ICL - wk 5 seminar - Marine insurance PDF

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Download ICL - wk 5 seminar - Marine insurance PDF

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1) Bonza Exporters Pty Limited (Bonza) is an Australian exporter who specialises in exporting signature Australian long life foodstuffs to foreign markets (mainly for expatriate consumption). Bonza’s best selling products are Red wine, Vegemite, Twisties and Tim Tams. Bonza contracts with Angelic Shipping Group (ASG), a Greek shipping company, holding a bareboat charter over the Toothless Dragon a ship owned by Viking SA, a Norwegian shipping company. The contract is for the carriage of 8 containers of dry goods from Sydney to Felixstowe (United Kingdom). Bonza takes out cargo insurance with Marine Insurance Contracts Europe Pty Ltd (MICE), the Australian subsidiary of a UK based insurer, using Institute Cargo Clause A for the Toothless Dragon shipment. The voyage appears to go very well with smooth sailing and mostly fine weather. When the Toothless Dragon arrives at Felixstowe and the containers are unloaded, it becomes apparent that moisture has got into in several of the containers which has damaged or ruined some of the goods (particularly the dry snack foods). Bonza and ASG are in dispute as to whether the Toothless Dragon was seaworthy when it departed Sydney. a)

Can Bonza claim under its Cargo Clause A insurance contract with MICE? -

Institute Cargo Clauses A: Full cover (still has exclusions) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he or she is not liable for any loss which is not proximately caused by a peril insured against. (MIA 1909 s 61 Included and excluded losses) -----------------------------------------------------------------------------------------------------------------------5. 5.1 In no case shall this insurance cover loss damage or expense arising from 5. 1.1 unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage of the subject-matter insured, where the Assured are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded therein 5.1.2 unfitness of container or conveyance for the safe carriage of the subject-matter insured, where loading therein or thereon is carried out prior to attachment of this insurance or by the Assured or their employees and they are privy to such unfitness at the time of loading.

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b)

Would it make a difference if Bonza only had Cargo Clause C cover with MICE?

- Institute Cargo Clauses C: Very limited cover -----------------------------------------------------------------------------------------------------------------------Fire/ explosion refer back to the clause ------------------------------------------------------------------------------------------------------------------------

c) If MICE pays Bonza out under the insurance contract, what happens to the dispute between ASG and Bonza? ------------------------------------------------------------------------------------------------------------------------ MIA 1909 (Cth) Part VI Measure of Indemnity - Division 2—Rights of Insurer on Payment of Loss - S 85 Right of subrogation - Where the insurer pays for a total loss, either of the whole, or in the case of goods of any apportionable part, of the subject-matter insured, he or she thereupon becomes entitled to take over the interest of the assured in whatever may remain of the subject-matter so paid for, and he or she is thereby subrogated to all the rights and remedies of the assured in and in respect of that subject-matter as from the time of the casualty causing the loss. ------------------------------------------------------------------------------------------------------------------------

d) What impact would it have on Bonza’s claim on its insurance with MICE if Bonza had failed to inform MICE when taking out the insurance that the Toothless Dragon had a reputation for being prone to leaks? Rescind the contract -

Utmost good faith – uberrimae fidei S23 [MIA 1909 (Cth) Insurance is uberrimae fidei “A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party.” - CGU Insurance Limited v Porthouse [2008] HCA 30, 235 CLR 103 at 49: [not itself a marine insurance case] “An insurance contract is a contract requiring the utmost good faith (uberrimae fidei) of both parties” Remarks: Utmost good faith is an excuse to enable the contract void where they probably should succeed. - tougher form of contract -----------------------------------------------------------------------------------------------------------------------Fetal for claim of bond - breach of obligation to disclosure s 24 - breach of obligation of good faith s 23 - fail the 5.1.1 institute cargo clause A test ------------------------------------------------------------------------------------------------------------------------

e) Imagine instead of smooth sailing and fine weather, there had been a hurricane and 1/3 of the Toothless Dragon’s containers had been lost overboard and ASG had declared General Average in relation to the Toothless Dragon. Can Bonza claim on its insurance contract with MICE? Yes - MIA 1909 s 61 Included and excluded losses - Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he or she is not liable for any loss which is not proximately caused by a peril insured against. -----------------------------------------------------------------------------------------------------------------------Cargo clause A - cover everything except for inclusion Clause C - only cover certain things ------------------------------------------------------------------------------------------------------------------------

[NB Copies of the Institute Cargo Clauses A, B and C are available in iLearn above under Week 5 Marine Insurance.] 2) Marine insurance has been around for thousands of years and many modern day marine insurance contracts still closely resemble their medieval ancestors and include terminology which has fallen out of use in everyday language or has taken on a special meaning in insurance. Choose two long standing concepts in marine insurance and consider whether they have changed or should have changed and whether they are still appropriate for today’s insurance contracts. Possible examples include uberrimae fidei, bottomry, respondentia, barratry and seaworthiness. uberrimae fidei: Create evidentiary burden on the insurer to investigate all of the situation - burden should be put on the assured to ensure the disclosure of information Seaworthiness: - The requirement of seaworthiness has changed over time - depending on Hamberg or Hague - That creates complexity of insurance - clarification may be required the level of seaworthiness - Obligation to tell insurer everything the assured knows eg the requirement of the seaworthiness/ how the goods to be carried to remain intact Bottomry: Barratry: bad behavior/ negligence by the master or the crew

3)

Does the Marine Insurance Act 1909 (Cth) strike the right balance between protecting the

rights of insurers and the rights of their customers in international commercial trade? Purpose of the question: The exploration of what the arguments are

Idea for Factors that affect the applicability of the Convention Uniform law probability Balance is not right Marine should not go the full way the consumer insurance The shipper should be more informed The risks inherent in marine insurance is higher than ordinary insurance The balance between now extremely easy for the insurer not to pay Marine insurance context is a different context Insureer are commercial party should be informed of the risk...