Marine Cargo Insurance
CHAPTER 14
RECOVERABLE EXPENSES AND LIABILITIES: SUE AND LABOUR, SALVAGE, GENERAL AVERAGE AND COLLISION LIABILITIES
Sue and labour
Sue and labour and cargo insurance
14.1 Where there is a casualty the assured under a marine cargo policy has a duty to minimise any loss that would fall upon cargo insurers. This duty is triggered by the casualty and, absent any provision in the insurance expressly requiring the exercise of due diligence,1 there is no general duty of due diligence.2 The duty to sue and labour is spelt out in the Marine Insurance Act 19063 and may reflect a similar though lesser obligation to mitigate at common law in non-marine insurance.4 The distinguishing factor in marine cargo insurance is the right of the assured to recover from the insurers the expenses reasonably incurred in mitigation of the insurers’ loss.5 14.2 The duty to mitigate has a twofold purpose in marine cargo insurance. Firstly, there is the duty to ensure that action is taken to preserve cargo exposed to danger as a result of a casualty. Secondly, and of key importance in practice, there is a duty to protect rights against bailees, in particular shipowners, road hauliers or others concerned in the carriage or storage of the cargo. The right to reimbursement, which is called the right to “sue and labour”, is so important that it is supplemental (i.e., additional) to the policy.6 This means that an assured can recover for a total loss of his cargo and, in addition, for expenditure reasonably incurred unsuccessfully in seeking to prevent that loss. The object of the sue and labour clause is to “encourage exertion on the part of the assured”7 so it only applies where the assured has himself voluntarily contracted with others to mitigate the loss: it does not apply where services, such as salvage, are rendered under general maritime law.8Origins and structure of the sue and labour cover
14.3 The SG Form of Policy scheduled to the Marine Insurance Act 1906 provides that:9“And in case of any loss or misfortune it shall be lawful to the assured, their factors, servants and assigns, to sue, labour, and travel for, in and about the defence, safeguards, and recovery of the said goods and merchandises, and ship, etc, or any part thereof, without prejudice to this insurance; to the charges whereof we, the assurers, will contribute each one according to the rate and quantity of his sum herein assured.”