This was a claim brought by an insured, Stroyservice Trading Ltd (the claimant) against its insurer, LLC Insurance Company Orbita (the defendant), for insurance compensation.

The claimant and the defendant entered into an all-risk marine cargo insurance agreement. The defendant was not liable under the policy if the vessel’s unseaworthiness caused the damage or loss. The policy comprised an insurance agreement, insurance rules, and an additional agreement. All of these formed equal parts of the insurance policy in light of art 943 of the Civil Code of Russia, under which the insurance rules of the relevant insurer are mandatory for the insured, even though they may not have been included in the insurance agreement. The claimant was also insured against any losses related to general average contributions.

On 9 October 2018, the vessel NILA, carrying cargo from Azov, Russia, to Giresun, Türkiye, suffered a breach. The vessel started sinking. There was a risk of wreckage and loss of the cargo. The ship was salved by FSBI Morspassluzhba. The shipowner declared general average.

The claimant submitted its claim to the defendant for compensation of the general average contribution due. The defendant rejected the claim on the basis that the vessel was unseaworthy at the beginning of the voyage, and the breach was caused by rusting of the vessel's hull. As a result, the insurer's liability was excluded. Moreover, the defendant stated that the plaintiff had failed to provide it with a proper general average adjustment. Therefore, the amount of the insured’s general average contribution was unknown.

The Court of first instance found in favour of the defendant. The claimant appealed.

Held: The appeal is dismissed. The judgment of the Court of first instance is upheld.

Under Art 284 of the Merchant Shipping Code of Russia (the MSC RF), general average losses and contributions are adjusted proportionally between the ship, the cargo, and the freight to their value at the time and place of the common venture. According to art 305 of the MSC RF, general average is adjusted in accordance with a report prepared by persons with special expertise (average adjusters). The report provided by the claimant was not a proper adjusting report under art 305 of the MSC RF. Although the value of the cargo and the freight were known to the parties, the report did not contain reliable information on the contributory value of the ship. Therefore, the general average was not properly adjusted. The report contained a reservation clause that it could not serve as the final adjustment, but was merely aimed at providing approximate figures for fair general average distribution.

[Judgment confirmed on cassation appeal: see the Judgment of the Commercial Court of the Moscow District in Case No A40-101639/2019 dated 26/05/2020.]