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INSTITUTE CARGO CLAUSES CAUSATION<\/span><\/p>\n The revised Institute Cargo Clauses have retained a number of different phrases for expressing the fundamental connection between the risk and the loss. These causation triggers include “caused by”, “arising from”, “resulting from”, “attributable to” and “reasonably attributable to”. <\/span><\/p>\n In addition, the exclusion of loss damage or expense resulting from nuclear incidents in Clause 4.7 of the (A) Clauses uses two causation triggers: “directly or indirectly caused by” and “arising from”. <\/span><\/p>\n These variations are now examined starting with “caused by” as representing the customary proximate cause rule, and then looking at the other phrases used to establish the extent to which that rule may be varied case by case.<\/span><\/p>\n The phrase “proximately caused by” which was used in the 1982 Clauses in exclusion 4.5 in relation to delay is no longer used in the revised Institute Cargo Clauses.<\/span><\/p>\n Different provisions as to causation may apply to the risks insured or the exclusions, or to both. In the Institute Cargo Clauses (A) the causation triggers are only used in relation to the exclusions the positive cover for all risks is simply expressed in Clause 1. with the phrase: “This insurance covers all risks of loss of or damage to the subject-matter insured”. In the absence of any particular causation provision, section 55(1) of the Marine Insurance Act 1906 provides that, “the insurer is liable for any loss proximately caused by a peril insured against”<\/i> and the ordinary proximate cause rule applies. By contrast, the Institute Cargo Clauses (B) and (C) use the phrase “reasonably attributable to” in relation to the first group of perils insured, fire or explosion etc, and the words “caused by” in respect of the balance of the perils, general average, jettison etc. This introduces different causation rules in relation to the perils themselves while, in relation to the (A) Clauses, the causal variations are confined to the exclusions.<\/span><\/p>\n \u00a0<\/span>“caused by”<\/span><\/i><\/b><\/p>\n The term “caused by” is used to introduce the second group of perils in the (B) and (C) Clauses and in relation to the exclusions of insufficiency of packing (Clause 4.3); inherent vice (Clause 4.4); delay (Clause 4.5); insolvency and financial default (Clause 4.6); as well as in the war and related exclusions (Clause 6) and the exclusions relating to strikers and terrorism (Clause 7.1). As we shall examine next, the notable exception being in relation to strikes” where the trigger is loss damage or expense “resulting from” strikes.<\/span><\/p>\n \u00a0<\/span><\/i><\/b><\/i><\/b>“resulting from”<\/span><\/i><\/b><\/p>\n The term “resulting from” is used in exclusion 7.2, which needs to be considered in contrast with the words \u00abcaused by\u00bb used in Clause 7.1?<\/span><\/p>\n “In no case shall this insurance cover loss damage or expense caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions resulting from strikes, lock-outs, labour disturbances, riots or civil commotions…”<\/span><\/i><\/p>\n The usual practice is to take out separate insurance against strikers under the Institute Strikes Clauses (Cargo) which provide as follows:<\/span><\/p>\n \u00a0<\/span>“This insurance covers. . .<\/span><\/p>\n \u00a0<\/span>1.1 strikers, locked-out workmen, or persons taking part in labor disturbances, riots or civil commotions…”<\/span><\/p>\n The Strikes Clauses further provide:<\/span><\/p>\n “In no case shall this insurance cover 3.7 loss damage or expense arising from the absence shortage or withholding of labour of any description whatsoever resulting from any strike, lockout, labour disturbance, riot or civil commotion.”<\/span><\/i><\/p>\n \u00a0<\/span>It will be seen that there is positive cover under Clause 1.1 of the Strikes Clauses for loss of or damage to the cargo done by strikers but not for losses or, more particularly, expenses resulting from a strike. Thus the intention is that there is cover for damage done by strikers, as where they burn down a warehouse and destroy the cargo stored there, but there is no cover under the Strikes Clauses for losses or expense “resulting from” strikes where a strike leads to deterioration in the cargo by reason of a failure in support services (e.g., electricity to service refrigeration machinery storing chilled or frozen cargo). Delays resulting from strikes would also be excluded under this Clause 7.2 in parallel with the delay exclusion under Clause 4.5.<\/span><\/p>\n It is assumed that the words ‘resulting from” are intended to widen the proximate cause rule to encompass more remote causes. However, the effectiveness of the words “resulting from” to achieve this is doubtful as these words have been treated by the courts as triggering the ordinary proximate cause rule. In particular, the expression “result from” undoubtedly imparts the notion of causation which, in turn, in all branches of insurance law, involves application of the notion of proximate cause, applied with good sense, so as to give effect to and not to defeat the intention of the parties.<\/span><\/p>\n Similarly, in general, words such as “resulting from” in an exception clause are to be treated as excluding only those losses proximately caused by the events mentioned. However, in relation to the strikes exclusion clause, by reason of the contrast between the words “resulting from” in Clause 7.2 and the words “caused by” in Clause 7.1, it is doubtful that “a broader test than proximate cause is to be applied under Clause 7.2”<\/i>. Moreover, the words “resulting from” may be perceived by the insurance market as excluding more remote causes.<\/span><\/p>\n The market perception and the suggestion that “a broader test than proximate cause is to be applied”<\/i> raise the difficulty of what test that would be. The purpose may be to exclude deterioration and delay following from a strike due to withdrawal of labour. This risk operates rather indirectly in the same way as delay. The loss to the cargo, or the expense incurred to avoid loss, is a consequence of some other more immediate risk, for example bacteriological deterioration, as where electricity supplies have been interrupted by a strike. It may be tentatively suggested that “resulting from” may be treated as opening the door to the operation of two concurrent risks, characteristically delay caused by a strike or withholding of labour, and some form of deterioration to the cargo. If this is right, the words “resulting from” serve to make it clearer that the exclusion applies even if the immediate cause of the loss is deterioration and the somewhat less immediate but nevertheless simultaneous cause is a strike.<\/span><\/p>\n \u00a0<\/span>“arising from”<\/span><\/i><\/b><\/p>\n The words “arising from” appear in the revised Institute Cargo Clauses in the Nuclear Accidents Exclusion (Clause 4.7 of the (A) Clauses and Clause 4.8 of the (B) and (C) Clauses) in the phrase “directly or indirectly caused by or arising from”. As the words “directly or indirectly caused by”1.1.2 encompass more remote causes they go well beyond the term “arising from” in widening the chain of causation and this renders the words “arising from” redundant in this Clause. The words “arising from” may be surplus but were retained in the Nuclear Accidents Exclusion as a matter of caution and to be consistent with Clause CL 370 (Radioactive Contamination etc.) which is a generally used exclusion of nuclear accidents and a wider group of risks with the capacity to cause catastrophic losses.<\/span><\/p>\n The second place the phrase “arising from” is used is in the unseaworthiness exclusion (Clause 5.1) which opens with the words:<\/span><\/p>\n “In no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft. . . unfitness of container or conveyance …”<\/span><\/i><\/p>\n “Although this exception insolvency of shipowners etc in Clause 4.6, in contrast to earlier exceptions in Clause 4, uses the expression “arising from” we doubt that any different test for causation was intended to be applicable.”<\/span><\/p>\n “Words such as ‘due to’, ‘resulting from’, or ‘arising from’ in an exceptions clause in a policy have been construed as excluding only those losses proximately caused by the events mentioned.”<\/span><\/p>\n \u00a0<\/span>In Marine Insurance, in the context of the insolvency exclusion, is also of the view that “arising from” is no different from “caused by” as both require proximate cause, saying:<\/span><\/p>\n “It is necessary for underwriters (on whom the onus lies) to show that the loss damage or expense was proximately caused by (‘arising from’) the insolvency or financial default. In many instances, the chain of causation would be difficult to establish.”<\/span><\/i><\/b><\/p>\n However, “The substitution of the words ’caused by’ in place of ‘arising from’ suggests that underwriters have conceded a drafting error in the original text.”<\/i><\/span><\/p>\n The comment most probably reflects the market perception that the words “arising from” are intended to broaden the concept of causation. It is unclear whether this is the legal position. The words “arising out of”, as used in the phrase “arising out of one event”, were held to imply a wider test of causation, where the words were “series of losses arising from one event” gives a similar view that these words implied a wider test of causation. <\/span><\/p>\n The words “caused by” and “arising from” had always been construed as relating to the proximate cause. It seems, therefore, that the market perception that “arising from” implies a wider test of causation is probably not in accord with the legal position that treats “arising from” as triggering the ordinary proximate cause rule.<\/span><\/p>\n Nevertheless, assuming the market perception to be correct, how does this bear on the revised Institute Cargo Clauses, and the continuing use of the words “arising from” in the unseaworthiness exclusion? <\/span><\/p>\n Does the loss of cargo or, more commonly in practice, the cost of forwarding, have to be proximately caused by the unseaworthiness or could unseaworthiness is a more remote cause? If “arising from” encompasses a more remote cause, what is the test? It is difficult, if not impossible, to assess degrees of remoteness, except where the test is “directly or indirectly caused by”, and the solution may lie in construing the words “arising from” to allow the operation of one of two concurrent causes. It is to be noted that, in the same context of unseaworthiness, section 39(5) of the 1906 Act uses the phrase any loss “attributable to” unseaworthiness that this would apply where unseaworthiness was “a” cause of the loss. A similar approach should, perhaps, be adapted to the words “arising from” in the unseaworthiness exclusion in Clause 5 of the Institute Cargo Clauses. If “arising from” means proximately “caused by”, which is more in harmony with the legal authorities, the result is more hesitant, but may be the same as the modern approach to proximate cause allows for a finding of two causes both of which are “proximate”.<\/span><\/p>\n