Page 36 - Insurance Times July 2016

exclusion clauses that intend to limit the liability of the
insurer under the policy. For instance, in a clause which is
worded "warranted free from seizure and capture", the
warranty means that the insurer is not liable for the perils
of capture and seizure.
However, the word 'warranty', in a technical sense, is used
to refer to a certain term of the insurance contract, breach
of which has particular legal consequences. With a
warranty, one party of the insurance contract, the assured,
undertakes certain obligations that need to be fulfilled
within a certain time frame and the liability of the insurer, A marine warranty is defined by S 35 (1) of the MIA 1963
under the insurance contract, depends on the assured's
compliance with those obligations. In this respect,
warranties are used by the insurer as a shield against
liability.
Warranties are quite commonly used in marine insurance
policies and The Marine Insurance Act (MIA), 1963 has
provided the legal framework therefore. Warranties also
appear in all types of non-marine insurance policies.
Generally speaking, the rules laid down by the MIA 1963
for marine insurance warranties could also be applied for
non-marine insurance warranties. However, there are
certain differences that exist between marine and non-
marine warranties.
First, the implied warranties that have been incorporated
in marine insurance policies by MIA 1963 do not exist in
non-marine policies. The main reason for this distinction is
that non-marine insurance lacks the element of maritime
adventure. Accordingly, in non-marine insurance policies
warranties must be formulated by express wording.
Secondly, in marine insurance it is a statutory rule that an
express warranty must be incorporated in the policy by
words of reference appearing in the policy itself. This does
not, however, appear to be the general rule in non-marine
insurance where it is sufficient for an insurer to obtain the
signature of the proposer to a declaration in the proposal
form which says that "This proposal is to serve as the basis
of the contract", whereupon the warranty is an effective
term of the contract, even though not expressly stated in
the policy.
Finally, it has been observed that courts have a tendency
to construe non-marine insurance warranties narrowly so
that the scope of the undertaking is restricted. But in
marine insurance, despite the applicability of similar
interpretation rules, courts are reluctant to interpret
warranties in favor of the assured. One possible reason
36 The Insurance Times, July 2016
behind this could be the fact that marine insurance market
is a place where the demand side is made up of professional
people like ship-owners, cargo-owners, consignees,
consignors, charterers etc. and they are expected to have
a certain amount of knowledge regarding rules and
practices which are followed both in domestic and
international trade and commerce.
Classification of Marine Insurance
Warranties
as follows :
"……….. a promissory warranty, that is to say, a warranty
by which the assured undertakes that some particular thing
shall or shall not be done, or that some condition shall be
fulfilled, or whereby he affirms or negatives the existence
of a particular state of facts".
It is clear from this definition that the MIA 1963 has
regarded all maritime warranties as "promissory". The
phrase "promissory warranty" is a collective expression for
all marine warranties and they are categorized according
to different criteria.
(1) Classification of promissory warranties according to
the time of undertaking :
Certain warranties relate in time to the circumstances
of the risk. For instance,a warranty whereby "the
assured declares that the ship-managers have a certain
citizenship", is a warranty of this type. In cases where
such a warranty is breached, the insurer never comes
on risk and, accordingly, the premium is refundable due
to total failure of consideration.
Some warranties undertake that a given state of affairs
would be satisfied or avoided at some time after
inception of the risk. This kind of warranty is referred
to as a "warranty as to future events". A navigation
warranty which requires the insured vessel not to
navigate in certain seas during the currency of the
policy is a warranty of this type. By virtue of S 35 (3) of
the MIA 1963, the breach of such a warranty does not
prevent the risk from running and leaves untouched
any right that has already vested in the assured at the
time of the breach.
An assured with a warranty might undertake that a
given state of affairs would not only exist at the
inception of the risk but exist during its continuation
as well. Warranties of this type are called "continuing
warranties". The implied "warranty of legality" that
requires the insured adventure to be a lawful one and