Marine Cargo Insurance

John Dunt

• Publisher: Informa Law from Routledge
• Year: 2015
• ISBN:
  9781317637233
• Edition: 2
• Topic: Diritto
• Subtopic: Diritto marittimo

The new edition of this British Insurance Law Association (BILA)-award winning text is the definitive reference source for marine cargo insurance law.

Written by an author who was closely involved with the revisions to the Institute Cargo Clauses 2009, the work expertly examines marine cargo insurance by reference to important English and foreign legal cases as well as the Marine Insurance Act 1906. Logically arranged to reflect the structure of the Institute Cargo Clauses, the most widely used standard form of cover, this text offers easy to find solutions for today's busy practitioner.

New to this edition:

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• Completely revised to include the Insurance Act 2015 (duty of fair presentation; warranties, fraudulent claims)

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• Brand new chapter on the revised Institute Ancillary and Trade Clauses, including those to be introduced on 1 November 2015

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• Increased coverage of jurisdiction and choice of law, particularly taking into account the Rome I Regulation

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• Enhanced coverage of the issue of Constructive Total Loss

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• Consideration of the Law Reform Commission's proposals for the reform of insurance law, and further amendments to the Marine Insurance Act 1906.

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• Covers latest developments in the Enterprise Bill for damages for late payment of claims

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• Fully updated with all of the influential cases since 2009, including:

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• The Cendor MOPU, one of the most important marine insurance cases of the last 50 years.

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• Clothing Management v Beazley Solutions

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• Notable hull cases such as Versloot Dredging v HDI Gerling on fraudulent devices

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• Influential foreign cases taken from this book's sister text, International Cargo Insurance

This unique text is a one-stop resource for marine insurance lawyers handling cargo claims, and will also be of interest to students and researchers of maritime law.

1 History and definition of marine cargo insurance

DOI: 10.4324/9781315758794-1

Historical background

The London market

Origins of marine cargo insurance

1.1 The origins of marine insurance are obscure¹ and not as ancient as, for example, general average.² The written evidence includes an early form of marine cargo policy prescribed by a Florentine Ordinance of 1523 which insured goods on a named ship against dangers of the sea, fire, jettison and like perils “even such as cannot be thought of”.³ Many of the risks insured under that form of policy show a remarkable resemblance to cargo insurance cover for named perils still underwritten today.⁴ The first recorded policies in English followed in 1555, though these early policies were less developed than the Italian forms.⁵ The sacking of Antwerp by the Spanish in 1576 led to London becoming a centre for marine insurance and benefiting from the wordings and customs that had originated in Florence and Genoa and had spread to Northern Europe, particularly Brussels and Antwerp.⁶ The development of London as a marine insurance centre was opportune as it coincided with the expansion of markets and trade in the reign of Elizabeth I.⁷

¹ Wright & Fayle, A History of Lloyd’s, 1928, Macmillan at p. 135. ² D. R. O’May, Marine Insurance, 1993, Sweet & Maxwell at p. 1. ³ Nicolas Magens, An Essay on Insurance, J. Haberkon, London, 1755, Vol. II, 4–5, where the policy is printed. ⁴ See Institute Cargo Clauses (B) and (C) considered later in this book in Chapter 9. It is the usual practice today to insure cargo on all risk terms (see Chapter 8) but insurances against named perils are still underwritten. ⁵ Marsden’s Select Pleas in the Court of Admiralty Vol. II, 45–52, referred to in Wright & Fayle, where the history of the policy is more fully set out, at p. 137 et seq. ⁶ H. Bennett, The Law of Marine Insurance, 2nd edn, 2006, OUP at para. 1.02. ⁷ Hakluyt’s Voyages and Discoveries (1589) concentrates on the conduct of business and, for example, “the utilising of products of new territories for the benefit of home industries”, see Black, The Reign of Elizabeth, Oxford History of England, 2nd edn (reprint, 1963), Oxford at the Clarendon Press, at pp. 318, 319.

1.2 In 1601 Parliament first regulated marine insurance by an Act of Elizabeth I entitled “An Act Concerning Matters of Assurances Used Among Merchants”,⁸ which formalised a system for resolving disputes by ad hoc arbitration by a Court of Aldermen of the City of London.⁹ Works on insurance law and practice were by then in existence as there was published at Rouen about the year 1600 a little book called Le Guidon de la Mer containing forms of marine policies then in use and a general account of marine insurance.¹⁰ It was in the context of the history of marine cargo insurance that MacKinnon LJ said, “this law of marine insurance is nothing more than a collection of rules for the construction of the ancient form of policy, and such additions as are from time to time annexed to it”.¹¹ By 1613 a cargo policy insured goods to be shipped on the vessel Tiger from London to Zante on terms that reflected the main substance of the Lloyd’s policy as it would become and as it existed until 1982.¹²

⁸ 43 Elizabeth, c.12. ⁹ Bennett at para. 1.35. This more expeditious forum was preferred to the Admiralty Court, at least by assured claimants. ¹⁰ See, Forestal Land, Timber & Railways Company Ltd v. Rickards; Middows Ltd v. Robertson & Other Cases (1941) 70 Ll. L. Rep. 173 (HL) at p. 183, per Viscount Maugham who summarises the history of cargo insurance. That book contained descriptions of total loss entitling the assured to abandon the cargo which assisted the House of Lords to clarify the concept of loss of the adventure and the requirement for abandonment. ¹¹ Middows Ltd v. Robertson & Other Cases (1940) 68 Ll. L. Rep. 45 at 63 (reported in the HL sub nom Forestal Land. v. Rickards, see fn. 10 supra). F. D. MacKinnon QC had been employed by Lloyd’s in 1921 to give an opinion on the form of policy and was later responsible for drafting significant parts of the Institute Cargo Clauses including the Frustration Clause; see Report HR5 by an Historic Records Working Party of the Insurance Institute of London, 1964, The Insurance Institute of London, 2nd edn at p. 11 and at p. 20 et seq. ¹² Wright and Fayle at p. 140. The policy included, in particular, a “lost or not lost” clause still sometimes used today, see Chapter 4, Insurable Interest, at paras. 4.16 to 4.21. Goodacre, Goodbye to the Memorandum, 1988, Witherby & Co Limited at p. 28 suggests that, “there is much speculation as to whether this is the vessel referred to by Shakespeare in both Macbeth and Twelfth Night”.

1.3 The increase in trade in the nineteenth century led, in turn, to the further development of marine insurance law in England, which, as it exists today, was much influenced by the use in the nineteenth century of special juries of experienced merchants, brokers, adjusters and insurers who assisted the judges, notably Lord Mansfield, in deciding commercial and mercantile cases.¹³ This created a body of 2,000 cases, some in the form of jury decisions without reasons, but others with reasoned judgments or addresses from Lord Mansfield to the jury, which articulated the fundamental rules and practices of marine insurance. These decisions, in turn, were codified by Sir Mackenzie Chalmers in the Marine Insurance Act 1906 (“MIA 1906”).¹⁴ The cases from which the law of marine cargo insurance has developed, both before and after the Act, involve shipments from all parts of the world and tell stories of cargoes from China,¹⁵ from the interior of Africa¹⁶ and journeys through South America in the face of delays caused by revolutions.¹⁷

¹³ Middows Ltd v. Robertson & Other Cases (supra) at p. 63, per MacKinnon LJ For the influence of the law merchant on the law and practice of marine cargo insurance, see J. Dunt, ed., International Cargo Insurance, 2012, Informa, at paras. 1.2 et seq. ¹⁴ The Act provides that, the “common law including the law merchant … shall continue to apply to contracts of marine insurance”, see British & Foreign Marine Insurance Company Limited v. Samuel Sanday & Co [1916] AC 650 (HL). Reference to an authority on which the Act is based may only be made provided that the authority in question is not “inconsistent with the express provisions of [the] Act”, MIA 1906 s. 91(2). ¹⁵ Dickenson v. Jardine (1868) LR 3 CP 639. ¹⁶ Niger Co Ltd v. Guardian Assurance Co and Yorkshire Insurance Co (1922) 13 Ll. L. Rep. 75. ¹⁷ Schloss Brothers v. Stevens [1906] 2 KB 665.

The development of Lloyd's and insurance companies

1.4 The development of Lloyd’s of London (“Lloyd’s”) can be traced back to the coffee house of Edward Lloyd founded in about 1689,¹⁸ but it was not until the early 1770s that Lloyd’s became an organisation of underwriters under the guidance of John Julius Angerstein (the “Father of Lloyd’s”).¹⁹ Lloyd’s went on to become regulated by various Lloyd’s Acts commencing with the Lloyd’s Act 1871. Lloyd’s had long been in competition with marine insurance companies. In the early days (from 1720 onwards) the only two insurance companies authorised to conduct marine business were the Royal Exchange Assurance and the London Assurance. In 1824 marine business was opened to other companies,²⁰ though it was not until 1884 that the Institute of London Underwriters (“ILU”) was incorporated.²¹

¹⁸ Wright & Fayle at pp. 12–13. ¹⁹ Wright & Fayle. For a brief history of the Lloyd’s market, see Chapter 2 of J. Burling, Lloyd’s: Law and Practice, 2013, Informa Law from Routledge. For a more detailed history of Lloyd’s see also F. Martin, The History of Lloyd’s and of Marine Insurance, 1876, Frederick Martin; D. Gibb, Lloyd’s of London: A Study in Individualism, 1957, MacMillan; G. Hodgson, Lloyd’s of London: A Reputation at Risk, 1984, Allen Lane, and as to the ILU, C. Hewer, A Problem Shared: A History of the Institute of London Underwriters 1884–1984, 1984. Summaries also appear in works on marine insurance, in particular, O’May, Marine Insurance, 1993, Sweet & Maxwell, Chapter 1, pp. 1–8; H. Bennett, The Law of Marine Insurance, 2nd edn, 2006, Chapter 1, paras. 1.03 to 1.22. ²⁰ By the Marine Insurance Act 1824. ²¹ Bennett records, at para. 1.19, that it had been intended to include Lloyd’s Underwriters in the Institute, but this was not possible because of the articles and memorandum of the Institute.

1.5 Whilst Lloyd’s and the ILU were developing in London, insurance businesses were also developing worldwide. For example, in Canton in 1835 a group of traders engaged in exporting cargo from China formed a mutual association to pool the hazards of marine cargo adventures.²² In Japan, in August 1879, The Tokio Marine & Fire Insurance Co Limited²³ was founded....