A Study on the Treatment of Unjust Insurance Claims in the English Law under Marine Insurance Contracts: Focused on the Case of the DC Merwestone

Abstract

Purpose This paper analyzes the reasoning of the judgment of the United Kingdom Supreme Court in the Versloot Dredging BV and another v. HDI Gerling Industrie Versicherung AG and others (The DC Merwestone) (2016) in finding that there is no remedy or sanction for the use of fraudulent devices (so-called “collateral lies”) in insurance claims and to consider potential implications for insurers. Design/Methodology/Approach The methodology is a literature analysis starting from case facts and the reasoning with short comments on legal implications. Findings Despite no sanction provided by law for the use of fraudulent devices, the room still opens for the insurers to stipulate the consequence of using the fraudulent devices by the express term in the insurance contract. Research Implications The case of the DC Merwestone may have wide implications for insurers in the future, where there is uncertainty over whether a fraudulent device has had any material effect on their ability to claim. The result of this study raises awareness of the marine insurance industry (especially insurers) as to the approach of the English law towards the use of fraudulent devices. It will need to wait and see what further decisions are made in this area in order to see how these will affect the insurance industry as a whole.