OCBC Bank’s bid to recover a US$56 million (SG$71.6 million) insurance payout linked to a capsized oil rig has been rejected by Singapore’s highest court, concluding a five-year legal dispute over the incident.
The case stems from the 2018 capsize of the jack-up rig Teras Lyza during a tow voyage from Vietnam to Taiwan. OCBC, which held a mortgage over the vessel and was named as a co-assured and sole loss payee under the marine insurance policy, filed a claim in 2021, arguing that the loss was caused by “perils of the seas” and qualified as a total loss.
In a judgment delivered on March 19, the Court of Appeal overturned an earlier High Court ruling that had found in favour of the bank. The apex court held that OCBC had failed to meet the burden of proof required to establish that the incident fell within the scope of the policy’s coverage.
Central to the court’s decision was the finding that OCBC did not sufficiently demonstrate how seawater entered the vessel or prove that the capsize resulted from an unforeseen maritime event. The court noted that claims under marine insurance policies must be supported by evidence showing that the alleged cause of loss is more likely than not.
The judges also rejected the bank’s attempt to rely on legal presumptions typically applied in cases where vessels are lost under unexplained circumstances. In this instance, the rig remained afloat in a capsized condition for several weeks, allowing time for investigation, which meant the circumstances were not considered wholly unexplained.
On the issue of total loss, the court found that OCBC had not provided adequate evidence to establish that the rig was beyond economic repair. Documentation submitted by the bank did not sufficiently demonstrate the actual cost of recovery or repair relative to the insured value.
While the court acknowledged that OCBC had not breached policy conditions and had proven the underlying mortgage debt, these factors were deemed insufficient to support the insurance claim.
The ruling ultimately favoured a group of insurers, bringing closure to the dispute and underscoring the evidentiary standards required in complex marine insurance claims.
