The Court of Appeal has ruled that a ship financier is entitled to claim insurance compensation for the loss of a vessel despite having approved a voyage based on a forged insurance document. The judgment, issued on July 6, 2026, resolves a dispute between Oceanus Capital SARL and Lloyd’s Insurance Co SA concerning coverage under a mortgagee’s interest insurance (MII) policy.

The case revolves around the MV Vyssos, a vessel owned by Lyra Mare Ltd, which struck a mine while navigating Ukrainian waters in 2023 en route to the port of Izmail. The ship suffered a constructive total loss. At the time, the vessel lacked valid additional war zone insurance because Lyra Mare had not paid the required premium necessary to extend its marine war risks policy to Ukrainian territorial waters. Instead, an additional cover note, purporting to confirm such insurance for the voyage, had been submitted to Oceanus, the lender and mortgagee, for approval. This document was later proven to be a forgery.

Oceanus had provided Lyra Mare with a $3 million loan secured by a first priority mortgage on the vessel, along with an assignment of the vessel’s insurance rights. The financier held an MII policy underwritten by Lloyd’s Insurance Co SA, designed to protect its interest when the owner’s policies failed to provide coverage. Following the vessel’s loss, Oceanus sought indemnity under the MII policy after the owner’s war risks policy declined coverage due to breach of trading warranties. The insurer denied the claim, arguing that the loss resulted from the forged cover note, a risk not covered by the policy, and raised additional defenses related to Oceanus’s knowledge and consent regarding the risk.

The court upheld a prior ruling in favor of Oceanus, concluding that the proximate cause of the loss was the mine strike, an insured peril, rather than the forgery. The MII policy covered losses arising from breaches of trading warranties in the owner’s war risks policy, which applied here as the vessel was operating outside permitted areas. The deception regarding the forged cover note did not prevent the insurer’s liability because evidence showed that even without the forgery, Oceanus would have consented to the voyage.

The insurer's argument that Oceanus was privy to the insured peril—knowledge of and consent to the breach of warranty—was rejected. The court clarified that privity under the MII policy requires both knowledge and consent, and that fraudulent deception vitiates consent. Since Oceanus had been misled by a forged document closely related to the subject of the consent, it did not validly consent to the breach.

Lastly, the court addressed the insurer’s contention that the loss was not fortuitous, since Oceanus knowingly accepted an unprotected risk. The judges disagreed, finding the mine strike a chance event beyond Oceanus’s control, thus satisfying the requirement of fortuity under marine insurance law.

The Court of Appeal’s decision reinforces protections for mortgagees holding MII policies, confirming that fraud affecting an owner’s policy does not necessarily exclude claims by financiers when the insured peril is otherwise valid and the mortgagee falls within the policy’s coverage terms. The judgment was delivered by Lord Justice Popplewell, with Lord Justices Newey and Males concurring.