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HISTORY AND HARMONISATION
John Dunt1
THE HISTORY OF MARINE CARGO INSURANCE
Origins in European mercantile and civil law
1.1 A system of maritime loans apparently existed in the ancient civilisations of Babylon,2 Phoenicia, Greece3 and Rome,4 but marine insurance, as such, originated in Genoa where research has recently established that a cargo policy was underwritten on 18 March 1343, some three years earlier than was previously thought to be the case.5 This first policy insured 10 bales of cloth for a voyage from Porto Pisano to an unnamed Sicilian port, but history does not record whether any claim arose for loss of or damage to the cargo.6 In the fourteenth century, this system of marine insurance was practiced in all the Italian city states,7 from where the word “policy” or, in Italian “police”, meaning loan,8 originated, and it was there that marine insurance first gained statutory recognition.9
1.2 This book considers the law of marine insurance in two main sections, the common law jurisdictions and the civil law jurisdictions.10 The law of marine insurance originally formed part of the law merchant,11 a body of international European law generated by the medieval mercantile community, which was practised by civil lawyers.12 This body of law included some notable texts, in particular, “Le Guidon de la Mer”, written in the late sixteenth century, which had a major influence on the codification of marine insurance law in France in the Ordonnance de la Mer of 1861.13 In Middows v. Robertson; and other Cases,14 “Le Guidon de la Mer” was treated by the House of Lords as a valuable potential source of English law, in recognition of the common source of the law merchant in medieval European tradition.15 In England, an Act of Parliament of 160116 established a special mercantile court to be known as the “Court of Policies of Insurance” to consist of the admiralty judge, the recorder of London, two doctors of civil law, two common lawyers, and eight merchants, five of whom were entitled to sit and decide the cases arising in London.17 The involvement of civil lawyers is of note because the development of commercial insurance law in England was retarded by reason of the division of the legal profession between the members of the Inns of Court, who practised in the courts of common law, and the civil lawyers, who were members of Doctors Commons and practised the law merchant.18 The common law rules as to venue prevented the common law courts having jurisdiction over actions arising outside the realm.19 Maritime law being of an international nature was practised in the Admiralty Court where the procedures were based on the civil law and were more intelligible to foreigners than the common law rules.20 In the High Court of Australia in Gibbs v. Mercantile Mutual Insurance (Australia) Ltd,21 McHugh J, quoting Holdsworth,22 summarised the position, saying23:
“The Admiralty Court retained this jurisdiction for several centuries. But it is almost certain that the law applied was foreign law. As late as the 16th Century, a petition to the Council asserted that insurance ‘is not grounded upon the laws of the realm, but is rather a civil and maritime cause, to be determined and decided by civilians, or else in the higher Court of the Admiralty’”.
In The Gas Float Whitton No. 2,24 it was said, following the same theme, that the jurisdiction of the Admiralty Court must be ascertained from the judgments of the Courts of Westminster using the law of the Rhodians, of Wisbey, the Hanse Towns, of Oleron (incorporated in the fifteenth-century Black Book of Admiralty), the Digest and French and other ordinances, which, though not part of the law of England, contained many valuable principles and statements of marine practice.
1.3 The unfortunate divide between civil law and common law was resolved in England by Lord Mansfield, who became Chief Justice in 1756, and heard commercial cases, including marine insurance cases, for the next 32 years.25 He was assisted by special jurors drawn from the ranks of leading merchants. In Lewis v. Rucker,26 for example, Lord Mansfield was advised on the practice as to average under a marine cargo policy by “a special jury, among whom were many knowing and considerable merchants”,27 who, according to his lordship, “understood the question very well and knew more of the subject of it than anybody else present”.28 Citations of “foreign writers” were used in argument before Lord Mansfield,29 who took the view that “the mercantile law, in this respect, is the same all over the world”,30 adding, “For the same premises, the sound conclusion of reason and justice must necessarily be the same”.31 This approach encouraged the harmonisation of English marine insurance law with European civil and mercantile law. Accordingly, the Marine Insurance Act 1906, as a codifying statute, was developed from both English and continental civilian judgments and writings, yet its influence has been divisive32 as the very structure of this book, which is divided into civil law and common law systems, recognises.33 In particular, the Comité Maritime International (“CMI”) recognised that the influence of the Marine Insurance Act 1906 was divisive in relation to the duty of good faith; the duty of disclosure; alteration of risk and in respect of warranties.34
1.4 Professor Malcolm Clarke has suggested35 a breakdown of the common law countries as including England, Australia, Hong Kong, New Zealand and Japan, an arrangement which accords with that adopted in this book. Similarly, the United States is treated in a separate category as being a common law jurisdiction but without a statutory code. The civil law countries are then considered, followed by South Africa, which is a hybrid jurisdiction based on Roman-Dutch law but strongly infl uenced by the common law, particularly in marine insurance matters.36
The common European form of policy: the SG Form
1.5 Marine insurance, after being established in the Italian city states,37 moved north, particularly to Bruges and Antwerp. After the sacking of Antwerp in 1576, the business moved to London. The policy forms used for the insurance of ship and goods throughout Europe remained in similar form and the positive law used to judge the validity of claims under that form had its origins in the same medieval commercial tradition.38
1.6 The policies evidencing medieval marine insurance were in similar form to that appended to the Marine Insurance Act 1906 known as the “SG Form” which covered ship and goods.39 The terms of the SG Form, formally adopted by Lloyd's in London in 1779,40 and later appended to the Marine Insurance Act 1906, dated back to the middle ages,41 or at least the sixteenth century.42 In the eighteenth century, it was the case in England that the policy terms were prescribed by statute and could not seemingly be departed from.43 Today, the opposite is the case as competition law demands that there be freedom of contract.44
The development of insurance markets
1.7 The development of Lloyd's of London (“Lloyd's”) can be traced back to the coffee house of Edward Lloyd founded in about 1689,45 but it was not until the early 1770s that Lloyd's bec...
