Category: Marine · Reviewed by Amy Price, Account Executive · Last reviewed 2026-06-05
The Free of Capture and Seizure clause, commonly abbreviated FC&S, was the historic London marine market exclusion of war-related risks from standard hull and cargo cover, the parent of all subsequent war risk exclusions and the foundation of the separate war risks insurance market.
Category: Marine insurance Also known as: FC&S clause, FCS clause, war risks exclusion First codified: Lloyd’s market practice from late 19th century; standardised c.1898; Waterborne Agreement 1937 Related legislation: Marine Insurance Act 1906 [1]
The Free of Capture and Seizure clause is a historic exclusion of war and capture-related perils from the standard marine insurance policy. In its classic form, the FC&S clause excluded loss or damage caused by capture, seizure, arrest, restraint or detainment, the consequences thereof or any attempt thereat; also loss or damage caused by hostilities or warlike operations, whether there be a declaration of war or not; piracy excepted (in earlier versions). The clause appeared in standard hull and cargo policies from the late 19th century and remained substantially in this form until replaced by modern exclusions in the Institute Cargo Clauses and equivalent hull wordings in 1982 [3][4].
The clause has its origins in the Crimean War (1853–56) and the American Civil War (1861–65), which exposed the difficulty of pricing war risks within standard marine policies. Underwriters at Lloyd’s progressively introduced exclusions for war-related losses, with the FC&S formulation becoming standard by the late 19th century. The Boer War (1899–1902) and then the First World War demonstrated the scale of war-related cargo losses and the need for a distinct war insurance market with separate underwriting [4][5].
The FC&S clause is no longer found in current standard wordings - the Institute Cargo Clauses (A), (B) and (C) from 1982 onwards use updated war exclusions in cl.6, paired with separate Institute War Clauses Cargo (CL.385) that restore cover by separate placement. The current war exclusion in cl.6 of the modern ICC covers similar ground to the historic FC&S - war, civil war, capture, seizure, derelict mines, torpedoes - but is more clearly drafted [3].
The FC&S clause remains historically and conceptually important. Many older policies in legal disputes (notably long-tail asbestos and environmental liability claims arising from carriage of asbestos cargo decades ago) continue to be construed against the language of the FC&S clause as it appeared at the time of cover. The clause’s structure - exclusion from the main policy with parallel restoration through a separate war placement - shapes the modern market.
The FC&S clause was given statutory backing by recognition in the Marine Insurance Act 1906. Section 55(2)(b) of the Act provides that, unless the policy otherwise provides, the insurer is not liable for any loss caused by ‘war, civil war or by any rebellion, riot or civil commotion’. The FC&S clause as drafted in market wordings put this beyond doubt and added the capture and seizure exclusions [1].
The Waterborne Agreement of 1937 was a critical market accord. Following heavy losses on cargo war business in the inter-war period (particularly losses connected with the Sino-Japanese War, the Spanish Civil War and the lead-up to the Second World War), London market underwriters agreed that cargo war cover would be limited to the waterborne portion of the voyage - that is, the period the goods were on board an overseas vessel. The agreement was a self-imposed market discipline rather than a regulatory measure, but it became the standard market practice for cargo war cover and is reflected in the duration clause of the modern Institute War Clauses Cargo [3][5].
Following the loss of HMS Hood, HMS Prince of Wales and many merchant vessels during the Second World War, the British government acted as reinsurer of last resort for marine war risks under the War Risks Insurance Acts. The post-war market reorganised around a separate war insurance market with mutual war risks associations for hull (the war risks clubs) and Lloyd’s market and IUA underwriters for cargo war risks.
The Insurance Act 2015 modernised disclosure and warranty law for commercial marine contracts entered into after 12 August 2016, but did not change the substance of the war risk exclusions, which continue to operate through the modern Institute Clauses [2].
The historic FC&S clause is rarely seen in current policies, having been replaced by the modern war exclusion in cl.6 of the Institute Cargo Clauses. The modern equivalent functions in the same way: the main marine cover excludes war risks, and a separate war insurance placement (under the Institute War Clauses Cargo or the equivalent hull war wordings) restores cover for an additional premium [3][4].
The two-policy structure - main marine cover plus separate war placement - allows the market to manage war risks separately. War premium rates fluctuate with global political conditions and are reviewed continuously; standard cargo premium rates are more stable. The war placement may also be cancelled on short notice (commonly 7 days for area-specific cancellation, longer for general termination), allowing underwriters to respond rapidly to changes in the global political environment.
In claims practice, the distinction between covered marine perils and excluded war perils is sometimes contested. Classic difficult cases include: damage from contact with a wartime derelict mine many years after the conflict (typically a war risk under the IWCC); pirate attack (now usually treated as a covered marine peril under ICC (A) but historically a war risk under the FC&S clause); seizure by terrorists or other politically motivated actors (war or strikes risk depending on classification); and collision damage to one vessel from another in a war zone (where the proximate cause may be war or may be navigation error).
The historic case law on the FC&S clause continues to inform modern interpretation. Britain Steamship Co v R [1921] 1 AC 99 (the Petersham case) considered whether a vessel lost in collision while sailing without lights under wartime conditions was lost as a result of a ‘warlike operation’ (excluded under FC&S) or by ordinary marine perils. The decision and the contrasting case of British and Foreign Steamship Co v R [1920] 2 KB 785 (the St Oswald) illustrate the difficulty of drawing the line, an exercise still required under modern war exclusions.
The FC&S clause appeared in various forms in different markets. The American Institute Marine Cargo Clauses included an FC&S provision in similar terms to the London market. Continental European markets, particularly the Hamburg and German marine markets, had their own equivalent exclusions but with somewhat different scope.
The FC&S clause underwent revision during and after each major conflict. The version current at the outbreak of the First World War excluded only declared war, prompting urgent revision when undeclared belligerent acts caused losses. Inter-war revisions added piracy back to excluded perils in some markets, only for piracy to be restored as a covered peril during the 1950s. The Waterborne Agreement of 1937 added a self-imposed limitation on the scope of separate war cover.
The current market structure, with the war exclusion in cl.6 of the modern Institute Cargo Clauses and separate war placement under IWCC, is the lineal descendant of the FC&S clause. The 1/1/82 revision of the Institute Clauses replaced the FC&S language with the more precise war exclusion, but the underlying market arrangement is the same.
A historic example illustrates the FC&S clause in action. A merchant vessel insured on an SG Form policy with the standard FC&S clause was lost during the First World War after striking a mine in waters where commercial shipping continued under naval escort. Under the FC&S clause as then drafted, the loss was excluded from the standard marine cover. The shipowner had separately placed war risks cover with the government war risks scheme, which paid the loss. This pattern - main marine cover excluding war risks under FC&S, separate war placement paying the loss - established the market structure that continues today through the modern Institute Cargo Clauses and Institute War Clauses Cargo. A modern equivalent loss from a derelict wartime mine in international waters would be handled under the IWCC rather than the original FC&S, but the conceptual structure is unchanged.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
Get a quote