Page 24 - Insurance Times July 2024

any fortuitous external accident. By contrast, the loss of the It can also be noted about the relevant provisions of the
Cendor Mopu’s legs was neither expected nor contemplated Marine Insurance Act 1906 read as follows: “55. INCLUDED
and occurred only under the influence of a leg-breaking AND EXCLUDED LOSSES
wave of a particular direction and strength catching the first 1. Subject to the provisions of this Act, and unless the
leg at just the right moment. policy otherwise provides, the insurer is liable for any
loss proximately caused by a peril insured against, but
In a passage which will surely be cited in all future cases subject as aforesaid, he is not liable for any loss which
involving inherent vice, Lord Mance explained the distinction is not proximately caused by a peril insured against.
by reference to the definition provided by Lord Diplock. He
2. In particular, unless the policy otherwise provides, the
held, at paragraphs 80 and 81, that
insurer is not liable for ordinary wear and tear, ordinary
(1) Lord Diplock’s reference to “the ordinary course of the
leakage and breakage, inherent vice or nature of the
contemplated voyage” was not intended to embrace
subject-matter insured ”
the weather conditions foreseeable on such a voyage,
but was rather used as a counterpoint to a voyage on
The ruling of the Supreme Court, in narrowing the test for
which some fortuitous external accident or casualty inherent vice in matters of marine insurance, will likely be
occurred
welcomed by policyholders. The Supreme Court held that a
(2) there was no apparent limitation in Lord Diplock’s fortuitous external accident would preclude the possibility
qualification “without the intervention of any fortuitous of inherent vice operating as the proximate cause of any
external accident or casualty” – in other words, on the loss suffered.
face of it, anything that would otherwise count as a
fortuitous external accident or casualty will suffice to Causation is a crucial issue in ascertaining whether certain
prevent the loss being attributed to inherent vice. loss or damage is covered in an insurance policy. Although
marine insurance is well-known for investigating the
The Supreme Court unanimously dismisses the appeal. The “proximate” cause of loss in order to determine the insurers’
Court finds that the cause of the loss was an insured peril liability, decisions by English courts are far from reconcilable.
rather than inherent vice. The effect of this ruling is stark,
irrespective of how fragile a cargo is, where the actions of
waves and wind have played a part in causing loss, it will be
almost impossible for insurers to deny liability based on the
exclusion of inherent vice.
The practical effect of the judgment is that the exclusion of
loss caused by inherent vice and nature of the thing insured
has become of much less use to insurers. They will not be
entitled to rely on the unsuitability of cargo for sea transit
to exclude recovery unless loss occurs as a result of the
inherent characteristics or defects of the goods causing loss
or damage to themselves without any intervention from
waves or wind (or other perils of the sea).
*I am thankful to Dr.S.Mukherjee, a Maritime Legal Expert
Unattractive and impractical though it might seem to and International Investigator for Maritime Fraud for his
insurers, it follows that - unless changes are made to the advice.
standard policies - they must take additional steps to
understand quite how susceptible to damage the insured Dr.Soumi Mukherjee completed her Graduation in Mass
Media and Masters in Mass Media from University of
cargo is. If they do not, and loss is sustained as a result of
Mumbai, later completed her Ph.d. She is interested in
the foreseeable but not inevitable actions of waves or wind,
they will have to pay the claim under the policy. This will be Investigative Journalism related with History, Geography,
the case equally where the probability of such loss occurring Zoology etc. She is currently serving in Media Officer
with International Police Organization.
is 5% or 95%.
22 July 2024 The Insurance Times