Page 39 - Insurance Times July 2016

Warranty of port-worthiness: Where a voyage policy
attaches 'at and from' the place named in the policy, S 41
(2) of the MIA 1963 requires that the vessel while in port
must be reasonably fit to encounter the ordinary perils of
the port. The term 'port-worthiness' does not appear either
in S 41 (2) or anywhere in the MIA 1963. It is a term of
recent origin. The degree of fitness required to encounter
the ordinary perils of the port may vary with according to
different factors:
(1) The class of vessel in question can be quite crucial in
determining the degree of fitness required. In this
sense, while a cargo ship can be considered as port
worthy for a specific port. A passenger boat may not.
(2) The degree of fitness may vary from port to port. A
lower degree of fitness may be required for a port that
is located in a bay than a port that is open to waves
and tides of an ocean. A vessel which is port worthy
for a certain port during summer season may not be
port worthy during winter season. Tides which vary with
the moon's quarters may affect the navigability of a
water basin and therefore impact the port worthiness
of a vessel.
Whether a ship has to be always fit to endure the ordinary
perils of the port throughout the period of her stay while
'at' port, is an issue that has never been fully answered. As
the implied warranty of sea worthiness is applicable only
at the commencement of the voyage, it could be said the
implied warranty of port worthiness should, likewise, apply
at commencement of the risk.
Warranty of cargo worthiness: Section 42 (2) of the MIA
1963 defines "cargo worthiness" as the vessel being
reasonably fit to carry the goods and other movables to
their destination. In terms of this definition, the main factor the assured would stand to lose his insurance cover if the
that has to be taken into account is whether the vessel is
in a fit state of repair to receive the cargo contracted for
carriage. Not all vessels are fitted out to carry cargo of
every description. For instance, if the cargo is frozen meat
then the refrigerating machines, holds etc. must be in
proper order, hygienically maintained, efficient and fit to
receive and carry that particular cargo.
A bulk carries which is fit to carry, say food grains may not
be fit to carry liquid cargo like edible oil or mineral ore. A
plain reading of the warranty indicates that it will be
construed in the light of the technical efficiency of the ship,
both in design and equipment installed. The voyage
undertaken is another factor that is extremely important
in determining whether the vessel is cargo worthy or not.
While a vessel carrying one type of cargo around the harbor
may be perfectly cargo worthy for the voyage, the same
vessel carrying the same cargo on an ocean voyage may
not be cargo worthy.
Warranty of legality: Section 41 of the MIA 1963 regulates
the legality of the adventure as an implied warranty. Not
only the subject matter insured (for example, ship, cargo,
freight) not be tainted with illegality but the adventure
must be lawful and be performed lawfully, so far as the
assured can control the matter. In non-marine insurance
legality is ensured by public policy. For instance, if a machine
in a factory has been put to some unlawful use, the insured
is precluded from claiming indemnity by public policy. Can
the doctrine of public policy be invoked for marine insurance
as well? There are practical difficulties in marine insurance
in applying the doctrine because of the element of maritime
adventure which affects both the assured and the insurer.
If S 43 of the MIA 1963 had not created a continuing
warranty status, illegality which might arise during the
performance of the maritime adventure insured would not
have affected the validity of the policy at the inception and
the insurer may be obliged to admit a claim. It is S 43 which
now provides some sort of protection to the insurer. From
the assured's angle, if illegality that might arise during the
performance of the adventure had not been regulated
through a warranty, public policy in some cases would have
invalidated such insurances from inception. In such a case,
illegal act beyond his control had been committed by one
or more of his employees. Now in view of S 43 of the MIA
1963 the assured is not likely to be prejudiced if any illegal
act beyond the assured's control be committed by his
employees during the performance of the adventure.
Considering the overarching role marine insurance plays in
both domestic and international trade and commerce, the
need for reform in marine insurance law cannot be over
emphasized. The breath taking speed with which ship and
navigation technology is changing in recent years, the need
for a thorough revision of marine insurance law cannot be
held up for long. Perhaps the powers that be at the Center
and the IRDA will look into the matter. 
The Insurance Times, July 2016 39