Category: Insurance case law · Reviewed by Matt Bartlett, Director · Founder · Last reviewed June 2026
A Court of Appeal decision on marine cargo insurance, the scope of “misappropriation” cover under bespoke transit policies, and the operation of accumulating risks where bank-financed cocoa commodities were lost across multiple voyages.
ABN AMRO Bank NV (“the Bank”) financed the trade in cocoa products by a number of commodity traders, taking security over the cargo and the trade receivables. It placed marine cargo insurance in the London market under transit policies arranged through brokers, with Royal & Sun Alliance Insurance plc (“RSA”) and a panel of other co-insurers on the slip.
The cover was bespoke. In addition to standard Institute Cargo Clauses-type perils, the policies included an extension responding to physical loss or damage and, materially, a “misappropriation” or “fraudulent documents” extension intended to protect the Bank as a financing party against the risk that cargoes financed against documentary collateral might be lost as a result of dishonest acts by the trader or third parties — including the issue of false bills of lading, double pledging, or diversion of cargo. The clauses had been negotiated specifically to address the credit and trade risks of the Bank’s commodity-finance business.
Losses arose across multiple shipments of cocoa products during 2013-2014, including disappearances of cargo, defaults by the trader counterparties and irregularities in shipping and warehouse documentation. The Bank claimed under the policies. Underwriters disputed cover on a number of grounds, including (a) the proper construction of the misappropriation extension; (b) whether the losses fell within the perils insured; (c) the operation of the aggregation/accumulation provisions and the consequent effect on limits; (d) the conduct of placement and whether there had been any breach of the duty of fair presentation; and (e) the application of subrogation and contribution principles between the Bank, the traders and the underwriters.
The matter came before the Commercial Court at first instance and was then taken on appeal to the Court of Appeal. The decision is significant because of the size and structure of the modern commodity-finance market and the role that bespoke cargo policies play within it.
The principal issues for the Court of Appeal included:
The Court of Appeal (paraphrased) construed the misappropriation extension by reference to its commercial purpose: the clause had been deliberately drafted to widen cover beyond the perils of the Institute Cargo Clauses, and was intended to provide the Bank with meaningful protection against fraud and dishonest dealings affecting financed cargoes. Read in that light, the clause responded to a range of dishonest acts going beyond ordinary theft, including issuance of fraudulent documents and diversion of cargo.
On aggregation, the court applied the orthodox approach of examining the wording of the policy and identifying the relevant “unifying factor” — whether each shipment was a distinct insured adventure or whether the losses arose from a single originating cause. The court reached a balanced conclusion that allowed for proper recognition of distinct losses while respecting the policy’s structure.
On fair presentation, the court (paraphrased) considered the materiality and inducement requirements under sections 3 and 7 of the Insurance Act 2015, and the question of what a reasonable search by a sophisticated financing institution required. Where the insured is a substantial bank with structured trade-finance operations, the reasonable search obligation extends to information held within the relevant business unit and reasonably retrievable from systems.
A bespoke “misappropriation” extension in a marine cargo policy is to be construed by reference to its commercial purpose and the specific risks it was negotiated to address. Where the wording is wider than the Institute Cargo Clauses, the court will not constrain it artificially. The aggregation analysis depends on identifying the unifying factor and the proper construction of the limit clause; the court will not lightly treat distinct voyages as a single loss in the absence of clear wording. The duty of fair presentation under the Insurance Act 2015 is calibrated to the size and sophistication of the insured: a global bank’s “reasonable search” extends to information reasonably retrievable from systems and the relevant business unit.
ABN AMRO v RSA is an important authority for the London market’s commodity-finance and marine cargo lines. Its significance includes:
Bespoke wordings carry weight. The court will give effect to the deliberate breadth of negotiated wordings. Brokers and clients should pay close attention to drafting, since clauses negotiated for a specific commercial purpose may be construed more broadly than market-standard analogues.
Misappropriation and fraud cover. The case is now a leading authority on the scope of misappropriation extensions in commodity-finance cargo programmes. It will inform negotiation of similar wordings going forward.
Aggregation discipline. The judgment reinforces the need for clear aggregation language in policies covering multiple shipments or transactions. Ambiguity will be resolved by reference to the unifying factor and the commercial context.
Insurance Act 2015 in sophisticated placements. The decision contributes to the developing case law on what a “reasonable search” means for large corporate insureds. Banks and other sophisticated insureds cannot rely on departmental silos to avoid disclosure.
Subscribing-market position. The case addresses the position of co-insurers and is a reminder that each underwriter on the slip remains liable in accordance with the terms of its subscription, subject to leading-underwriter arrangements.
For brokers placing commodity-finance, trade-credit or marine cargo cover, the case is essential reading and should inform wording negotiations and pre-placement enquiries.
By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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