Marine Insurance Law Development - Essay Example

? Marine Insurance Law By s Due Marine Insurance law is developed through legislation andcases. The Marine Insurance Act, 1906 is the legislation that provides us with the basic framework on which the Marine Insurance law operates. Second primary source of this law is the case law formed by precedents. Precedents are the decisions for cases having specific circumstances and these decisions bind the judges to adjudge the future similar cases in the same manner. There are also some precedents that are not binding on the judges but can be used for guidance. A very important aspect of Marine Insurance law is the risk of ‘perils of the seas’. In maritime journeys, the risk of perils of the sea is the most probable risk to the ship. It is very natural for a ship owner to contemplate marine insurance so that he can recover any loss caused by destruction of the ship due to perils of the sea. There is a condition that is strictly attached with Marine Insurance which is the seaworthiness of the ship in question. S. 39(4) of Marine Insurance Act, 1906 states that, “A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.” It means that the ship must be able to bear the ordinary risks that are encountered in a voyage and the owner must take necessary steps to make any repairs that are required to make the ship seaworthy. If it turns out that the ship was sunk or destroyed because it was not seaworthy, the owner would not be able to recover anything from the insurer. It is also important that the ship is insured against the risk of perils of the sea. The burden of proof that a ship has sunk due to perils of the sea lays on the plaintiff i.e. the owner. However, the defendants are allowed to prove that the ship has not sunk due to the perils of the sea but it is not obligatory. The Popi M In The Popi M [1985]2 Lloyd’s Rep. 1, Popi M, a conventional cargo ship, sank in calm weather in the Mediterranean Sea off the coast of Algeria in deep water and it was laden with a cargo of bagged sugar. The plaintiffs sought to claim insurance from the defendants, hull underwriters, claiming that the ship sank due to one of the perils that they had insured against. The burden of proof that the ship sank due to the perils of the sea was on the plaintiffs. The plaintiffs explained that the ship had collided with an unidentified, moving and submerged submarine which was unseen and went undetected. Inquiries were made as to the seaworthiness of the ship and it was found that the ship was seaworthy. It was held that as the true cause of the sinking of Popi M was in doubt and the plaintiffs had failed to provide a justified explanation that the ship had sunk due to the perils of the sea, the plaintiffs’ claim was rejected. This case reveals that the proof on balance of properties is very important in Marine Insurance Law. It means that the proof which has to be given by the plaintiffs must be probable and convincing so that it can be relied upon. A collision with a submarine would surely have a two-fold effect and there was absolutely no evidence to believe that there was, in fact, a submarine that had collided with the ship. It is also very improbable that the collision occurred accidently because the submarine was undetected because even if it was, the ship itself was very detectable and the operators of the submarine would have seen it surely. In any case, this is not included in the risks of perils of the sea. The proof provided by the plaintiffs was insufficient to fulfill the balance of probabilities and the court declared that it was impossible that it could have happened. The defendants had no obligation to give an alternate explanation. It was enough for them that it was very improbable that the ship sank in a calm weather due to perils of the sea. The Marel Another very important case regarding ‘perils of the sea’ is The Marel [1994] 1 Lloyd’s Rep. 624. This case concerns a single deck self-trimming bulk carrier of 17,002 tonnes deadweight which was called ‘The Marel’. At the time of its purchase by the plaintiffs in 1983, sufficient surveys and ultrasonic tests were carried out. The Marel was deemed to be seaworthy in all respects and no repairs were required. In 1985, it sailed from Salonika bound for Ghent carrying a cargo of 16,015.084 tonnes of Greek corn in bulk which was loaded in all four hatches. According to the watch-keepers, a bump was felt which was intense enough to throw them off-balance at 05 10 hours. Large amount of water rushed in and flooded the engine-room which subsequently caused loss of electric power and propulsion. The crew abandoned the ship at 05 25 hours and fired flares at 05 35 hours which were seen by a German vessel known as Norasia Rebecca and the crew of The Marel was picked up by this vessel. The efforts to save The Marel were abandoned and it sunk by the stern at 12 36 hours. The plaintiffs contended that the vessel sank due to one of the perils that they had insured against under the policy named ‘perils of the sea’. They claimed that the ship had collided with an unidentified object which caused the ingress of water into their engine-room. The damage became more severe causing water to enter into No. 4 hold. They claimed that The Marel was completely seaworthy and the whole scenario was initiated by the perils of the sea and as they were insured against those, they must be indemnified. The burden of proof, of course, fell on the plaintiffs and they provided with expert evidence that the ship had collided with a floating or partially submerged container which collided in such a way that it fractured the vessel’s shell plating which was very near to the engine-room bulkhead. It was held that it was not enough that the plaintiffs had explained the ingress of water into the insured vessel because mere entry of water is not itself a peril of the sea. The court ruled out the theory of the floating or partially submerged container and it was deemed to be impossible that a container could cause that much damage. The court established that there was no sufficient evidence to conclude that the flooding of No. 4 hold was caused due to the flooding of the engine-room. It must have been caused due to an existing unseaworthiness which went undetected at the commencement of the voyage. The court established that the plaintiffs had failed to prove their point on a balance of probabilities and the real cause of the incident was not revealed. The court was also dissatisfied with the plaintiff’s explanation for the fact that The Marel was lost due to an unascertained peril of the sea. The Popi M [1985]2 Lloyd’s Rep. 1 was also applied as the plaintiffs had failed to prove their point on the balance of probabilities. The explanation of an undetected floating container was akin to the explanation of an undetected submarine. If the ship was seaworthy at the time of commencement of the voyage, then on the balance of probabilities, there was a possibility that the ship was sunk due to the perils of the sea or it was scuttled i.e. sunk on purpose. It was also taken into consideration that the last time that the ship was checked for its seaworthiness was 2 years prior to the commencement of the voyage. Therefore, there was a very strong possibility that the ship was not seaworthy. In that case, the plaintiff’s claim would have been deemed to be nullified. The video clips of The Marel lying on the seabed did not show any opening in the shell plating which should have been there to cause the flooding of No. 4 vessel. According to the scientific calculations, this opening should have been more than 4.5 meters below the still water line in the already flooded engine-room. The amount of water that should have been there in the flooded engine-room was also calculated. Also, no evidence was found as to the existence of a container in the vicinity of The Marel and the scientific calculations showed that a container could not have caused such damage at that place at that time. On the balance of probabilities, the plaintiff’s claim was rejected. Inference The case of The Marel sheds light on a few very important points. One of those is the seaworthiness of the ship. It was not the sole question of the case. The pivotal point in this case was whether The Marel was lost due to the perils of the sea or not. But the question regarding the seaworthiness of the ship had an incidental bearing on this case because the court was in doubt as to what was the real cause of ingress of water in the engine room and the No. 4 hold. The court gave an opinion that there was a possibility that the ship was not seaworthy. The burden of proof that the ship was seaworthy at the commencement of the voyage always rests on the plaintiffs and they have to prove it on the balance of probabilities. It means that after their presentation of the case, the court must not be left in doubt. Failure in doing this results in rejection of the insurance claim. In this case, plaintiffs had a validated expert opinion that the ship was seaworthy but the facts of the case cast significant doubts. Another view was that the ship might have been scuttled. This was not a point that was insisted upon but it was mentioned because if the ship was seaworthy and it did not had to fight bad weather conditions, there was a possibility that it was sunk deliberately because an impact with a container was not deemed to be hard enough to cause such damage. The facts stated that the ship did face bad weather for some time but the damage that resulted in its sinking was caused after an impact with a container. If the ship was scuttled, the plaintiffs would not be able to recover anything. The plaintiffs are bound to satisfy the court on the balance of probabilities that the loss of ship has been due to one of the perils that they were insured against. The case of The Meril clearly refers to a statement by Lord Justice Scrutton in La Compania Naviera Martiatu v. The Corporation of the Royal Exchange Assurance [1922] 13 Ll.L.Rep.298 which is that, “This view renders it unnecessary finally to discuss the burden of proof, but in my present view if there are circumstances suggesting that another cause other than a peril insured against was the dominant or effective cause of the entry of seawater into the ship and an examination of all the evidence and probabilities leaves the court doubtful what is the real cause of the loss, the assured has failed to prove his case.” A statement with a similar theme was given in Regina Fur Co. Ltd. v. Bossom [1958] 2 Lloyd’s Rep. 245 but it also mentioned that the defendant underwriters had a right to establish that the claimants have committed a crime i.e. they have scuttled their ship. The plaintiffs are also bound to prove that no crime has been committed. In both of the given cases, the plaintiff’s explanation of the real cause of the loss of ship was very insufficient. Especially in ‘The Marel’, the plaintiffs had failed to clearly explain the cause of ingress of water into the No. 4 hold. They gave different explanations and it was clear that even they did not know the real cause. They gave possible reasons. One of those was that maybe the seawater entered into No. 4 hold because the damage occurred in the engine room was intensified. The expert opinion regarding the seaworthiness of the ship was contradicting it because according to it, the structure of the No. 4 hold was sufficient to disallow such ingress of water. The seawater found its way into the No. 4 hold which meant that the ship was not seaworthy. The theory presented by the plaintiffs became a paradox. It left the court unsatisfied and doubtful as to whether the loss was caused by a fortuitous accident or casualty of the seas. The ‘perils of the sea’ do not include the ordinary actions of winds and waves. It was deemed that the plaintiffs could not discharge themselves of their duty to prove their point on the balance of probabilities with such explanation. Therefore, their claim was rejected. The given cases are very relevant to the law regarding risk of ‘perils of the sea’ because they touch the two key areas i.e. seaworthiness of ship and the proof that the loss was caused to due to the perils of the sea. These cases provide us with the guidelines as to the practical application of the laws regarding these very important areas of Marine Insurance Law. References La Compania Naviera Martiatu v. The Corporation of the Royal Exchange Assurance [1922] 13 Ll.L.Rep.298 Marine Insurance Act, 1906. (UK) s 1. Marine Insurance Act, 1906. (UK) s 39(4). Regina Fur Co. Ltd. v. Bossom [1958] 2 Lloyd’s Rep. 245 The Marel [1994] 1 Lloyd’s Rep. 624 The Popi M [1985]2 Lloyd’s Rep. 1 Read More