Towage of a Liftboat, High Court of Singapore Clarifies Constructive Total Loss in Marine Insurance
The recent Singapore High Court ruling in Oversea-Chinese Banking Corp Ltd v Argoglobal Underwriting Asia Pacific Pte Ltd and others [2025] SGHC 82 represents a significant moment for the offshore and marine insurance market, particularly those involved in the towage of non-self-propelled liftboats and MODUs.
Background
The case arose from the loss of the liftboat Teras Lyza, which capsized while under tow from Vung Tau (Vietnam) to Taichung (Taiwan) in June 2018. The vessel was unmanned and being moved for reactivation when it developed a list and capsized within hours. Oversea-Chinese Banking Corporation (OCBC), the vessel’s mortgagee and co-assured, sought recovery of US $70 million under a hull and machinery marine insurance policy.
The insurers denied liability, arguing that the loss was not caused by an insured peril, that the vessel was not a constructive total loss (CTL), and that OCBC had breached its duty of fair presentation under the UK Insurance Act 2015.
The Court’s Findings
Justice Kwek Mean Luck found decisively in favour of OCBC:
The vessel was a constructive total loss, as the estimated cost of salvage and repair far exceeded the insured value.
The capsize was due to “perils of the sea”, not decrepitude or unseaworthiness.
The insurers’ reliance on alleged breaches of warranties and non-disclosure failed.
OCBC, as mortgagee and sole loss payee, held a valid insurable interest and was entitled to recover under the policy.
The Court awarded OCBC US $56 million under the hull and machinery section of the policy, the full insured value, while rejecting unsubstantiated defences and late payment claims.
Key Takeaways
Towage of Liftboats as an Insured Risk The ruling confirms that incidents occurring during the towage of non-propelled offshore units may fall squarely within “perils of the sea”, provided the tow was properly planned, surveyed, and approved. This reinforces the importance of Marine Warranty Survey certification and class engagement.
Proving Constructive Total Loss The Court adopted a pragmatic evidential approach, accepting business records and contemporaneous reports as proof of loss under Singapore’s Evidence Act. In practice, this lowers the procedural burden on mortgagees and operators following catastrophic marine casualties.
Modern Application of the UK Insurance Act 2015 The decision reflects the Act’s intent to balance insurer and assured interests, limiting the ability of insurers to avoid claims on technical grounds such as non-disclosure or warranty breach, unless material and causative.
Implications for Banks and Offshore Operators For lenders, the case underscores the value of being named co-assureds and loss payees. For offshore contractors and operators, it reiterates that documentation — from MWS approvals to towing plans — remains the cornerstone of risk transfer and claims defensibility.
A Broader Message
Beyond its immediate outcome, Teras Lyza reinforces a fundamental principle of marine insurance: when a vessel is lost through the hazards of the sea, and due diligence can be demonstrated, the loss should fall where the policy intends, on the insurer.
As offshore operations become increasingly complex and global, this decision provides much-needed certainty for those involved in heavy-lift and towage projects, reminding all parties that legal rigour and operational discipline remain inseparable in maritime risk management.
Commentary
This case is a significant affirmation of Singapore’s alignment with modern English insurance law principles under the UK IA 2015. The Court demonstrated flexibility in admitting business records to establish CTL, reflecting the realities of marine casualties where live witnesses may be unavailable.
The ruling underscores that mortgagees and banks, when named as loss payees, enjoy direct enforceability of claims notwithstanding disputes involving shipowners. The Court also confirmed the limited role of warranties post-2015 reforms, a development of practical importance to marine underwriters and assureds.
For practitioners, the judgment highlights the evidential importance of contemporaneous salvage and broker reports in proving CTL, and the continued relevance of perils of the sea jurisprudence in modern offshore operations.
Citation (OSCOLA)
Oversea-Chinese Banking Corp Ltd v Argoglobal Underwriting Asia Pacific Pte Ltd and others [2025] SGHC 82 (Gen Div, High Ct, Singapore).
