facultative reinsurance cover for the renewal period typically being confirmed by email on the 'expiring terms' basis. If renewed on this basis (i.e., on expiring terms with no changes to the cover note) then premium closings and a facultative placement slip are issued for the forthcoming renewal period in the usual way, by way of confirmation.

31. By an email dated 26 May 2015, Mr Al Shaikh wrote to Mr Hamama at AWRIS to advise that ABNIC had received a firm order from Horizon to insure marine hull war and to request that AWRIS confirm their "100% Fac. Support at a highest commission possible". Attached to the email was a schedule of the vessels required to be insured, together with a draft of the quotation slip. The email was rated high in importance, Mr Sheikh said in his oral evidence that this was because Horizon was an important client, and urgent, he speculated that this might be because the insurance was close to renewal.

32. Mr Al Shaikh followed up on the same day to provide an updated schedule of vessels. He also suggested a minor amendment to "paragraph-9" of the quotation slip, as indicated in the body of the email. This was in response to a request from Horizon, not AWRIS (who had not yet replied to his initial email at this stage). This was the only change suggested by either ABNIC or AWRIS to the original quotation slip.

33. Later the same day, AWRIS's CEO replied to confirm "100% FaC. Cover as per terms submitted. Comm. 20%. Please advise attachment date and confirm to bind cover.”

34. On 31 May 2015, Mr Al Shaikh wrote to Mr Hamama to confirm AWRIS's " 100% share" and that the period of insurance would be "12 Months WEF 10th June 2015". He also noted that he awaited receipt of AWRIS's cover note.

35. Later that day, AWRIS replied to confirm "Cover bound wef. 10/06/2015", that it awaited ABNIC's "closings" and that the cover note would be sent "soonest".

36. ABNIC's premium closings and the placement document for the 2015 year were issued on or around 8 June 2015. Mr Al Shaikh could not recall when the original Cover Note was received, but when it was received it was duly signed by Mr Salah and returned to AWRIS, as requested. Mr Hamama recalled that the Cover Note was sent to ABNIC via registered post during 2015, and that it was stamped, signed and accepted by ABNIC.

37. Mr Al Shaikh said in his written evidence that the direct policy was then issued, and it was governed by UAE law. He was wrong, the policy issued to Horizon in 2015 made no mention of the governing law. If he was talking about the 2018 War Policy, he was also wrong – that stated expressly that “THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE ENGLISH LAW AND EACH PARTY AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE UNITED ARAB EMIRATES. THE ARBITRATION CONTRACT SHALL ALSO BE SUBJECT TO THE LAW AND JURISDICTION OF THE UNITED ARAB EMIRATES.”

38. There was no discussion about the governing law of the Reinsurance Contract. Mr Hamama stated that it was his subjective intention to enter the Reinsurance Contract on behalf of AWRIS on the basis that English law and practice would be the governing law of the Reinsurance Contract (as it was for the underlying War Insurance Policy).

39. By an email dated 4 June 2018, Emilda Rammah of Horizon wrote to Mr Shalab and enclosed a list of vessels (the “Declaration”) in respect of which marine hull and marine hull war coverage was being sought for the following policy period, being the policy period of the War Policy (and the reinsurance). The Declaration noted, in respect of the m/t BETA (Item No. 2 of the Declaration) that it was classed with Bureau Veritas classification society (“BV”).

40. Mr Shalab replied to Ms Rammah’s email on the same day to request confirmation of “clean loss records till date”, together with a request for specific updates to be provided in relation to three other vessels listed on the Declaration.

41. On 5 June 2018, he sent another email to Ms Rammah requesting that she confirm “the status of class for the existing fleet and advise us if there are any amendments”.

42. Later the same day, Ms Rammah responded to confirm that “we are in the process of renewing the class” and did not advise that any amendments were required to the Declaration, in this respect.

43. Again, on 5 June 2018, Mr Shalab wrote to Ms Rammah to request details of three other vessels.

44. In her email to Mr Shalab of 6 June 2018, Ms Rammah instructed ABNIC to “kindly proceed with the renewal of the policies and issue them accordingly”. Ms Rammah also instructed ABNIC to “hold” the renewal for certain vessels but not the m/t BETA.

45. On 7 June 2018, Mr Satesh Babu in the Reinsurance Department of ABNIC wrote to AWRIS enclosing the updated schedule and asking for reconfirmation of “your 100% share”. Ms Entisar Mohammed Atteya, Assistant Underwriter - Technical at AWRIS, replied, “We are pleased to confirm the renewal of our 100% share of the above- mentioned risk for a further year with effect from 10/06/2018 at expiry terms and conditions”.

46. On 10 June 2018, Ms Rammah re-attached the Declaration.

47. On 11 June 2018, ABNIC received from Noble Insurance Brokers what was described as the “final list of vessels” for the purposes of the renewal. The m/t BETA was still shown classed with BV. On the same day, Mr Shalab forwarded this email and attachment to ABNIC’s General Manager, Mr Nader Qaddumi, for his information as to the status of the renewals process.

48. ABNIC issued the War Policy - a Marine Hull War Policy (policy number SH- HULL/000114/18/SH) dated 28 June 2018. The insured was “M/s Horizon Energy Co. LLC, and/or subsidiary and/or affiliated companies and/or other interests as be named for their respective rights and interests”. The Vessel, IMO (i.e. the International Maritime Organization unique identification number), Type, Class and Flag were all “as per schedule attached”. The Schedule did not state the IMO but identified the m/t BETA as a Liberian flagged Tanker owned by ABIS, with a sum insured of USD 70 million out of a total fleet value of USD 315.57 million.

49. The insured interests were:

50. The Period of Insurance was 12 months with effect from 10 June 2018 to 9 June 2019.

51. The Policy Schedule contained the following terms:

52. ABNIC says that the Reinsurance Contract comprised the following documents:

AWRIS did not return a signed and stamped copy.

53. AWRIS accepts that the Reinsurance Contract followed previous Reinsurance Contracts that were entered into between ABNIC and itself and that the Cover Note for the year 2015-2016 provides evidence of the Reinsurance Contract. However, AWRIS denied that the Placement Document was a contract document or evidenced the terms of the Reinsurance Contract.

54. ABNIC says that when the reinsurance was first placed in June 2015, a facultative reinsurance placement document was issued to the Defendant at its request. The reinsurance cover was, thereafter, renewed on an expiring basis on an annual basis until 9 June 2018. No further Cover Note was issued for the subsequent periods, including that for the period from 10 June 2017 to 9 June 2018. Instead, a facultative reinsurance placement document was produced by ABNIC on an annual basis, at the request of AWRIS.

55. ABNIC says that at no point during the currency of the original reinsurance contract or the reinsurance contracts as subsequently renewed on an annual basis, including the Reinsurance Contract, did AWRIS contend or otherwise suggest that the clause set out at paragraph 52(2) above was not a term of them or that the facultative reinsurance placement documents did not accurately record the terms of the reinsurance contracts, including the Reinsurance Contract. I regard this evidence as what I called “secondary pleading”.

56. The Institute Time Clauses Hulls dated 1/11/95 (CL. 280) are incorporated into the Institute War & Strike Clauses Hull Time dated 1/11/95 (CL. 281).

57. Both CL. 280 and CL. 281 bear the words in their headings: “(FOR USE ONLY WITH THE CURRENT MAR POLICY FORM) … This insurance is subject to English law and practice”.

58. Mr Saleh had overall responsibility for the placement of the Reinsurance although Mr Al Shaikh handled it on a day-to-day basis. His recollection is that there was no discussion about the governing law of the Reinsurance Contract.

59. Mr Saleh said that ABNIC and AWRIS have enjoyed a long-standing and cooperative relationship for many years and that unless a particular cover note includes claims control or claims cooperation provisions which provide that the 100% facultative reinsurer has an entitlement to take over control of a particular claim, the practice has been that the 100% facultative reinsurer will follow ABNIC's decisions in respect of a claim, and reimburse ABNIC for its costs of dealing with the same. He gave as an example a previous claim that was paid under war policy No. ZR-HULL/000007/17/AI.

60. Mr Hamama denied that AWRIS had ever agreed to follow the fortunes of its cedants even in the absence of any claims control or claims cooperation provisions in a cover note. AWRIS insists on undertaking proper due diligence investigations on all reported claims, independently, before agreeing to their reimbursement. Mr Hamama referred to the previous claim. It emerged in evidence that this was a case where a recreational fishing vessel had been seized by the Iranian Navy for straying into Iranian territorial waters. AWRIS considered this to be a genuine claim and agreed to pay the Loss Adjuster’s fees.

61. Mr Hamama said that while the Reinsurance Contract was also renewed in June 2019, ABNIC retrospectively cancelled it in October 2019. On 30 September 2019 Mr Babu wrote to AWRIS stating that “the [War] policy has been cancelled with effect from 01/09/2019 due to non-payment of premium.” On 19 November 2019 AWRIS agreed to cancel the cover under the Reinsurance Contract “up-initio”.

62. On 18 November 2020 Horizon emailed ABNIC headed “Insurance Claim Notice”. It was under Policy No. H-HULL/000113/18/SF, i.e. the Hull Policy. It alleged:

“Within the insurance cover period (under the above-mentioned insurance policy), and under a guard contract, the guarding affairs of the insured vessel, City Elite “IMO9486908”, insured vessel, Beta “IMO9486910”, and the insured vessel, Al Nouf “IMO9422990” shall be delivered to Al Noor Al Satee Marine Services, represented by its manager/ Prashant Gupta- Indian national.
During the insurance contract validity, and according to the judgment rendered in Penal Case No. 1209/2020 Penal- Sharjah, Beta vessel was disappeared, and City Elite and Al Nouf entered Khor Fakkan by the concerned authorities inside the State. This caused damages to the owner thereof “the insured and their interests”.”

63. ABNIC forwarded the document to AWRIS on 6 January 2021.

64. Mr Hamama recalled that Mr Babu contacted AWRIS and asked AWRIS to sign and backdate the 2018 Placement Document which AWRIS refused to do.

65. By letter dated 25 October 2021, Horizon gave notice to ABNIC of a claim under the War Policy alleging:

66. On 3 November 2021 ABNIC wrote to AWRIS:

“Reference our earlier correspondence with regard to the above subject. Kindly note that our client, Horizon Energy, have submitted their claim “copy is attached”. They have gave us one week to respond. We have responded as per the attached e-mail from Mr. Shalab, Our Marine Manager.
Please note that our lawyers Clyde & Co are aware of all developments and they are following up the matter.”

67. On 7 November 2021 Horizon filed a complaint with the UAE Insurance Authority pursuant to Article 110 of Federal Law no. 6 of 2007 (as amended) claiming it was entitled to an indemnity from ABNIC in the amount of USD 70 million. The Complaint was then referred to an Insurance Dispute Resolution Committee (the “IDRC”).

68. Clyde & Co wrote to Horizon on 10 November 2021 on behalf of ABNIC while at the same time commencing the DIFC Proceedings. By the letter ABNIC avoided both the Hull and War Policies on the following grounds:

69. AWRIS contends that ABNIC was also guilty of misrepresentation or a failure of disclosure to it because ABNIC also knew that:

as Horizon was a shareholder in ABNIC, and one of Horizon’s representatives, Mr Abdullah Juma Al Sari, was a member of the Claimant’s Board of Directors at all material times, whereby the Reinsurance Contract was void or voidable.

70. ABNIC states that Horizon was not a shareholder and whatever might have been the knowledge of Mr Abdullah Juma Al Sari of the relevant facts, he was not involved in the decision as to whether or not to take on the risk or as to the terms of such and, therefore, any knowledge that he might have had cannot be attributed to ABNIC. Mr Shalab said that although he could say nothing about whether Horizon was a shareholder of ABNIC or Mr Al Sari’s role as a member of the Board of Directors of ABNIC, he was the underwriter responsible for the renewal of the War Policy and can give evidence about what was made known to him during the renewal of the War Policy. Mr Shalab said that he relied entirely on Ms Rammah’s statements, or those provided on the Horizon’s behalf when making the decision to renew the War Policy. Mr Shalab noted that he gave evidence to H.E. Justice French that he was not aware of the matters alleged in the preceding paragraph, which was accepted (see paragraph [135] of the judgment in CFI-098-2021 cited at paragraph 15 above). I do of course observe that his evidence was unchallenged.

71. Mr Shalab stated that Mr Al Sari was not, and has never been (so far as he is aware) involved in any underwriting or renewal decision making at ABNIC. He did not understand that Mr Al Sari could have had any knowledge of any matters to do with the renewal of the War Policy.

72. Horizon and ABIS challenged the jurisdiction of the DIFC Courts, but on 27 April 2022 the DIFC Court of First Instance dismissed the jurisdiction challenge. AWRIS notes that in resisting the challenge ABNIC made submissions to the DIFC Court that the governing law of the Reinsurance Contract is English law. The Order with Reasons of Justice Roger Giles, dated 27 April 2022 at paragraph 24, is in the following terms:

“The Policies are in English, and the governing law is English law. They incorporate a number of standard London marine market clauses, and in particular Institute Clauses. (ABNIC’s submissions included they are on back-to-back terms with its reinsurance, also governed by English law…)”;

73. ABNIC accepts that in the evidence in support of the response to the application by Horizon to contest the jurisdiction of the DIFC Court it asserted that the Reinsurance Contract was governed by English law, but says it did so in error and Justice Giles made no finding on the point.

74. By a decision dated 13 June 2022, the IDRC dismissed the Complaint.

75. On 7 July 2022, Horizon and ABIS initiated the Sharjah Proceedings.

76. Mr Hamama points to correspondence between AWRIS and ABNIC during the period February to December 2022. AWRIS stated its intention was to assist ABNIC particularly in the context of ABNIC having been a member of the syndicate for 42 years. AWRIS took the view that there was no reliable evidence that the m/t BETA was in fact arrested/pirated by Iranian government and converted into "Al Makran", a navy Vessel, noting that the loss allegedly happened on 13 May 2019 when the m/t BETA switched off its Automatic Identification Tracking system, but the claim was not notified until 6 January 2021. AWRIS referred to articles chronicling the financial troubles of the Al Sari family. In subsequent correspondence AWRIS expressed the view that the War Policy did not respond to Horizon’s claim. There was no suggestion in this correspondence that ABNIC itself was guilty of misrepresentation or non-disclosure in relation to the Reinsurance Contract.

77. On 19 April 2023, the DIFC Court of Appeal dismissed the Defendants’ challenge to the decision dismissing their challenge to jurisdiction of the DIFC Courts.

78. On 20 September 2023, the Sharjah Court stayed the Sharjah Proceedings in favour of the DIFC Proceedings.

79. On 12 October 2023, the DIFC Court of Appeal dismissed an application by the Defendants to refer the DIFC Proceedings to the Union Supreme Court.

80. As noted at paragraph 15 above on 26 September 2024 ABNIC were held to be entitled to avoid both the Hull and War Policies.

THE ISSUES

81. ABNIC summarises the issues to be determined as follows:

(1) What is the law governing the Reinsurance Contract?

(2) What are the terms of the Reinsurance Contract?

(3) Is AWRIS entitled to avoid the Reinsurance Contract?

(4) Was Horizon in breach of warranty such that there is no liability under the War Policy?

(5) Is ABNIC entitled to be indemnified under the Reinsurance Contract in respect of any liability that it might have to Horizon under the War Policy?

(6) Is ABNIC’s claim time-barred?

(7) Is ABNIC entitled to be indemnified by AWRIS in respect of the Defence Costs?

82. I consider that issue (1) is undoubtedly the first threshold question – all that follows will be decided in accordance with the applicable law.

83. There is however a second threshold issue posed by AWRIS, which emerged with clarity during oral closing submissions. Mr Potts submitted that it has been held by a court of competent jurisdiction that ABNIC was entitled to avoid the War Policy ab initio. ABNIC’s issue (4) is subsumed in this point and inevitably must be answered in the affirmative given the terms of H.E. Justice French’s judgment. There was, it is said, therefore no underlying policy and therefore nothing to reinsure. In short, there was no insurable interest.

84. ABNIC’s issue (5) is the obverse of the second threshold issue: if another court does not respect the finding of this Court, subject to AWRIS’s other defences, might the Reinsurance Contract respond? Thus, ABNIC says, while there may be no present liability to Horizon there remains a contingent liability.

85. ABNIC’s issue (7) then arises: even if ABNIC is not liable to Horizon under the War Policy, is it nevertheless entitled to recover the Defence Costs from AWRIS?

86. If there is, or would be but for AWRIS’s other defences, a present or contingent liability on ABNIC to which the Reinsurance Contract would respond, it becomes necessary to consider those defences, namely – misrepresentation/non-disclosure and time- bar/late notification.

87. If AWRIS does not have grounds to avoid the Reinsurance Contract or liability, and there is a contingent liability to Horizon, has ABNIC satisfied the terms of the Reinsurance Contract entitling it to indemnity? In other words, is there proof of loss?

88. Finally, it is necessary to consider what rights to relief (if any) flow from the findings on the other issues.

89. I do not consider ABNIC’s issue (2) to be a freestanding issue as it permeates consideration of all the other issues. Accordingly, I would recast the issues as follows:

ISSUE (1): GOVERNING LAW OF THE REINSURANCE CONTRACT

90. I say at the outset of the consideration of this issue that I disregard the evidence of both sides’ witnesses as to their supposed subjective opinions concerning the governing law of the Reinsurance Contract. They should not feel that I am necessarily rejecting their evidence as untrue, it is unnecessary for me to make a finding in that respect as the evidence is legally irrelevant. In the absence of an express choice of law, the question is an objective one to be determined in accordance with the applicable principles of DIFC law.

91. Those principles are to be found in The Law on the Application of Civil and Commercial Laws in the DIFC, DIFC Law No. 3 of 2004 , Consolidated Version (November 2024), As amended by Law of Application of Civil and Commercial Laws in the DIFC Amendment Law, DIFC Law No. 8 of 2024, and DIFC Laws Amendment Law, DIFC Law No. 2 of 2022 which provides at Article 8(2) that the applicable law (the Law uses the word “Jurisdiction” but the Court of Appeal has made it clear that Article 8(2) is a choice of law provision: The Industrial Group Ltd v Hamid [2022] DIFC CA 005 and CA 006, [127]; the Article is also now headed “Choice of applicable law”) is to be the one first ascertained under the following:

92. Articles 8(2)(a) and (b) are inapplicable on facts of the present case.

93. As to Article 8(2)(c), the Reinsurance documents are silent on applicable law and my impression from the oral evidence is that the representatives of neither party applied their minds to the question. Insofar as ABNIC’s mistaken conflation of jurisdiction with applicable law was not a rationalisation for the purposes of these proceedings, it was purely subjective and did not amount to a common understanding with AWRIS.

94. AWRIS submits in its written closing submissions that “The true position is that the Reinsurance Contract was clearly and expressly governed by English law and practice”. It relies on 6 propositions (in addition to my observations in the preceding paragraph) to support the submission:

95. I consider the submission that there was an express choice of English law to be wrong both in law and in fact. There was an express choice of English law in the War Policy, but assuming in AWRIS’s favour that English law does apply, that would not be sufficient to import the same express choice into the Reinsurance Contract. As Mr Craig pointed out, the underlying contract of insurance and the reinsurance contract are different contracts dealing with different subject matters: per Lord Griffiths in Forsikringsakfieselskapet Vesta v Butcher [1989] AC 852, 896. General words incorporating the terms and conditions of the underlying policy into the reinsurance contract do not necessarily demonstrate agreement to precise terms: per Moore-Bick J in AIG Europe SA v QBE International Insurance Limited [2001] 2 Lloyd’s Rep 268, [26]. The words incorporating the terms and conditions of the underlying policy into the reinsurance contract are ineffective to incorporate choice of law clauses from a direct policy into a reinsurance agreement: Arnould: Law of Marine Insurance and Average (21st edn., 2024) at §33-13; Gan Insurance Co Ltd & ors v Tai Ping Insurance Co Ltd [1999] 1 IRLR 472, 480. Specifically (in the context of a contract of insurance) reference to the Institute Clauses in the certificate does not evince the parties’ intention to choose an English governing clause for the contract of insurance as a whole: per Andrew Smith J in Evialis SA v SIAT [2003] EWHC 863. [42].

96. There is no objective evidence of a common understanding between the parties as to the governing law of the Reinsurance Contract. There was therefore no agreed applicable law and the Court is left to determine the law most closely related to the facts of and the persons concerned in the matter within the meaning of Article 8(2)(d) of Law No. 3 of 2004. I will return to the factors identified by AWRIS in that context.

97. ABNIC points to 10 factors it says demonstrate that the Reinsurance Contract is most closely related to the UAE, not England as AWRIS contends:

98. Of these factors, I would immediately dismiss (3) and (10). It seems to me irrelevant where documents are stored or where a party holds bank accounts, in the absence of facts linking the storage of documents or banking arrangements to the subject matter of the proceedings.

99. I also dismiss (6). While 11 out of the 17 vessels identified in the schedule to the War Policy were flagged in the UAE, the other 6 vessels (which were not) were the most important (tankers as opposed to tugboats, crew boats and pleasure craft) and the most valuable (they comprised USD 308 million of the USD 315.57 million sum insured or 97.5%). There is no evidence that the tankers traded out of the UAE.

100. (1) and (7) are duplicates as are (4), (8) and (9). Thus, in reality it boils down to three points:

101. Reverting to the factors identified by AWRIS, it relies on the use of English language and the use of the Institute Clauses and London Market wordings. It also adopted ABNIC’s own earlier submissions in similar terms on the jurisdiction challenge, which albeit aimed at a different target, nevertheless indicated that the closest connection is to English law:

102. To these points Mr Potts added that this is international Marine War Risks reinsurance, that is reinsuring an internationally mobile fleet of vessels, which claim to be registered all over the world including registrations in Liberia, Panama, and Palau. The critical feature of Marine War Risk reinsurance is that it is written and underwritten on back- to-back Institute Clauses which are expressly governed by English law and practice and have to be governed by English law and practice to make any sense because they all work with the Marine Insurance Act of 1906, and all the learned judicial and academic literature work together to promote commercial and legal certainty. Both ABNIC and AWRIS hold themselves out to the world as being providers of War Risks insurance and reinsurance on London Market wordings, subject to the Institute Clauses, which everybody knows are governed by English law.

103. In response, Mr Craig noted that the Institute War and Strikes Clauses of 1/11/95 (Cl. 281) expressly provide that they are “For use only with the current MAR policy form”. The MAR Policy form is a London Market policy form which expressly provides that the insurance “shall be subject to the exclusive jurisdiction of the English Courts, except as may be expressly provided herein to the contrary.” He submitted that to the extent that the Institute Clauses are not being used with the MAR policy form they are being put to a use which was not intended. It certainly cannot be assumed that parties using them in such a way intend that their insurance contract shall be governed by English law. Still less can it be assumed that Parties to a reinsurance contract relating to an insurance policy incorporating the Institute War and Strikes Clauses should be so governed.

104. In considering the laws of the jurisdiction which appears to be the one most closely related to the facts of and the persons concerned, in the matter, I accept neither the bare facts nor the identities of the persons concerned appear to have an immediate connection to England. The matter concerns a contract of reinsurance made between an insurer incorporated in Sharjah with a reinsurer incorporated in Bahrain, the subject matter of which is a fleet of vessels expressly stated to be trading “worldwide”. The vessel in respect in respect of whose loss claim was made was flagged in Liberia. The vessel’s owner was a subsidiary of a UAE-incorporated company but was itself incorporated in Liberia. Thus, the facts of the matter and the locations of persons concerned point to a number of different jurisdictions, none of which is England.

105. It is therefore necessary to drill down a little deeper and to consider the nature of the transaction between the parties. It is not just a contract of reinsurance, but reinsurance of a specialised type – Marine Hull War Risk reinsurance. Lord Mance noted in Wasa International Insurance Co Ltd v Lexington Insurance Co AGF Insurance Ltd v Same [2009] UKHL 40, [35], “Reinsurance is a settled business conducted worldwide by experts, often (even if past experience indicates not invariably) possessing very considerable legal knowledge and expertise”.

106. Mr Saleh seemed to be at pains to point out that the function of placement of marine war risk reinsurance was really no more than a post-box exercise. Marine war risk reinsurance was always placed with AWRIS (Transcript, Day 1, 115:8). He said that the wording of the underlying policy was determined by the “technical” department by refence to the Institute Clauses (i.e. the marine insurance department of which Mr Shalab was head) (ibid. 121:4-19). He denied that his department had any function in determining that the reinsurance cover was back-to-back with the underlying policy:

To decide who are the reinsurers would hardly be taxing as it was always AWRIS.

107. Mr Saleh therefore “passed the buck” of determining whether or the reinsurance was back-to-back with the underlying policy to Mr Shalab’s department. He was unshakable in his repetition of the formula that the reference to the UAE as “JURISDICTION” meant that the Reinsurance Contract was governed by UAE law. This assertion did not always lie comfortably with his other answers about the adoption of the Institute Clauses:

108. He accepted that the inclusion of the Institute Clauses in the successive underlying War Polices meant that they were governed by English law. His adherence to the case that any disputes between ABNIC and AWRIS were subject to UAE law led him to the extraordinary proposition that while the War Policy and the Reinsurance Policy were to be interpreted in accordance with English law any disputes were governed by UAE law:

“Q. You know that AWRIS has retrocessionaires in the
13 London reinsurance market, don't you?
14 A. Sorry?
15 Q. You know that AWRIS buys retroceded coverage −−
16 A. AWRIS, they are reinsurance, they are a syndicate,
17 of course. They have something from London. That's of
18 course −−
19 Q. They are a syndicate?
20 A. Yes.
21 Q. Your company is a member?
22 A. Yes.
23 Q. And they in turn buy reinsurance from London. You
24 know that?
25 A. Yes, of course.
95
1 Q. Okay. So your concern when underwriting is to make
2 sure you have back−to−back cover with your reinsurers and
3 that they then have back−to−back cover with their
4 reinsurers?
5 A. Yes.
6 Q. And the only way back−to−back cover works is if it
7 is all governed by English law by reference to the Institute
8 Clauses, isn 't that correct?
9 A. Yes, as I told you, cover itself is covered by the
10 English law, but the disputes, as the registered
11 jurisdiction is United Arab Emirates, will be governed by
12 the UAE law”. (Day 2, pages 95-96)

At best Mr Saleh demonstrated that he did not understand the difference between governing law and jurisdiction. At worst he believed that an insurer’s expenses resisting a claim by an insured were not recoverable under English law and that the application of UAE was more beneficial to ABNIC’s case. Either way, his opinion on the meaning of the Reinsurance is inadmissible and irrelevant, but I accept his factual evidence that it was ABNIC’s policy to do business on London Market terms as governed by English law.

109. This evidence is corroborated by ABNIC’s website where it is stated:

Mr Saleh accepted that these policies are always written under English law. AWRIS’s website contains similar wording stating that it provides marine war and related perils cover normally excluded from a Standard Marine Hull and Machinery Policy based on recognised international conditions such as the Institute War and Strike Clauses.

110. There are good practical and commercial reasons why these insurance and reinsurance contracts should be interpreted in accordance with English law, as Mr Williams put it “ultimately, the risks end up in the London market −− or the War Risks” (Day 3, 99:14-15). He noted that London is probably the leading market in the world for War Risks (ibid., 101:8). Mr Hamama stated that AWRIS had little choice but to follow the Institute Clauses and the other London Market Clauses:

“7 Q. Okay. On the facultative side , back in 2015 and
8 2018, did I understand that the underwriting guidelines
9 required you to impose the Institute Clauses and the other
10 London Market Clauses?
11 A. Yes, yes.
12 Q. Was it your understanding that the Institute
13 Clauses specifically included English law and practice?
14 A. Since inception of AWRIS, we followed Institute
15 Clauses. And we continue. Why? Because the support from
16 retrocessionaires , they give it on certain basis . We have
17 to follow . It is not a matter of choice, no, always. Since
18 inception, I told you, which I joined, until now. I left
19 the underwriting side, but if we have to follow.” (Day 3, page 80)

This was consistent with Mr Abdeen’s experience when he was at AIG:

“A. That question, thank you for raising it . We raised
20 it at AIG. When we started the operation, we brought
21 underwriters and everything. So what was the best approach
22 was to introduce internationally recognised clauses for
23 claims cooperation and claims control.
24 As a reinsurer then, they need your prior consent,
25 which lawyer to hire, what are the fees. So you control
1 this process without destroying it .
2 So the introduction of such clauses, we found it to be
3 the best mechanism to control the concern you raised that
4 the cedant might abuse, the cedant might go away for
5 nothing, so those internationally recognised clauses will
6 put some control in this process. That's how an
7 underwriter, reinsurance underwriter, will react to such
concern, valid concern you have.” (Day 2, pages 213-214)

111. From a legal point of view, as long ago as 1989 Lord Griffiths lamented in Vesta v Butcher at 893C that the form used in Lloyd’s market was “inelegant and ungrammatical” and “obscure”. At 896C he described the wording as “archaic and difficult to comprehend”. Little seems to have changed in the last 36 years judging from underlying Policy Schedule and Reinsurance Cover Note in the present case. As noted by AWRIS, it was ABNIC’s submission to this Court that the Institute Clauses had developed over a long period of time and are the product of, among other things, decisions of the English court: their inclusion is intended to create certainty as to, among other things, the peril insured. Given the sometime difficulty of their language English law may provide a ready store of guidance upon their interpretation to courts and tribunals who may not be immediately familiar with this particular form of reinsurance and whose first language may not be English. Lord Mance in Wasa, paraphrasing Lord Lowry in Vesta, said that parties entering into an English law reinsurance could be taken to have had access to “a foreign legal dictionary” to interpret the language of the reinsurance.

112. I am reinforced in this view by the fact that ABNIC, while contending for the application of UAE law, has not pointed to any decision of the UAE courts on marine hull war risk reinsurance. I infer that had it been able to so, it would have done so in support of a contention that there is a body of UAE jurisprudence rendering it unnecessary to have recourse to English law.

113. I have not found the evidence and debate about the practice under treaty reinsurance to be of assistance. The evidence clearly indicates that the business is quite different from facultative reinsurance.

114. I have therefore reached the conclusion that the nature of the transaction between the parties has its closest connection to English law. The Reinsurance Contract is an English language document the full meaning and effect of which can only be truly understood in the context of an English law interpretation.

ISSUE (2): INSURABLE INTEREST

115. AWRIS relies on the speeches in Wasa. Lord Mance said [33]-[35]:

116. Lord Collins of Mapesbury said,

117. Mr Potts submitted that marine war risks are a species of property insurance because they are insuring the underlying vessels against a peril covered by war risk. In this case the reinsurance is back-to-back cover of the underlying risk. It is not liability insurance; it is not liability insurance for the insurer. The consequence is if this Court has found that the Hull Policy has been validly avoided, and the War Policy has been validly avoided, ABNIC has zero insurable interest in any of these ships, it has no exposure to any potential claim with respect to any of these ships.

118. Mr Craig’s response was first that there was an insurable interest in relation to the Defence Costs. Secondly, he focussed on Lord Mance’s words, “The insurable interest which entitles the insurer to reinsure in respect of that subject matter is the insurer’s exposure under the original insurance”. If, he went on, ABNIC is found liable to Horizon by the Sharjah court there will be an insurable interest and AWRIS will be liable.

119. The former is a “bootstrap point”, it assumes what must be proved, namely that the Reinsurance Contract extends to the Defence Costs. I will address that at my issue (4). Before that, I turn to the possibility of a finding by the Sharjah court of a liability to Horizon on the part of ABNIC.

ISSUE (3): CONTINGENT LIABILITY

120. ABNIC says that the issue is resolved by the express terms of the Reinsurance Contract. By reason of the Placement Document (paragraph 52(2) above) AWRIS is obliged to “follow the settlements”. The effect of a follow the settlements clause was described in Insurance Co of Africa v Scor [1985] 1 Lloyd’s Rep at 330, per Goff LJ:

“the effect of a clause binding reinsurers to follow settlements of the insurers, is that the reinsurers agree to indemnify insurers in the event that they settle a claim by their assured, i.e., when they dispose, or bind themselves to dispose, of a claim, whether by reason of admission or compromise, provided that the claim so recognized by them falls within the risks covered by the policy of reinsurance as a matter of law, and provided also that in settling the claim the insurers have acted honestly and have taken all proper and business-like steps in making the settlement”

121. Lord Mance in Wasa noted at [35] that such clauses bind the reinsurer following a judgment against the insurer. Thus, ABNIC says, if the Sharjah Court makes a finding against it under the War Policy, AWRIS is bound to indemnify it.

122. The argument depends upon the Placement Document forming part of the Reinsurance Contract. AWRIS denies that it does and I agree. I consider that in each year the Reinsurance Contract was concluded by the confirmation of renewal of cover issued by AWRIS. The Placement Document was an attempt to incorporate additional terms and by its express terms requested specific agreement which was not forthcoming.

123. When the hearing closed it was not known what would occur in the Sharjah proceedings.

124. I have now been supplied with a copy (and translation) of the judgment of the Sharjah Court of First Instance on 19 June 2025. On 30 April 2025, the hearing was adjourned. On 7 May 2025, the First Commercial Circuit referred the case to the Civil Court of First Instance – Insurance Disputes and Credit Indemnities Department. The form of proceedings was a challenge (cassation) to the decision of the IDRC on 13 June 2022 (paragraph 74 above) on the grounds of error of law in holding that it did not have jurisdiction. The case was heard on 28 May 2025 and judgment was delivered on 19 June 2025.

125. In summary, in a reasoned judgment invoking the principle of res judicata, the Sharjah Court held that the DIFC Courts had given a final and binding judgment that it was they who were the Courts with jurisdiction and that the avoidance of the underlying insurance polices was now final and binding. I do however recognise that the decision may be appealed to the Sharjah Court of Appeal and to the Court of Cassation.

126. It seems to me that the declaration sought by ABNIC asks me to speculate that the decision of the Sharjah Court of First Instance that the judgment of H.E. Justice French constitutes a res judicata as between Horizon and ABNIC (a decision with which I unreservedly agree) may be set aside on appeal. AWRIS submits that:

127. I have been directed to my decision in Charles Russell Speechlys LLP v (1) Grand Valley General Trading LLC (2) Mohammed Al Sari (3) Mas Investments LLC (4) Mohammad Mosa ABD Al Arabiat (5) Abdalla Juma Al Sari [2022] DIFC CFI 080 in which I followed the practice in Rolls Royce PLC v Unite The Union [2009] EWCA Civ 387 [120] per Wall LJ in that the principles affecting the grant of declaratory relief include that (1) the power of the court to grant declaratory relief is discretionary and (2) there must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them.

128. In my judgment, there is no real or present dispute between the parties before the Court. Both parties agree that the judgment of 26 September 2024 was correctly decided. What would be the point of declaring what is agreed: as Neuberger J (as he then was) said in Financial Services Authority v John Edward Rourke (Trading As J.E.Rourke & Co) [2002] CP Rep 14 (2001) the court should not grant a declarations merely because the rights, facts or principles have been established and one party asks for a declaration. Thereafter, the matter is shrouded in speculation. Will the Sharjah Court of Appeal uphold or reverse the Court of First Instance? Will the Sharjah Court of Cassation uphold or reverse the Court of Appeal? Will the matter be remitted back to the IDRC? Will the IDRC find that the underlying polices were validly avoided? Will there be another round of appeal from that decision?

129. In the exercise of my discretion, I decline to make the declaration sought on such a speculative basis.

ISSUE (4): DEFENCE COSTS

130. ABNIC submits that whether the Insurance Contract is governed by UAE or English law it is entitled to the Defence Costs. In the light of my finding under my issue (1) this issue must be determined in accordance with English law.

131. There were two pleaded bases for recovery of the Defence Costs. The first was that ABNIC was so entitled under the Institute Time Clauses Hulls dated 1/11/95 (Cl. 280) which are in relevant part incorporated into the Institute War & Strike Clauses Hull Time dated 1/11/95 (Cl. 281), by Clause 2 of Cl. 281 and which are, in turn, incorporated into the Reinsurance Contract. The second was that it was an implied term of the Reinsurance Contract that AWRIS shall pay all reasonable costs of ABNIC incurred in defending claims brought against it by Horizon and/or taking such action as is reasonably necessary to limit or avert its potential liability to the Insured, it being a custom or practice in the UAE that such costs are payable by a reinsurer, particularly in circumstances where the reinsurer has agreed to reinsure 100% of the risk. At trial ABNIC confined itself to the latter.

132. Baker v Black Sea & Baltic General Insurance Co Ltd [1998] 1 WLR 974 the House of Lords considered the bases on which it might be possible to imply a term into a reinsurance contract (per Lord Lloyd of Berwick at 978F-G):

133. Lord Lloyd continued at 982D:

“Although the authorities are not perhaps compelling, the weight of the authorities is certainly consistent with the view that the syndicate cannot succeed in these proceedings by virtue of a term implied by law. On this point therefore I find myself in complete agreement with the judge and the Court of Appeal.”

134. As to a term to be implied by reason of a trade practice or usage Lord Lloyd endorsed Millett LJ’s observation in the Court of Appeal (983H-984A) that:

“What was needed was evidence of a universal and acknowledged practice of the market for reinsurers to pay such costs whether this is expressly provided for in the treaty or not; or (to put it another way) that it is well understood by underwriters that if it is not intended that the indemnity should extend to the legal costs and expenses of the reinsured, these need to be expressly excluded.”

135. In Wasa at first instance ([2007] EWHC 896(Comm)) Simon J summarised the effect of Baker v Black Sea at [55]:

“In Baker v. Black Sea & Baltic General Insurance Co Ltd [1998] 1 WLR 974, the House of Lords held that, in the absence of either express provision or a universal market practice in the relevant market, reinsurance contracts do not provide cover for expenses incurred by the reinsured in defending claims. The House unanimously rejected a submission that a term requiring the reimbursement of expenses should be implied into proportional reinsurances.”

136. AWRIS drew my attention to the decision of Christopher Clarke J in Goshawk Dedicated Limited & Ors v Tyser & Co Limited & Anor [2005] EWHC 461 (Comm) at [37]-[39]:

“37 I also reject the submission that there is, by the custom of Lloyd’s, a contract between broker and underwriter to the effect alleged. A term may be implied in a contract if it is “certain, notorious and reasonable” … . In other words, the term has to be sufficiently clear, invariable and well known that those who practice, or seek to practice, in the relevant market must be taken to know that it is implicit in the contracts that they make; and it must not be so lacking in reason that effect should not be given to it. If these three conditions are satisfied it may be that the term can arise by way of a freestanding contract. But it is not sufficient to show that, as a matter of practice, those concerned have often, or habitually, acted conformably to the term asserted. A typical way of proving the existence of a custom is to show that its existence had once been challenged but, when the challenge occurred, the application of the custom was confirmed. But this is not the only way of doing so since, were that so, a term, which, apart from the disputing litigant, everyone recognised, would fail to be treated as a customary obligation if no one, apart from him had ever questioned its applicability.
38 In the present case the evidence, in my opinion, falls considerably short of establishing a custom, as opposed to a common or habitual practice. There is no evidence of an unsuccessful challenge to the custom. Mr Berry does not relate any occasion when the existence or otherwise of the custom was in issue….
39 Further, the difference of view of the experts appears to me inconsistent with the existence of the custom relied on. I, of course, accept that the fact that they hold differing views is not conclusive against the existence of such a custom, since one of them may simply be wrong. But the impression that I received, from the evidence of two men of great experience, was not that there was a well known customary obligation, which all concerned would recognise, but which Mr Blackburn for some reason did not. I do not think that Mr Berry’s evidence is sufficient to elevate market practice to the status of a freestanding contract arising by custom.”

137. In order to prove the practice ABNIC relies on the expert evidence of Mr Abdeen. Between 1999 and 2010 he was Executive and then Senior Vice President of AIG Middle East, Mediterranean & South Asia region. He was leader of all AIG operations in the MENA region including Commercial Lines, Energy and Marine. Since 2010 he has served as CEO of Abu Dhabi National Takaful Company P.S.C.

138. He stated in his first expert report at paragraph 3.1.6-7:

“3.1.6 In this regard, the re/insurance markets in these jurisdictions have developed, over the years, customary common or common practices, interpretations and principle controls that are well-established, understood and followed by all market participants.
3.1.7 In the above context, and in my experience, one of the common market practices and procedures adopted by market participants in the UAE and Middle East in the event of a claim relates to the payment of litigation fees and associated expenses:
(a) It is a uniformly accepted market custom in the reinsurance market (whether facultative or treaty) in the UAE and Middle East that, in the event of a claim under an underlying policy, any litigation fees incurred by a reinsured (together with any other associated costs incurred in dealing with the claim) will be reimbursed by reinsurers, in accordance with their respective shares of the risk.
(b) In this regard, unless litigation costs and associated expenses are expressly excluded or limited by a reinsurer then in my experience such fees form an integral part of the reinsured’s reinsurance claim, in the absence of any specific wording stating otherwise (see further below).
(c) In other words, if the parties have not included any language restricting or limiting the indemnification of litigation or defence costs, and/or a specific sublimit in that respect, such costs should (and are) treated as an integral part of the reinsurance claim. In that situation, facultative (or treaty, as the case may be) reinsurers are liable to reimburse the reinsured for these costs in the usual way, up to their respective share of the risk.
(d) It is therefore a uniform market practice for facultative (and treaty) reinsurers operating in the UAE and Middle East to reimburse a reinsured for litigation/ defence costs. As such, there is no requirement to expressly stipulate in the reinsurance slip/ cover note that the facultative reinsurers are liable for such costs, unless the parties wish to impose specific restrictions on the ability for the reinsured to claim them.
(e) I have been involved in numerous claims over the years (both as a reinsured and as a reinsurer) not dissimilar to claim faced by ABNIC under the Underlying Policy. Where acting as a reinsurer (as AWRIS is in this case), the reinsurance company I have represented has always – as a matter of course – settled litigation fees and associated expenses incurred by our underlying reinsured (up to the proportion of our relevant share).
(f) Where acting as a reinsured (i.e., as ABNIC does in this case) it has similarly been my experience that our reinsurers have reimbursed, or paid on our behalf, any litigation or legal fees incurred in defending a claim under an underlying policy.
(g) This market practice has been demonstrated very recently in the UAE, following the significant storm event that occurred in the country in April 2024 (the Storm). ADNTC, where I am the CEO, has been involved in many claims arising from the Storm (both as a reinsured, and as a facultative reinsurance participant). In those cases:
(i) Where ADNTC has acted as a reinsured, our facultative (and treaty) reinsurers (fn.5: Our facultative and treaty panel is comprised of reinsurers in the UAE (onshore and Dubai International Financial Centre) and Middle East (inc., for example, Hannover Re Takaful in Bahrain), as well as international reinsurers in Europe) have supported litigation and other expenses. It is to be noted that international and local reinsurers have not denied liability for these costs and expenses, even where the applicable reinsurance cover notes/slips did not expressly state participation in loss adjustor fees, experts fees, litigation fees, etc. This is because, as I have described above, there is a uniform custom and practice that these costs and expenses will be reimbursed by facultative reinsurers in accordance with their respective shares and such costs are considered an integral part of the reinsurance claim.
(ii) Where ADNTC has acted as a facultative reinsurer (which it does for risks in the UAE and the Middle East), ADNTC has always provided indemnity for our reinsureds’ litigation fees and other costs incurred, in accordance with our respective share on the risks. I note again, for completeness, that we – and our co-reinsurers (fn 6: We participate in reinsurance where our co-reinsurers are based in the UAE (again, both onshore and in the DIFC), the Middle East more generally (all jurisdictions, including Bahrain) and in Europe) - have agreed to do so even in situations where the relevant cover note/ reinsurance slip does not contain specific language to this effect. Again, this is because it is a uniform market practice for reinsurance participants in the UAE and Middle East to reimburse such costs in accordance with their share of the risk and to treat these fees as part of the claim.
(iii) I also note that foreign reinsurers (outside of the Middle East) that have supported ADNTC on both a facultative and treaty reinsurance basis have followed the same principle; namely, that litigation costs and other expenses associated with dealing with received claims are indemnifiable and form an integral part of the claim. In this context, we have cases where our facultative reinsurers have indemnified ADNTC despite the fact there was no specific stipulation or clause which dealt with liability for such costs. This is consistent, as above, with my experience of work for, or dealing with, companies offering facultative or treaty reinsurance in the UAE and Middle East markets and demonstrates, in my opinion, that a common understanding about the treatment of such costs is held by all market participants.”

139. In answer to a Request for Further information from AWRIS he stated:

“There is a reinsurance market in the UAE, Bahrain and Middle East for the purpose of reinsuring marine war risks. However, for the purposes of paying litigation fees and associated expenses, the nature of the underlying risk, whether war risks, hull risks or a non-marine risk, does not matter; the standard uniform practice is that they are paid by the reinsurer.”

140. AWRIS’s expert was Mr Williams. Mr Williams had spent thirty-seven years in the insurance industry, with thirty-one years at Lloyd’s of London with four syndicates, and Lloyd’s Claims Office. In addition, he had experience with a large Lloyd’s broker as well as a Houston based marine and energy broker and prior to returning to the Lloyds market was Senior Vice President with overall responsibility for claims in all lines of business for Houston Casualty Company, a Houston based Property and Casualty insurance company. He appeared however to have little or no experience of the Middle East.

141. At paragraph 2.1.1 of his expert report Mr Williams stated, “I would not consider that the UAE represents an established market for the reinsurance of marine war risks (or reinsurance business more generally).” This was something of a surprising proposition given the existence of AWRIS (The Arab War Risk Insurance Syndicate) itself and its stated objective in its financial statements “to protect the interests of the Arab insurance markets in the Arabian Gulf area and other Arab regions in respect of marine cargo and marine hull war risks insurance”, from which he readily retreated under cross-examination:

142. I am in no doubt that Mr Williams is a highly experienced former reinsurance professional with a fund of knowledge of the Lloyd’s and US markets. I accept without hesitation his evidence about London market practice, but I do not consider that he was qualified by his experience to express an expert opinion on the Arab insurance or reinsurance markets. It should not however be understood that I am criticizing Mr Williams in any way. Quite the contrary: it appears that important relevant materials were not brought to his attention when he was preparing his report and, very properly, when they were finally brought to his attention on cross-examination, he was quick to make the appropriate concessions. His candour does him credit as an independent expert.

143. Mr Abdeen is, however, a man of the Region whose CV indicates that he has contributed to the growth of the emerging insurance markets in the Middle East for more than 25 years. Mr Williams’s evidence cannot impugn his evidence.

144. While Mr Abdeen’s evidence may be uncontradicted, it was not unchallenged. The first line of cross-examination was an attempt to draw a distinction between a Takaful and a conventional insurance company. Mr Abdeen accepted that that there were structural differences but he indicated that London Market wording and Institute Clauses were used in policies issued by Takaful companies, “The only thing you attach to it is a preamble informing the insured that you might be entitled for a surplus if that fund of the pool of policyholders make money. But in terms of coverage, in terms of exceptions, provisions, everything the same” (Day 2, 195:2-6). He also confirmed that his company reinsures its treaty business with conventional leaders in London and Europe. His own company did write some facultative support for certain lines of business insured by conventional companies.

145. He said that Takaful and non-Takaful companies in the Region are heavily reinsured, because it is an energy/oil producing region and very active. The UAE is the hub in the Arab world. It is a heavily sophisticated market which seeks reinsurance.

“… So the system which I was part of creating in
18 this region, is to have a match between the reinsurers and
19 the insured, and that's how we done it. But there is
20 nothing to prevent you, either a takaful company, or a
21 conventional company, to accept any jurisdiction or
22 applicable law. It is subject to discussion and
23 negotiations. But the trend and the practice in our region
24 to make sure that there is sustainability and credibility of
25 reinsurers , because if I play in my own yard, you play in
1 your own yard, there is a mismatch. So this will affect the
2 effectiveness of insurers and reinsurers which will affect
3 the umbrella. So the adopted practice is to have
4 jurisdiction where the risk is located.” (197:17-198:4)

146. He was then asked about his current role with the implication that he may now be out of touch with the day-to-day practice. He accepted that there were different teams within his organisation and that he issues approvals in certain cases. He did confirm that he was the creator the organisation’s risk management manual.

147. He said that ADNTC issues direct marine hull and cargo policies but does not offer reinsurance support for marine business only other lines of business. He accepted that marine was not the strongest part of his company’s business, but they do issue some direct Hull and Machinery policies for large commercial vessels. He also accepted that war risks cover was not a target market and if they do get it, they would seek full reinsurance support either from AWRIS, the local market or internationally through brokers. Indeed, ADNTC is a member of AWRIS.

148. It was suggested to him that, contrary to the statement in his expert report that he knew of no conflicts, ADNTC’s membership of AWRIS might give rise to a conflict because it would be convenient for his company to establish some form of precedent that reinsurers are obliged to pay the legal costs of a primary insurer in all cases, whatever the merits. Mr Abdeen replied that it did not occur to him and in any event there is no system of precedent in the Arab world.

149. He was then asked whether he had ever worked personally as a marine war risks reinsurer. He replied that he had not but:

“I used to lead AIG and,
12 you know, when Iraq, all of these, we were offering out of
13 UAE a lot of War−related coverages that −− I was not the
14 underwriter for that, but I am overall responsible for the
operations.” (205:11-15)

150. Mr Abdeen was then taken to his answers to AWRIS’s Request for Further Information. It was suggested to him that if a reinsurance policy is governed by English law and English market practice, it must surely be relevant to consider what is English market practice. The object of the question was to defend Mr Williams’s evidence, because he only gave evidence about English market practice. Mr Abdeen replied that he was not asked to give evidence on English market practice but that in the Middle East.

151. It was suggested to him that the basis for his opinion was that the arrangement between ABNIC and AWRIS was a fronting arrangement, which he denied.

152. Mr Abdeen accepted that AWRIS would seek retrocessional reinsurance at Lloyds. It was suggested that there would be a problem if there was a market practice, either in the UAE or the wider Middle East, that in every situation, in every case, every reinsurer has to pay an unlimited amount of legal fees in circumstances where they will never be able to get retrocessional cover from London given the terms and conditions of both the reinsurance and the retrocession. He gave the answer set out at paragraph 110 above. He said that the market practice can be excluded by agreement.

153. Mr Potts disputed paragraph 4.1 of Mr Abdeen’s First Report:

“ABNIC is entitled to be indemnified by AWRIS under the reinsurance contract, on a 100% basis, for all the litigation fees and the expenses it incurred during the process of defending the claim submitted by Horizon which includes the reasonable and necessary steps it took to protect both ABNIC’s position and that of AWRIS (i.e., starting the claim in the DIFC Courts). Such steps were taken, ultimately, for the benefit of AWRIS (who had assumed 100% of the risk under the Underlying Policy).”

154. Mr Potts suggested that the judgment obtained was not just for ABNIC’s benefit but also for the benefit of the Hull Policy Reinsurers. Mr Abdeen replied that he is not a judge. All he was asked was to do was provide expert opinion. He was not asked to consider the position under the Hull Policy, he was asked about market practice in the context of ABNIC versus AWRIS. He was pressed that he had misunderstood his function as an independent expert witness, because he had adopted a partisan position. His response was “I feel a little bit heated about this”, he had been in the market in a leading position for 30 years, he had no reason not to express his professional opinion.

155. AWRIS summarised its position in its written closing note:

“… the purported opinions of Mr Abdeen (who is clearly not an expert in the business of marine war risks reinsurance, or even reinsurance at all) are inadmissible, unreliable, irrelevant, and incomplete; and not only are they unsupported by any corroborating documents (whether in the form of literature, policies, contract wordings, guidelines, textbooks, publications, judgments, or arbitration awards), but they are positively inconsistent with the express terms of the Institute Clauses and English law and practice, as well as relevant provisions of UAE Federal law, and commercial common sense, logic, and reason. Indeed, even Mr Abdeen concedes that the issue of the availability of legal fee coverage under a reinsurance contract necessarily depends on the specific wording of any particular reinsurance contract or policy (namely, whether the fees are covered, and/or whether they are excluded). It necessarily follows, therefore, that there can be no universal market practice.”

156. Thus, it is fair to say that Mr Abdeen’s evidence was vigorously challenged. He explained that he would not produce concrete examples of other polices because they are confidential. The criticism that he did not produce literature, guidelines, textbooks, publications, judgments, or arbitration awards would have had some force if it had been established that any existed and they were put to him. It was not and they were not. He did in fact give examples from his own immediate experience relating to the storm of April 2024 where the market practice had been demonstrated. This was not challenged, nor was it suggested that this was some sort of “fronting” arrangement.

157. I do not accept that the refence to the Institute Clause imported London market practice. If one were to give legal force to the heading of the Clauses that would include the words emphasized in capital letters “FOR USE ONLY WITH THE CURRENT MAR POLICY FORM”. That was unarguably not what was intended by the parties. They had no intention to use the MAR form. They intended to incorporate the wording of the Clauses in the Reinsurance Contract, no more. My finding for the purposes of DIFC Law No. 3 of 2004 (as amended) that the contract has the closest connection to law of England cannot be taken, in addition, to import London Market practice. The decision does no more than identify the applicable law.

158. The alleged “concession” by Mr Abdeen misstates his evidence. He did not say that “the issue of the availability of legal fee coverage under a reinsurance contract necessarily depends on the specific wording of any particular reinsurance contract or policy (namely, whether the fees are covered …”. What he said was that there is a market practice and if you wish to exclude it, you do so by specific wording:

“For AIG, we used to say litigation fees is
2 applicable. Sometimes you stay silent. So in my opinion,
3 the market practice, if you want to depart from this market
4 practice, there are ways and means either to control it,
5 limit it , exclude it . You put specific language.
6 Q. So the conclusion from that, really , is that
7 everything depends on the specific terms of the relevant
8 contract, doesn't it ?
9 A. What I put in my reports, and it is not really just
10 putting in the reports because I'm practising it , we always
11 participate in litigation fees , even if it is not
12 specifically . So exactly you could say implied, in this
13 market practice it is implied, unless the reinsurer
specifically exclude it .” (215:1-14)

159. Ultimately, I consider that Mr Abdeen was unshaken in his evidence and nothing of substance was put to him to contradict it. His evidence was clear that there is a uniformly accepted market custom in the reinsurance market (whether facultative or treaty) in the UAE and Middle East that, in the event of a claim under an underlying policy, any litigation fees incurred by a reinsured (together with any other associated costs incurred in dealing with the claim) will be reimbursed by reinsurers, in accordance with their respective shares of the risk unless litigation costs and associated expenses are expressly excluded or limited by a reinsurer. He spoke with the authority of 30 years in the market in leading positions. I found his evidence credible (the allegation of conflict of interest was rightly not pursued in closing) and impressive.

160. Addressing the Goshawk criteria, in my judgment they are satisfied in the present case by the critical fact that if reinsurers in the Middle East market wish to avoid liability for legal fees and other associated costs incurred in dealing with the claim, they contract out of the liability. If there were not “a freestanding contract” it would be unnecessary to exclude it. Unlike in Goshawk the Court is not confronted with the opposing views of equally eminent experts. Here Mr Abdeen has opined exclusively on Middle East market practice and Mr Willaims exclusively on London.

161. Accordingly, I do find that there is a market practice in the Middle East reinsurance market that any litigation fees incurred by a reinsured (together with any other associated costs incurred in dealing with the claim) will be reimbursed by reinsurers, in accordance with their respective shares of the risk. I hasten to add that this is a finding of fact based on the evidence before me, it cannot bind a subsequent Court faced with different evidence.

162. I need to consider whether, even if there is a market practice that any litigation fees incurred by a reinsured (together with any other associated costs incurred in dealing with the claim) will be reimbursed by reinsurers, it is excluded by Clause 5.1 of the Institute War & Strikes Clauses Hull-Time (see paragraph 56(4) above). AWRIS notes that in The Wondrous [1992] 2 Lloyd’s Rep 566, the Court of Appeal held, at 573 to 577, that the words “any financial cause” in the predecessor to Clause 5.1.5 should be given “their ordinary meaning”, which is “very wide” in “the context of a War Risks Policy”.

163. First, I am not sure the passage assists AWRIS when read in full:

“We were not referred to any decided cases on the meaning of "financial cause". But I can see no reason to confine the words to causes for which the owners are responsible, as the Judge held. The words are not financial default, still less financial default on the part of the owners; but financial cause. The financial cause must, of course, affect the ship. Otherwise there would be no detainment. But assuming the ship is detained by a failure to pay money on the part of the cargo interests, it comes within the ordinary meaning of the words "financial cause". I accept that the ordinary meaning of the words is very wide. But they are the words which the parties have chosen. In the context of a War Risks policy the words can and should be given their ordinary meaning.”

164. The Court of Appeal appear to be saying that the financial cause must be linked to the cover. The cover is “loss or damage to the Vessel caused by … capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat”. The exclusion extends to “loss damage liability or expense arising from ... the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause”. In the present context the seizure of the m/t BETA for any financial cause would have been excluded, but that is not what happened.

165. Secondly, on the Goshawk analysis market practice operates as an implied term. No term will be implied if it is inconsistent with the express terms of the contract. I do not consider that an implied term that any litigation fees incurred by a reinsured (together with any other associated costs incurred in dealing with the claim) will be reimbursed by reinsurers is inconsistent with Clause 5 as they are dealing with different things. Clause 5 addresses the extent of the cover of the perils in the insuring clause; the market practice addresses the costs of the insurer in dealing with the claim.

166. Referring back to paragraph 119 above, since the market practice does act as an implied term of the Reinsurance Contact it must follow that the liability for Defence Costs does amount to an insurable interest as explored in Wasa. The implied term defines “the insurer’s exposure under the original insurance” to include the Defence Costs. I accept that that does not sit altogether easily with the wording of the Institute Clauses but that is a consequence of the practice, noted with “regret” by Lord Griffiths in Vesta, of giving little thought to the difference between a primary insurance contract and a reinsurance contract at the time of placement (893C).

167. The fact that the market practice acts as an implied term of the Reinsurance Contact is also an answer to AWRIS’s broader submission that since this Court has found that the Hull and War Policies has been validly avoided, ABNIC has no exposure to any potential claim with respect to any of the ships. It would make no sense that, accepting there is an implied term enabling the recovery of Defence Costs, on a successful defence, liability to indemnify the insurer against the Defence Costs automatically disappears. The only logical and commercial interpretation is that the implied term persists in the event of successful proceedings enabling the insurer to avoid the underlying polices.

ISSUE (5): MISREPRESENTATION/NON-DISCLOSURE

168. The issue is to be determined in accordance with English law and is governed by the Insurance Act 2015, the material terms of which are as follows:

“Section 3 The duty of fair presentation
(1) Before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk.
(2) The duty imposed by subsection (1) is referred to in this Act as “the duty of fair presentation”.
(3) A fair presentation of the risk is one—
(a) which makes the disclosure required by subsection (4),
(b) which makes that disclosure in a manner which would be reasonably clear and accessible to a prudent insurer, and
(c) in which every material representation as to a matter of fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith.
(4) The disclosure required is as follows, except as provided in subsection
(5)—
(a) disclosure of every material circumstance which the insured knows or ought to know, or
(b) failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances. Section 4 Knowledge of insured
(3) An insured who is not an individual knows only what is known to one or more of the individuals who are—
(a) part of the insured's senior management, or
(b) responsible for the insured's insurance.
…
(6) Whether an individual or not, an insured ought to know what should reasonably have been revealed by a reasonable search of information available to the insured (whether the search is conducted by making enquiries or by any other means).
(7) In subsection (6) “information” includes information held within the insured's organisation or by any other person (such as the insured's agent or a person for whom cover is provided by the contract of insurance).
(8) For the purposes of this section—
…
(b) an individual is responsible for the insured's insurance if the individual participates on behalf of the insured in the process of procuring the insured's insurance (whether the individual does so as the insured's employee or agent, as an employee of the insured's agent or in any other capacity), and
(c) “senior management” means those individuals who play significant roles in the making of decisions about how the insured's activities are to be managed or organised.
…
Section 6 Knowledge: general
(1) For the purposes of sections 3 to 5, references to an individual's knowledge include not only actual knowledge, but also matters which the individual suspected, and of which the individual would have had knowledge but for deliberately refraining from confirming them or enquiring about them.
…
Section 8 Remedies for breach
(1) The insurer has a remedy against the insured for a breach of the duty of fair
presentation only if the insurer shows that, but for the breach, the insurer—
(a) would not have entered into the contract of insurance at all, or
(b) would have done so only on different terms.
(2) The remedies are set out in Schedule 1.
(3) A breach for which the insurer has a remedy against the insured is referred to in this Act as a “qualifying breach”.
(4) A qualifying breach is either—
(a) deliberate or reckless, or
(b) neither deliberate nor reckless.
(5) A qualifying breach is deliberate or reckless if the insured —
(a) knew that it was in breach of the duty of fair presentation, or
(b) did not care whether or not it was in breach of that duty.
(6) It is for the insurer to show that a qualifying breach was deliberate or reckless.”

169. It is common ground that one can read “insured” for “insurer” and “insurer” for “reinsurer” in the above.

170. In its written opening submissions ABNIC suggests that by Schedule 1, an insurer may avoid only if the breach was deliberate or reckless (as defined under s.8(5)) or it can show that it would not have entered the insurance contract on any terms. The latter only applies to a qualifying breach which was neither deliberate nor reckless. That is not the case here, in closing submissions AWRIS stated “... there was a misrepresentation as to the classification of the vessel, because the schedule that was sent to us on 7 June asking us to bind cover told us in unqualified terms that the m/t BETA was classified with Bureau Veritas … We are not talking about non-disclosure, we are talking about a positive false misrepresentation of fact, and the question is, did the person making the representation have a proper basis upon which to make a false representation of fact”.

171. AWRIS focuses on the exchanges set out at paragraphs 39 to 47 above. Mr Shalab was cross-examined extensively about the classification of the m/t BETA on Day 2 between transcript pages 101 and 124. His response was that he did not consider it part of his duty to inform AWRIS that Horizon had informed him that the vessels to be insured were in the process of classification renewal. He accepted that Horizon did not get back to him confirming that the classification had in fact been renewed. Mr Shalab said that he understood that the renewal process had been initiated:

“A. No, I did not tell anyone about this. See,
15 whatever we received this information has to be disclosed by
16 the client , the client confirm they initiated the class
17 process amid renewal, so based so that one we understand the
18 class is being renewed, which is renewed, means all vessels
19 now are class, according to the final declaration , which
20 they submit to us.
21 Based on that one, we submitted the confirmation to our
22 reinsurers . And of course if there is any doubt, reinsurers
23 of course ask the question, were there any updates,
24 something. But since no question received, they accepted as
25 it is , the declaration .” (Day 2, 122:14-25)

172. There was no suggestion to Mr Shalab he sought deliberately to mislead AWRIS. Indeed, it was never suggested by AWRIS itself that that ABNIC was guilty of misrepresentation or non-disclosure in relation to the Reinsurance Contract (see paragraph 76 above). AWRIS suggested in closing that Mr Shalab was negligent, that he turned a blind eye to the issue even though the Hull insurers requested a warranty that the vessels were in class. It was suggested that he turned a blind eye because of the relationship between Mr Qaddumi, the General Manager of ABNIC, and Mr Al Sari. Mr Shalab said that Mr Qaddumi was not involved in the placement of the reinsurance. So far as Mr Al Sari is concerned there is no evidence that he was an individual who played a significant role in the making of decisions about how ABNIC’s activities are to be managed or organised with regard to reinsurance within the meaning of section 4(8)(c) of the Insurance Act 2015.

173. Throughout, I received a strong impression of an underlying conspiracy theory on the part of AWRIS that Mr Al Sari sold the m/t BETA to the Iranian Navy and that somehow ABNIC is infected with knowledge. This is pure speculation. It is unnecessary for me to find whether Mr Shalab could and should have made further enquiries having received Horizon’s Declaration and the warranty in the Hull Policy. It is for AWRIS to prove that ABNIC knew that it was in breach of the duty of fair presentation, or did not care whether or not it was in breach of that duty. I do not consider that there is any evidence on which I could make such a finding.

174. It follows from the foregoing that AWRIS is not entitled to avoid the Contract of Reinsurance for misrepresentation or non-disclosure.

175. ABNIC also makes the point that a finding that AWRIS were so entitled would be inconsistent with judgment of H.E. Justice French as set out at paragraph 15 above that “I accept Mr Shalab’s evidence that had he known that the Vessel was not in class, he would not have recommended that the Policies issue”. It is unnecessary for me to decide that point but I do note that Mr Shalab’s evidence in that case was unchallenged and the Court was looking at the issue in a different context to the present.

ISSUE (6): TIME BAR/LATE NOTIFICATION

176. As the applicable law is English law, consequently the provisions of the UAE Federal Law on Maritime Commercial Law are not applicable.

177. Clause 4 of the Institute War and Strikes Clauses Hulls-Time provides that notice of accident whereby loss or damage may result must be given promptly after the date on which the [insurer] becomes or should have become aware of the loss or damage. If notice is not given within twelve months of that date [reinsurers] will be automatically discharged from liability for any claim under in respect of or arising out of such accident or the loss or damage (see paragraph 56(3) above).

178. AWRIS submits that the 18 November 2020 letter was not a notification under the War Policy, it was a notification under the Hull Policy. It was more than 12 months after the expiry of the 2019 policy in June 2019, it was more than 12 months after the alleged date of the last sighting of the vessel in May 2019.

179. ABNIC passed the document to AWRIS on 6 January 2021. I accept that ABNIC had no knowledge of a potential claim until Horizon gave notice of a potential claim under the Underlying Policy on 18 November 2020. I do not understand AWRIS to suggest that it did. While it is true that the notice was headed with the Hull Policy number, I consider that there is enough in it to put the Insurers on notice of a potential claim in that it was said the vessel had “disappeared”. I am therefore satisfied that ABNIC gave notice timeously.

180. I should add that the Notice claim document from Horizon in Arabic (untranslated) dated 25 October 2021 does reference both polices. Horizon’s letter of 25 October 2021 was apparently copied to AWRIS on 3 November 2021. That was (just) within 12 months of 18 November 2020.

ISSUE (7): PROOF OF LOSS

181. AWRIS submits that an insuperable difficulty for ABNIC is that ABNIC has made no effort to prove, by reliable and admissible evidence, that on a hypothetical counter- factual scenario – i.e., even if the Hull Policy and the War Policy had not both been validly avoided, and even if the DIFC Court had not held there to be various other valid coverage defences under both the Hull Policy and the War Policy – the alleged loss of the m/t BETA was proximately caused by an eligible and covered war risk within the relevant policy period, as opposed to the deliberate or negligent acts or omissions of its owner or a third party, or an ordinary peril of the sea.

182. AWRIS referred the Court to paragraph 24-20 of Arnould on Law of Marine Insurance and Average (21st edition):

183. As I decline to make a declaration that AWRIS is liable to indemnify ABNIC against any hypothetical finding against ABNIC by the Courts of Sharjah it is not necessary to consider whether the alleged loss of the m/t BETA was proximately caused by an eligible and covered war risk within the relevant policy period.

184. Having held that the Defence Costs are payable under an implied term of the Reinsurance Contract, AWRIS reminds me of my words in the Reasons for my Order of 3 January 2025, that the burden of proving its claim rests on ABNIC. ABNIC is obliged to produce documents showing that the costs claimed relate to its costs of defending the Underlying Insured’s claims under the War Policy. If it fails to do so, the claim will fail.

185. AWRIS submits that ABNIC has provided no evidence to support the proposition that any of the legal costs and expenses allegedly incurred were reasonable (either in principle or in amount), or that they were directly or solely attributable to ABNIC’s defence of claims made against it by Horizon or ABIS for coverage under the War Policy as opposed to its defence of claims for coverage under the Hull Policy or in support of its arguments that Horizon’s claims were completely invalid claims and were simply not covered under any policy at all. AWRIS says it is notable that ABNIC has made no effort to try to make any allocation or apportionment, but it has, instead, sought to ‘load’ 100% of the alleged costs on to AWRIS. There can be no coherent explanation for this approach, and there has been no evidence put forward to seek to justify it.

186. I find that there is some force in AWRIS’s submissions, but these issues do not arise for immediate determination. ABNIC has confined its claim to a declaration and indemnity on the basis that the full amounts have not yet crystallised (Day 1, 92:22- 93:18). Whether it should have done so or should have brought all of its claims in this action is another matter. AWRIS says that it reserves its rights having regard to Henderson v Henderson abuse of process principles.

ISSUE (8): RELIEF

187. The pleaded claim for relief is as follows:

188. I decline to make the declaration sought at (1) or the Order sought at (3) for the reasons stated above.

189. I grant a declaration in the following terms in respect of (2): it is an implied term of the Reinsurance Contract that AWRIS is liable to indemnify ABNIC against costs and expenses properly incurred in claims brought by or against the Insured arising out of or in connection with the Underlying Policy.

190. No entitlement to interest arises.

COSTS

191. Following circulation of this judgment in draft, I invited the parties to make written submissions on costs.

192. The applicable principles are not in dispute. RDC 38.6 provides that the Court has a discretion as to whether costs are payable by one party to another and the amount of those costs. RDC 38.7 states that if the Court decides to make an order about costs the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the Court may make a different order.

193. In deciding what order to make about costs, the Court will have regard to (amongst other circumstances), the conduct of the parties and whether a party has succeeded on part of its case, even if it has not been wholly successful (RDC 38.38). The conduct of the parties will include:

194. As recently observed by H.E. Justice Sir Peter Gross in ASW Hospitality AG v MAG of Life FZ – LLC [2002] DIFC CFI 077 (2 April 2025) at [6], the relevant principles were comprehensively summarised in Al Khorafi v Bank Sarasin-Alpen (ME) Ltd [2009] DIFC CFI 026 (16 January 2017) at [36] where Sir John Chadwick, DCJ stated:

195. By RDC 38.10, the orders which the Court may make include an order that a party must pay:

196. RDC 38.13 provides that where the Court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.

197. ABNIC maintains it was the successful party and should have its costs. It says that it sought two declarations, namely (a) a declaration that it is entitled to be indemnified under the reinsurance contract in the event that it is found liable to the underlying insured, Horizon; and (b) a declaration that it is entitled to an indemnity in respect of all costs and expenses incurred in proceedings brought by or against the Insured. It says that it was successful in relation to (b) and it was only denied the declaration sought at (a) because it became unnecessary due to the decision of the Sharjah Court handed down after the trial.

198. AWRIS claims:

199. As to the declaration obtained by ABNIC, AWRIS submits that the limited form of declaration that the Court has indicated that it is willing to grant is clearly very different to (and much more limited in scope than) the various declarations sought by the Claimant. That limited declaration will also only have been granted by the Court in reliance on oral (and essentially anecdotal) opinion evidence, following a written report that was only belatedly disclosed by the Claimant to the Defendant very shortly before trial (not, as it might reasonably have been, under cover of pre-action correspondence), and which clearly needed to be tested by the Defendant under cross-examination at trial (bearing in mind that the form and content of the Claimant’s written expert report contained a large body of inadmissible material).

200. AWRIS concedes that while it may may not have been successful on certain subsidiary issues (resulting in the limited form of declaration that the Court has indicated that it is willing to grant), ABNIC’s limited success on those subsidiary issues is, in substance and in practice, entirely Pyrrhic, since it is no closer to receipt of any monetary sum from the Defendant following the draft Judgment, than it was prior to the draft Judgment. Indeed, says AWRIS, it is very likely that, having regard to the actual findings and provisional observations in the draft Judgment (and the various other legal, procedural, and evidential obstacles standing in the way of any monetary claims that ABNIC might seek to assert against AWRIS in separate legal proceedings in the future), AWRIS will ultimately recover nothing at all from the Defendant under the Marine War Risks Reinsurance Contract in due course.

201. This is a reference to my observations at paragraphs 184 to 186 above. ABNIC chose not to make a financial claim in these proceedings because it stated that the full amount of the indemnity that it was seeking had not crystallised. It is true that even when the hearing closed it was not clear whether the Sharjah Court would allow Horizon to continue with its claim against ABNIC. In the event it did not. AWRIS says it is an abuse of process not to bring all claims in one action. I declined to decide that point in these proceedings. I must therefore limit myself to considering whether ABNIC was the successful party on its claim as phrased.

202. In my judgment it was. It is true that the declaration granted was in different terms to that sought. I do not consider the differences to be so significant as to undermine the fact that ABNIC essentially achieved what it was seeking, namely an indemnity against the costs incurred in defending the claim by Horizon. The differences were issues of detail. ABNIC claimed to be to be immediately indemnified against all costs and expenses incurred, but it was in fact not seeking an immediate indemnity and it could only ever recover costs and expenses properly incurred.

203. ABNIC did fail on the issue that UAE law was the governing law of the reinsurance contract but that was a step in the indemnity claim. Had UAE law applied I would not have had to consider the English authorities requiring consideration of market practice with regard to reinsurers reimbursing insurers for defence and other costs in the Middle East market (which AWRIS’s expert began by denying even existed). In the event ABNIC succeeded notwithstanding English law was the governing law of the reinsurance contract.

204. At paragraph 89 above I identified 8 issues:

205. ABNIC did fail on Issue No. 1 as noted at paragraph 203 above. Issue No. 2 merged into Issues Nos. 3 and 4. I found that Issue No. 3 was overtaken by events as described at paragraph 125 above. ABNIC succeeded on Issues Nos. 4, 5 and 6. Issue No. 7 is the point at paragraph 201 above and Issue No. 8 related to the form of relief. I am in no doubt that ABNIC was in reality the successful party.

206. Each party criticises the conduct of the other. AWRIS points out that it successfully made a strike-out application against ABNIC with respect to the various defects in ABNIC’s original pleadings (which ABNIC then amended, even though the balance of its amendments were dismissed at trial, and a number of those amendments had to be abandoned at the beginning of trial). The application was combined with an application to stay the proceedings pending the outcome of the Sharjah Proceedings which was dismissed. I did consider the costs of the applications at the time. I found that both parties enjoyed some success although neither was unqualified, and the fairest costs order was that the costs of the application would be costs in the case.

207. AWRIS attempts to revisit its stay application in its costs submissions. This is inappropriate – costs submission are not to be treated as belated appeals. AWRIS also makes more generalised criticisms of ABNIC’s conduct, but the conduct seems to me to be no more than the usual cut and thrust of hotly disputed litigation. The same is true of ABNIC’s criticisms of AWRIS’s conduct.

208. Both parties refer to efforts to settle the proceedings. The only offer that was made by AWRIS was “a ‘full and final settlement’ on a ‘drop hands’ basis,” made on 1 August 2025 after sight of the draft judgment. In my view this was too little, too late.

209. While it is true that ABNIC did not succeed on every issue, as stated in Khorafi, there is no automatic rule requiring reduction of a successful party's costs if it loses on one or more issues. The fact that a successful party has failed on certain issues does not justify making a separate costs order on those issues. The costs of the strike-out and stay application are res judicata and are to be costs in the case. I consider the offer made after the sight of the draft judgment to be irrelevant both in substance (ABNIC did better than the offer) and timing (all the costs of the action, save for the final costs submissions, were incurred by that date). I see no reason for not awarding ABNIC its assessed costs in full.

210. Each party unilaterally reserves “the right” to file and serve written submissions. This is misconceived: there is no right to serve written submissions only permission. The Court directed a single round of submissions on 17 July 2025. Instead of requesting a further round, on 18 August 2025, the parties agreed a consent order extending the time for service of the single round of written submissions. The parties exchanged submissions on 22 August 2025 and Statements of Costs on 25 August 2025. Neither party requested the opportunity to serve further written submissions. I do not require service of further written submissions on the question of who should bear the costs of the action and in what proportion.

211. ABNIC seeks an order that AWRIS pay its costs of and occasioned by the proceedings, such costs to be paid on the standard basis and to be assessed by way of immediate assessment to be paid within 14 days. AWRIS seeks its own costs to be assessed if not agreed. It does not state in the body of its submissions whether the assessment should be immediate or detailed. In a footnote AWRIS stated “For the avoidance of doubt, the Defendant reserves its rights generally with respect to any potential interim payment on account of costs, pending detailed assessment. The Defendant had filed a Statement of Costs with the Court for the purposes of the trial in April 2025, and an updated version is in the process of being filed.” The Statement of Costs is however in the form for assessment “Without hearing”.

212. RDC 38.29 provides that whenever the Court makes an order about costs which does not provide for fixed costs to be paid, the Court should consider whether to make an immediate assessment of costs. It is not usual to order an immediate assessment of the costs of an action where the trial has exceeded one day. The thinking behind that policy is no doubt that the trial judge may not have a familiarity with the interlocutory stages of more complicated cases. That difficulty will not arise in a docket system where a single judge has had the conduct of a case throughout. In the present case, I have had the benefit of dealing with the majority of the case management.

213. The total amounts of the parties’ costs appearing from their Statements of Costs are respectively AED 4,563,051.74 for ABNIC and AED 5,621,072.08 for AWRIS. It is surprising that there should be a difference in excess of 20% between a claimant’s and defendant's costs especially when one normally expects the claimant’s costs to be higher since they have carriage of the proceedings and where there is no counterclaim. The difference is more surprising given that ABNIC’s lawyers (Clyde & Co) had a larger and more senior team with correspondingly higher charge-out rates (albeit, with one minor exception, within the Indicative Hourly Rates) than AWRIS’s lawyers (Pinsent Masons).

214. Having said that, the totals excluding disbursements are: Clydes AED 3,494,289 and Pinsent Masons AED 3,646,647. This is much more as expected and shows that the principal difference is in the disbursements, comprising in ABNIC’s case “Counsel Fees – AED 960,825.11 Expert Fees – AED 57,999.00 Court Fees - 23,156.76 Transcription Fees – AED 20,989.27 External Translator Fees – AED 2,485.00 In- House Translator Fees – AED 3,007.38 Courier Fees – AED 130.30 Printing / Photocopying Charges – AED 170.10” Unfortunately AWRIS’s Statement of Costs does not itemise the disbursements as it should have done in compliance with RDC 38.34(4).

215. Given that both parties seem content with an immediate assessment and neither has sought permission to serve further submissions, I am content to assess ABNIC’s costs on an immediate basis in order to bring finality to these proceedings. There is nothing in the materials before me to indicate that ABNIC’s cost are disproportionate, unreasonably incurred or unreasonable in amount (RDC 38.21).

216. As to the matters to which the Court must have regard under RDC 38.23: I do not consider any conduct on the part of ABNIC justifies a reduction in any costs awarded to ABNIC (RDC 38.23(1)). The amount in dispute was substantial – had the Sharjah Court permitted Horizon to reopen its claim there was a potential liability in excess of USD 70 million (RDC 38.23(2)). The matter was important to the parties because it raised a novel issue in the highly specialised field of Marine War Risk Hull Reinsurance in the Middle East market (RDC 38.23(3), (4), (5)). I have addressed the time spent on the case, and the place where, and the circumstances in which, work or any part of it was done are not material (RDC 38.23(6), (7)).

217. It follows from the foregoing that I award ABNIC its costs in the sum claimed, namely AED 4,563,051.74 to be paid within 14 days from the date of this Judgment.