Marine Cargo Insurance by Dunt, John -- Read -- Imperial Library of Trantor

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Index

Cover Half Title

LLOYDS SHIPPING LAW LIBRARY

Title Page Copyright Page Preface Outline Contents Table of Contents Abbreviations Table of Cases Table of Legislation 1 History and Definition of Marine Cargo Insurance Historical background The London market Origins of marine cargo insurance The development of Lloyd's and insurance companies The London market Policy forms and Institute Clauses The SG (ships & goods) and G (goods) Policy Forms The MAR Policy Form and the Institute Clauses The Market Reform Contract The development of the Institute Cargo Clauses The Institute Cargo Clauses Types of cover under the Clauses Physical loss of and damage to the cargo and specified expenses Loss of the adventure The structure of the Clauses How the clauses should be construed Marine cargo insurance defined The circumstances in which a cargo insurance contract amounts to “marine insurance” Marine insurance defined Land risks incidental to sea voyages Risks analogous to a marine adventure Insurance subject to the Institute Cargo Clauses Carriage of cargo by land: road and rail Carriage of cargo by air Cargo in store 2 Law and Jurisdiction Clauses Choice of law English law under the Institute Cargo Clauses and the MRC The general rule: freedom of choice Risks situated within the EEA States When are transit risks situated within the EEA States? The rules applicable to cargo risks situated within the EEA States When are storage risks “large risks”? Risks situated outside the EEA States: all other risks English law clauses and foreign courts Choice of jurisdiction Standard London market jurisdiction clauses Application of the EC Judgments Regulation Is jurisdiction under the EC Judgments Regulation exclusive or permissive? The EC Judgments Regulation and the Lugano Convention Formalities Goods in transit by seagoing ships and connected risks “Large risks” The court first seised The common law position Arbitration 3 Open Covers, Policies and Certificates of Insurance Open covers How cargo insurance operates in practice The structure of a cargo insurance contract The development and structure of open covers The origin of open covers Open covers: types and terms Standard open covers Facultative/obligatory: (“fac./oblig.”) covers Brokers' facilities or lineslips Brokers' facilities considered and defined Is a facility a contract of insurance? The position of leaders and followers: agency? The General Underwriters' Agreement (“GUA”) Coverholders: binding authorities Policies and contracts of insurance The Market Reform Contract and the SG and MAR Forms The contract of insurance as evidence What the policy must specify: the assured The “Assured” under London market open covers The “Assured” under the Institute Cargo Clauses Knowledge of the “Assured” under the Institute Cargo Clauses “Employees” of the “Assured” under the Institute Cargo Clauses “Persons Interested” in storage policies on goods Designation of the subject-matter insured The description of the goods: deck cargo The premium Certificates of insurance Certificates of insurance described The legal status of certificates of insurance Assignment and tender of certificates of insurance How is assignment achieved in practice? Is the assignee bound by the terms of the Open Cover? 4 Insurable Interest and the Indemnity Principle The insurable interest requirement defined The requirement for an insurable interest The approach of the courts to insurable interest Insurable interest: property, risk and other economic interests The further interest covered by a cargo policy: loss of the adventure Extent of insurable interest: loss of profits and increased value The special position of bailees The timing of the insurable interest requirement The time when insurable interest must attach Retrospective declarations for cargo “lost or not lost” Acquisition of a retrospective insurable interest Sellers' interest clauses 5 Good Faith, Non-Disclosure and Misrepresentation The principle of good faith Origins of the principle of good faith Disclosure by the assured Time of disclosure Knowledge of the assured “Materiality” and “inducement” The remedy of avoidance Avoidance and affirmation Circumstances that may need to be disclosed Ownership or other interest Over-valuation High value brand-named goods The history of the cargo: second-hand or used goods Packing and preparation Previous refusals Subrogation rights Moral hazard Circumstances that need not be disclosed Circumstances that diminish the risk Circumstances known or presumed to be known to the insurer Circumstances as to which information is waived Circumstances which it is superfluous to disclose by reason of any express or implied warranty Misrepresentation by the assured Materiality of representations Representations of fact and belief distinguished Circumstances that may be material The different approach to inducement Representations as to existing terms of coverage 6 Warranties, Conditions and Exclusions Warranties The nature of warranties The effect of breach of warranty: exact compliance When compliance is excused: waiver Express warranties The form of words for an express warranty The construction of warranties Examples of London market warranties The implied warranty of legality Conditions Conditions precedent Conditions Innominate terms Exclusions Exclusions defined The burden of proof in relation to exclusions Exclusions under the Institute Cargo Clauses 7 Causation Principles of causation The role of causation in insurance law The proximate cause rule Concurrent causes Proximate cause and wilful misconduct Proximate cause and delay Proximate cause and inherent vice Causation triggers under the Institute Cargo Clauses “caused by” “resulting from” “arising from” “attributable to” “reasonably attributable to” “directly or indirectly caused by” Summary of the effect of the causation triggers 8 All Risks and Exclusions History and nature of all risks cover: burden of proof The history of all risks cargo cover Origins of the all risks concept: inevitability of loss and fortuity The burden of proof under all risks insurance The limitations on all risks When do the limitations apply? “Unless the policy otherwise provides” Ordinary wear and tear, breakage, leakage and loss in weight “Ordinary wear and tear” Ordinary breakage Ordinary leakage and ordinary loss in weight: “paper losses” Inherent vice Inherent vice defined Inherent vice and containerisation: moisture and condensation damage Insufficiency of packing Insufficiency of packing: a form of inherent vice? Insufficiency of packing under the Institute Cargo Clauses What amounts to insufficiency of packing or preparation? Rats and vermin General exclusions Wilful misconduct Wilful misconduct defined Wilful misconduct distinguished from lack of due diligence The position of the innocent c.i.f. buyer Delay Insolvency and financial default The revised exclusion: 2009 Historical background to the exclusion Forwarding charges The Institute Commodity Trades Clause exclusion of insolvency Accidents with nuclear weapons and devices Unseaworthiness, unfitness and classification requirements Unseaworthiness and unfitness Historical background to the exclusion The revised unseaworthiness and unfitness exclusion The Institute Classification Clause 01/01/2001 The classification requirement The age limitation The held covered type provision 9 Named Perils and Exclusions Named perils under the Institute Cargo Clauses (B) and (C) The use and origin of the (B) and (C) Clauses General structure of the (B) and (C) Clauses How are named perils to be construed? The named perils Fire and explosion Stranding, grounding, sinking and capsize Overturning or derailment of land conveyance Collision Discharge of cargo at a port of distress Earthquake, volcanic eruption or lightning General average sacrifice Jettison Washing overboard Entry of sea, lake or river water “Sling losses”: packages totally lost overboard or in loading or discharging Theft, pilferage and non-delivery Recoverable expenses and liabilities: sue and labour, salvage, general average and collision liabilities Exclusions under the Institute Cargo Clauses (B) and (C) Deliberate damage or deliberate destruction 10 War, Strikes, Terrorism and Rejection Risks The structure of war and strikes cover History and origins of war cover History and origins of strikes cover War, strikes and piracy cover in a conventional policy The main limitations on war and strikes cover War risks The perils insured War, civil war, revolution, rebellion and insurrection Capture, seizure, arrest, restraint and detainment Derelict mines, torpedoes, bombs or other derelict weapons of war Exclusion of loss of the adventure: the Frustration Clause A comparison of war risks cover under the 1963 Clauses and the revised Clauses of 2009 Attachment and duration of war risks War risks on land not covered The Transit Clause Termination of Contract of Carriage Clause Extension to craft: mines and torpedoes Deviation and variation of the adventure Change of Voyage Clause Strikes, riots and civil commotions Strikes and strikers Riots and civil commotions Terrorism Terrorism and cargo insurance The cover for terrorism The revised definition of terrorism Terrorism defined and distinguished from war risks “Influencing by force or violence” “Political, ideological or religious motives” A “terrorist” under the 1982 Clauses Exclusion of loss of the adventure: the Frustration Clause Termination of Transit Clause (Terrorism): JC 56 Weapons of mass destruction The Radioactive Contamination Exclusion Clause (RACE) Chemical and biological weapons Computer systems and computer programs Rejection risks Origins of rejection risks cover The London Rejection Risks Clauses 1975 11 Duration of the Insurance 1: The Transit Clause Origins and structure of the duration provisions Duration of risk in cargo insurance History of the Transit Clause: commencement/termination of risk Does the “voyage” include land transit? Open covers: special duration provisions The structure of the standard duration provisions The Transit Clause Attachment of risk “Subject to Clause 11 below” “this insurance attaches” “from the time the subject-matter is first moved” “in the warehouse or place of storage” “for the purpose of the immediate loading” “into or onto the carrying vehicle or other conveyance” “for the commencement of transit” “Ordinary course of transit” The role of the phrase “continues during the ordinary course of transit” The meaning of “ordinary course of transit”: the “Collateral Purpose Test” The Avoidance of Delay Clause Termination of risk The meaning of “unloading” “final warehouse or place of storage”: transit sheds “final warehouse or place of storage”: forwarding to a further destination Storage in warehouses other than in the ordinary course of transit Storage on vehicles or in containers other than in the ordinary course of transit Sixty days after discharge from the oversea vessel Forwarding to another destination Delay, deviation and other variations of the adventure Inter-relationship with Clause 8.1 and Clauses 9 and 10 “Delay beyond the control of the Assured” Deviation Forced discharge, reshipment or transhipment Variations of the adventure 12 Duration of the Insurance 2: Termination of Carriage and Change of Voyage Held covered and analogous provisions General principles Prompt notice No absolute right to cover Termination of Contract of Carriage Clause Origins of the clause Requirements of the clause Change of Voyage Clause Origins of the clause Voluntary change of voyage: the modern form of the clause (Clause 10.1) Change of destination of the ship: the extension of the Change of Voyage Clause (Clause 10.2) 13 Claims and Losses Claims Notification of claims Limitation of actions (time limits) Burden and standard of proof Interest and costs Good faith and fraudulent claims Lack of good faith in the claims process Fraudulent claims Losses The categorisation of losses “Physical” loss or damage: fraudulent or erroneous documents What constitutes “loss of” the cargo? Loss of the goods by theft involving force Loss by theft or fraud The timing of the theft or taking Theft and fraud: transfer of title Loss by conversion or other unlawful acts by a third party: insolvency Loss by abandonment and threat of misappropriation, lien and lawful sale What constitutes “damage to” the cargo? Destruction or damage: actual total loss “Damage to” cargo: partial losses Constructive total loss Constructive total loss defined Deprivation of possession Damage to goods: cost of repair Effect of constructive total loss: notice of abandonment Effect of abandonment Loss of the adventure The general principle Historical origins: frustration of the voyage Total loss of the adventure and sue and labour The Forwarding Charges Clause A risk covered by the insurance “Termination” of the insured transit Insolvency and loss of the adventure Delay and loss of the adventure 14 Recoverable Expenses and Liabilities: Sue and Labour, Salvage, General Average and Collision Liabilities Sue and labour Sue and labour and cargo insurance Origins and structure of the sue and labour cover What triggers the right to recover sue and labour expenses? The requirement of reasonableness Loss must be recoverable under the policy Supplementary to the contract: additional to the insured value Breach of the duty The Forwarding Charges Clause The Waiver Clause Contractual salvage (and salvage charges) Contractual salvage (LOF) The nature of “salvage charges” Insurance cover for salvage charges Values for the purposes of the insurance General average Sacrifice, expenditure and contribution Insurance cover for general average The values at risk Collision liabilities The “Both to Blame Collision Clause” 15 Measure of Indemnity Valued and unvalued policies Valued policies When is a policy a valued policy? Loss of goods Total loss of part of the cargo Cargo delivered damaged at destination Salvage losses Under-insurance The effect of under-insurance Open cover limits Subrogation Under-insurance Deductibles Agreed values Policy limits Unvalued policies Proprietary rights to the proceeds of a legal action Proprietary rights: total loss and abandonment Interest and costs 16 Subrogation, Double Insurance and Rights of Contribution Subrogation Origins and nature of the right of subrogation Subrogation and assignment of rights: applicable law Co-assureds and waiver of subrogation The exercise of subrogation rights Lloyd's Standard Subrogation Form Control of the recovery proceedings Increased value cargo insurance The right to salvage The origin and nature of the right Exercise of the right in practice Double insurance and contribution between insurers Double insurance When does double insurance occur? The requirements for double insurance Return of premium Contribution between insurers The origin and nature of the right The circumstances which give rise to the right Apportionment of liability between insurers The foreign element Appendices

1 Marine Insurance Act 1906 2 Third Parties (Rights against Insurers) Act 1930 3 Public Order Act 1986 (sections 1 and 10(2)) 4 Reinsurance (Acts of Terrorism) Act 1993 5 Market Reform Contract for Marine Cargo Insurance (based on Willis proforma) 6 Lloyd's Marine Policy: MAR91 7 Certificate of Insurance (Lloyd's) 8 General Underwriters Agreement (GUA): Marine Cargo Schedule 9 Subrogation Form 10 Institute Cargo Clauses (All Risks) 1/1/63 11 Institute Cargo Clauses (A) 1/1/82 12 Institute Cargo Clauses (A) 1/1/09 13 Institute Cargo Clauses (B) 1/1/82 14 Institute Cargo Clauses (B) 1/1/09 15 Institute Cargo Clauses (C) 1/1/82 16 Institute Cargo Clauses (C) 1/1/09 17 Institute War Clauses (Cargo) 1/1/82 18 Institute War Clauses (Cargo) 1/1/09 19 Institute Strikes Clauses (Cargo) 1/1/82 20 Institute Strikes Clauses (Cargo) 1/1/09 21 Institute Cargo Clauses (Air) (excluding sendings by Post) 1/1/09 22 Institute War Clauses (Air Cargo) (excluding sendings by Post) 1/1/09 23 Institute Strikes Clauses (Air Cargo) 1/1/09 24 Institute War Clauses (sendings by Post) 1/3/09 25 Institute Commodity Trades Clauses (A) 5/9/83 26 Institute Malicious Damage Clause 1/1/82 27 Institute Theft, Pilferage and Non-Delivery Clause 1/12/82 28 Institute Replacement Clause 01/12/2008 29 Institute Classification Clause 01/01/2001 30 Institute Extended Radioactive Contamination Exclusion Clause 1/11/02 31 Institute Radioactive Contamination, Chemical, Biological, Bio-chemical and Electromagnetic Weapons Exclusion Clause 10/11/03 32 Institute Cyber Attack Exclusion Clause 10/11/03 33 Termination of Transit Clause (Terrorism) 2009 JC2009/056 34 Insolvency Exclusion Clause JC93 35 Contracts (Rights of Third Parties) Act 1999 Exclusion Clause (Cargo) JC2000/002 36 Cargo Piracy Notice of Cancellation JC2008/024

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