The decision of Deputy Judge Eggers in the English High Court in Ithaca Prospect LLC and Anor v Lloyds Insurance Company SA and Ors [2026] EHC 2700 (Comm) has looked closely at the recovery of sue & labour expenses incurred following the Russian invasion of Ukraine. 

The vessel "Ithaca Prospect" was detained at a Ukrainian port following the Russian invasion in February 2022 and remains at that port. 

A marine insurance policy which insured against war risks was cancelled with effect from 2 March 2022. Replacement war insurance cover was then arranged from that date until 12 May 2022. 

Following the vessel's detention for 12 months, the vessel owners and managers made a claim for the constructive total loss of the vessel and subsequently served notices of abandonment on the insurers, who rejected those notices. 

The claim for constructive total loss was subsequently settled for its full amount (US $16 million) and the claimants continued to maintain the vessel until May 2023 but sought recovery from insurers of the expenses incurred in keeping the vessel in a condition in which it was ready to depart quickly as sue & labour expenses in an amount of a little over US $1 million, together with a claim for the cost of replacement war risks insurance (US$2,285,435.42).

The Marine Insurance Act provides that an insured has a duty to "take such measures as may be reasonable for the purpose of averting or minimising a loss" and further provides that a sue & labour clause in a marine policy is supplementary to the contract of insurance (see Marine Insurance Act 1906 (UK) section 78(1) and (4) - which has equivalent provisions in the Marine Insurance Act 1909 (Cth) sections 84(1) and (4).)

The court noted that under the relevant policy clauses (the Institute Time Clauses - Hulls 1/10/83) in order to recover the claimant must establish that:

1. an insured peril is imminent such that the need to mitigate loss or damage by that peril arises;

2. the claimant undertook unusual and extraordinary steps or incurred unusual or extraordinary expense;

3. the action or expense was proper and reasonable;

4. the purpose behind the action or expense was to preserve the insured property from loss or damage by an insured peril; and

5. if loss or damage occurred by reason of the insured peril, that loss or damage was indemnifiable under the insurance contract. 

The judge found that crew-related expenses were recoverable as sue & labour expenses as they were incurred to facilitate the departure of the vessel from the port in Ukraine should that opportunity arise. The expenses were extraordinary or unusual as, once the vessel was delivered in a war zone, the crew were entitled to be repatriated, and the claimants were compelled to employ a local crew to satisfy their crewing requirements imposed by the Panama Maritime Authority (the relevant registration authority). Crew-related expenses of US $550,134.52 were allowed. 

Similarly, the court allowed the cost of consumption of bunkers used in maintaining the vessel in readiness to depart Ukraine at a cost of US $192,000. 

In relation to a claim for legal fees incurred, those incurred for the purpose of facilitating departure of the vessel were found to be a recoverable sue & labour expense, but those related to the exercise of a lien over the cargo or the arrest of the vessel were not recoverable. 

A claim for port fees was not recoverable, there being no evidence that the fees were required to be paid as a condition for the vessel's departure from Ukraine. 

Finally, in relation to the claim for replacement war risks insurance, the judge looked at the effect of the service of the notices of abandonment. He found that the insurers did not accept the abandonment of the vessel. The effect of the settlement of the claim for a constructive total loss was also irrelevant. He found that the cost of replacement insurance was a "liability of ownership" that was not released by the settlement agreement of the hull claim. However, he dismissed the claim for the cost of replacement insurance.

The judgment provides a very useful summary of the relevant law relating to both sue & labour expenses and the effect of a notice of abandonment. 

It will be interesting to see if the claimant accepts the findings, particularly those in relation to the recoverability of the additional insurance costs, or whether the claimants decide to appeal this or other aspects of the decision.

For advice on marine insurance, shipping risks or the implications of this decision, please contact a member of our Transport & Logistics team.