Insurance Law Implications of Delay in Maritime Transport

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Implied condition as to the commencement of risk


9.1 Section 42 of the MIA 1906 states that in voyage policies insured ‘at and from’ or ‘from’ a particular place, there is an implied condition that the adventure shall be commenced within reasonable time, failure of which gives the insurer the right to avoid the contract. The words ‘at and from’ or ‘from a particular place’ do not import a warranty or a representation that the vessel is already at the place when the policy is made.1 The fact that s 42 applies merely to voyage policies rests upon the rationale that delay in the nature of abandoning the voyage or changing the risk undertaken with respect to the voyage initially insured should no longer be binding upon the insurer. Albeit there is a fair number of cases decided prior to the enactment of the MIA, the section has not been much litigated nor has it been the subject of considerable debate following its enactment. There are mainly three aspects of s 42 which shall be analysed in this chapter namely the implied condition as to the commencement of risk in the period of pre-attachment of risk, pre-contractual non-disclosure of a circumstance which may result in delay at the commencement of the voyage; and insurers’ discharge from liability for delay in the post-attachment of risk period, before the commencement of voyage. These aspects and the circumstances which negate the implied condition will be considered in the following parts of this chapter. The chapter generally aims at assessing whether and to what extent the MIA has changed the common law rules so far as s 42 is concerned, at identifying the possible motives behind such a change and at determining whether the wording of the section still allows the implication of certain common law concepts into the provision. The latter assessment will rest upon s 91(2) which provides that the rules of the common law including the law merchant shall continue to apply to marine insurance contracts save in so far as they are inconsistent with the express provisions of the MIA.

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Delay before the risk attaches

9.2 In a voyage policy on ship ‘at and from’ a particular place, if the vessel is not at the place when the insurance contract is made, the risk attaches as soon as she arrives there in good safety.2 What is required for the attachment of risk is not merely confined to the vessel arriving at the port of departure,3 the vessel should arrive at the port and without unreasonable delay. In the leading pre-MIA authority De Wolf v Archangel Maritime 4 where the policy was on freight, the ship finally arrived at the departure port however with some delay.5 There was no representation as to the time of arrival of the ship and it was held that the risk had not attached. There were also several US decisions which held that even if a vessel arrived at the port of departure but stayed there without reference to any particular voyage, the policy attaches only from the time that preparations begin with reference to the voyage insured.6 Similarly it was held that the risk did not attach where an entirely different voyage was intended although the ship was where the risk was to begin.7 This would mean the mere arrival at the port without undue delay would not be sufficient for the risk to attach, there would also be the requirement of the vessel being or getting ready for the voyage insured.8 The delay in commencing the voyage insured would consequently result in the non-attachment of the risk. It may be submitted that this approach would also be in line with the concept of risk undertaken by the insurer under a voyage policy subject to the MIA, which is a marine adventure involved in a particular voyage of a particular vessel.9 According to each policy, the particular voyage may have to commence within a given period or on a specific day, in the absence of which and prior to the enactment of the MIA, the common law implied in the policies that the adventure should be commenced in reasonable time for that particular voyage. Whether in policies ‘at and from’ the risk attaches when the ship arrives without unreasonable

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delay and terminates where the preparations for the insured voyage are laid aside is important for the purposes of s 42. The section’s title is ‘implied condition as to commencement of risk’, and not ‘as to commencement of voyage’ and the section arguably relates only to the period until the attachment of risk.10 The risk attaches where the vessel arrives at the port of departure as per MIA Schedule I, r 3 and the period as to preparations for the insured voyage will be considered as pertaining to the period of post-attachment of risk. 9.3 The fact that the risk has attached in an ‘at and from’ policy does not necessarily mean that the voyage has started as from that date and that s 48 on delay in voyage may apply. In particular in terms of goods, as transit contemplates their movement from one place to another,11 s 48 may begin to operate as from the moment where the vessel leaves the port of departure with the goods, or at the very least when the goods are laden on board for the insured adventure and are ready for the transit which is going to start immediately. It is important to note that delay in arriving at the loading port and delay at the loading port should be considered separately in terms of ‘at and from’ policies.12 The situation can be briefly described as follows:
  • i. The voyage to the departure port shall be performed in reasonable time after the contract is made and without unnecessary delay before the risk attaches,
  • ii. The insured voyage which is usually due to commence after the attachment of risk shall be commenced within reasonable time.

This distinction emanates from Tindal CJ’s speech in Mount v Larkins 13 where the difference as to delay before and after the risk is attached was made clear. Tindal CJ asked the question of what would be the difference between a delay in the outward voyage and a delay in the departure port and enunciated that the insurer had a right to calculate upon the outward voyage in order that the risk may attach:

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